5 Hidden Facts About Zara: The Six Sigma Process in 2024

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Yes! Clothing is important to all ! We all are aware that basic necessity of mankind is clothing. Clothes are produced by the garment industry. Textile industry produces of intermediate products like fabric and yarn etc. These intermediate products are used to make the final product i.e. garment. To produce garments it is important to have quality products which is done using the Six Sigma process. 

 

In today’s scenario, market is highly complex and competitive that’s why it is important to maintain the standard quality level. There are two aspects of quality that is design of a product or service and manufacturing of product, produced according to the specifications. Customer can be satisfied if they are provided;

• Right Product
• With Right Quality
• At Right Time

In garment industry, apparel quality control is exercised right from the initial stage to final stage of apparel production through the Six Sigma process.  In textile or apparel industry, quality can be measured in terms of quality of fibre, yarn, fabric and finished garment.

Quality of garments can be achieved by designing and manufacturing as per the needs of the customers. Quality control in garment industry include pre-sales and posts sales service, delivery, pricing, etc. It is significant not to ignore quality related problems.

Do you know various issues in garment industry?

There are various issues often seen in garments manufacturing like

• Fabric defects
• Sewing defects
• Colour defects
• Size issues
• Others defects like defective buttons, snaps, stitches, holes, faulty zippers, loose or hanging sewing threads, misalignment of buttons, missing buttons, cuts, stains, short zippers, inappropriate trimmings etc.

 

Benefits of Lean Manufacturing : The Six Sigma process

Lean Manufacuring is a systematic method of elimating waste by contionous improvement. There are various benefits of lean Six Sigma process in manufacturing like;

• Improve productivity and quality
• Reducing work in process (WIP) inventory,
• Reduce cycle and lead time,
• Reduce manpower,
• Time and space,
• Sustainability,
• Employee satisfaction,
• Increase profit,
• Increase customer satisfaction and customer service.

Lean Manufacturing Vs Conventional Production System:

Let’s understand how lean manufacturing in Six Sigma process is different conventional way of manufacturing;

Conventional Manufacturing	Lean Manufacturing
The day to day production problems are normally view or treat as problems in conventional system.	In lean manufacturing, problems are normally view as opportunities for future improvement. By the help of Six Sigma process, there is a better chance to enhance new or value added features into the current product.
In traditional production system, the production is normally driving by sales forecast team or people.	In lean system, it’s also one of the main motive of the production team to avoid surplus stock. So, this is why, the production is only driving by customer’s demand (like JIT system).
Work in progress (WIP) is a normal thing or part of production operation in conventional production system.	Whereas in lean production system, the WIP is symbol that the process is requiring some improvements. And it is also considers as waste which need to improve on priority basis.
The top or in some cases tactical management level is authorize to change the process of production. And they normally don’t bother to involve operational staff in decision making process.	Everyone is looking for the ways to improve the process/system using lean Six Sigma process. So, anyone from the production team can come up with suggestion to improve the product value in lean system.
In conventional production process, the standard work procedures only define in papers. But there is no any practical implications exist on the production floor.	In lean manufacturing for Six Sigma process, everyone is normally following the standard procedure which describes in SOP. And it keeps following until or unless new or an improve version introduces or implements.
This system focuses more on the people’s training. And it totally relies on the people not to make mistakes.	On the other hand, the lean manufacturing focuses on the system improvements. Once the system improves then it prevents people not to commit any mistake in day to day production matters.
In traditional or conventional production system, if the production process is working smoothly. Then no one bothers to intercept it for further improvements and things are running on same pattern years to years.	In this way of production, if experts feel that with some necessary changes, they can improve the production system. Then they don’t wait for any happening/incident. They simply intercept the smooth system and implement the necessary changes to get a better production with quality.
In conventional production system, the product design lasts for a long period of time.	In lean manufacturing for Six Sigma process, there research and development work is going on continues basis. This is why the product design and shape is changing by the passage of time.
In traditional production system, the quality department is built separately and they are responsible for the product quality parameters. The operational worker are note responsible for it.	In this advance manufacturing system, all the workers are responsible for the quality of the product. This is done using lean Six Sigma process . The TQM and JIT systems are best examples of this.

 

Lean Manufacturing Tools

Lean manufacturing tools for a Six Sigma process, used in garments industry like 5S, Kanban, PCDA (Plan, Do, Check, Act) etc

–          5S

 

• It is the first step to implement lean manufacturing and tool of continuous improvement.it helps to keep workplace organize and clean.Sort (eliminate that which is not needed)
• Set In Order (organize remaining items)
• Shine (clean and inspect work area)
• Standardize (write standards for above)
• Sustain (regularly apply the standards)

–          Kanban

It is a bottleneck analysis process which is the slowest among other garment manufacturing process which interfere in production. This analysis is crucial for sewing of apparels and finishing section.

–          PDCA

It is plan-do-check-act or plan-do-check-adjust. It is four step management method for quality controlling and continuous improvement.

There are various other techniques of lean manufacturing like root cause analysis, key performance indicators (KPI), etc.

Apparel quality control is really complex. Therefore, it is important to control the quality of apparels as it is important for customer satisfaction. Apparel quality control in terms of manufacturing, pre-sales and posts sales service, delivery, pricing, etc. Quality of apparels can be maintained by using latest technology along with apparel quality control tools and Six Sigma process techniques.

Zara – A case study

Zara is a Spanish apparel retailer based in Arteixo (A Coruña) in Galicia. The company specializes in fast fashion, and products include clothing, accessories, shoes, swimwear, beauty, and perfumes. It is the largest company in the Inditex group, the world’s largest apparel retailer. Zara as of 2017 manages up to 20 clothing collections a year.

History of Zara

Amancio Ortega opened the first Zara store in 1975 in central A Coruña, Galicia, Spain. Ortega initially named the store Zorba after the classic film Zorba the Greek, but after learning there was a bar with the same name two blocks away, they rearranged the letters molded for the sign to “Zara”. It is believed extra “a” came from an additional set of letters that had been made for the company. The first store featured low-priced lookalike products of popular, higher-end clothing fashions. Ortega opened additional stores throughout Spain.

During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called “instant fashions”. The improvements included the use of information technologies and using groups of designers instead of individuals.

In 1985, Amancio Ortega set up a parent company for Zara before going for the global expansion, and in 1988, the company started its international expansion through Porto, Portugal. In 1989, it entered the United States, and then France in 1990.

During the 1990s, Zara expanded to Mexico (1992), Greece, Belgium and Sweden (1993). In the early 2000s, Zara opened its first stores in Brazil (2000), Japan and Singapore (2002), Russia and Malaysia (2003), China,  Morocco, Estonia, Hungary and Romania (2004), the Philippines, Costa Rica and Indonesia (2005), South Korea (2008), India (2010), Taiwan and South Africa and Australia (2011).

On September 2010, Zara launched its online boutique. The website began in Spain, the UK, Portugal, Italy, Germany and France. In November that same year, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States in 2011, Russia and Canada in 2013, Mexico in 2014, South Korea in 2014, Romania in 2016, India in 2017 and Brazil in 2019.

Zara introduced the use of RFID technology in its stores in 2014. The RFID chips are located in the security tags which are removed from clothing when it is purchased and can be reused. The chip allows the company to quickly take an inventory by detecting radio signals from the RFID tags. When an item is sold, the stockroom is immediately notified so that the item can be replaced. An item that is not on the shelf can easily be found with the RFID tag. 

In 2019, Zara had updated the logo.

In 2019 the Global Fashion Business Journal stated that while the textile commerce of the world had gone down by 2.38%, Zara had risen 2.17% (https://en.wikipedia.org/wiki/Zara_(retailer).

Product Range of Zara

Zara stores have men’s and women’s clothing as well as children’s clothing (Zara Kids). Zara Home designs are located in European stores. Zara’s products are supplied based on consumer trends. It’s highly responsive supply chain ships new products to stores twice a week.

After products are designed, they take ten to fifteen days to reach the stores. All of the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.

Reportedly, Zara needs just one week to develop a new product and get it to stores, compared to the six-month industry average, and makes roughly 40,000 designs of which around 12,000 new designs are carefully selected and produced each year. 

Zara has a policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead.

Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980 and upgraded to reverse milk-run-type production and distribution facilities in 1990. This approach, designed by Toyota Motor Corp., was called the just-in-time (JIT) system.

It enabled the company to establish a business model that allows self-containment throughout the stages of materials, manufacture, product completion, and distribution to stores worldwide within just a few days.

Most of the products Zara sells are manufactured in proximity countries like Spain, Portugal, Turkey and Morocco. While some competitors outsource all production to Asia, Zara manufactures its most fashionable items – half of all its merchandise – at a dozen company-owned factories in Spain and Portugal and Turkey, particularly in Galicia and northern Portugal and Turkey. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia.

The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are cancelled and a new design is pursued.

Zara monitors customers’ fashion changes. Zara has a range of basic designs that are carried over from year to year, but some fashion-forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.

As a result of increasing competitive pressures from the online shopping market, Zara is shifting its focus onto online as well, and will consequently open fewer but larger stores in the future.

Success of Zara

ZARA has used proven Lean Six Sigma process techniques to stay ahead of its rivals and achieve its global success.

–          #1. ‘Just in Time’ Production

Lean production or simply Lean is common language in many industries, however the principles behind it may be known by other names.

Through its ‘Just in time’ or Lean business model, ZARA breaks the fashion supply chain rules by holding low stock and updating its collections continuously. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive. To ensure this happens, ZARA controls more of its manufacturing than most retailers.

New designs are can arrive in store within fifteen days, which means that ZARA can respond to its customer demand by producing more of its popular products and disregarding less popular items.

–           #2. Agility

ZARA was designed from day-one to be responsive and agile. Rather than outsourcing to Asia, ZARA uses a network of automated factories in Spain and over 300 small finishing factories in North Africa and Turkey to constantly create unfinished products.

When a new design has been approved, the unfinished products are pulled, sent to the finishing shops and turned into products that are ready to shipped in as little as 24 hours to Europe, and in 40 hours to the Asian and North American markets.

 

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–          #3. Kanban

One of the most obvious Lean techniques used by ZARA is a pull-model, which is also known in the Toyota Production System as a Kanban system. A Kanban system uses a queue of resources that are ready to be pulled by the following process as they are needed.

When a resource is pulled, a signal is sent to the following process to replace what was used or completed. To avoid over-producing and over-ordering, the Kanban system keeps small quantities of resources that are needed and replaces what is used, only when it has been used.

ZARA creates up to 1,000 designs every month based on store sales and current trends. It monitors how much money customers spend in store to evaluate and understand which designs are being purchased and then it updates its next designs accordingly.

–          #4. Customer Value

ZARA quickly realised that the demand for ‘on trend’ products is highly uncertain. Therefore it buys capacity from its fabric suppliers, but does not commit to a particular colour or print until it has a clear picture of customer preferences.

ZARA also continuously gathers customer feedback from retail stores through leading edge IT infrastructure, which allows its designers to identify new trends that the customer wants to buy. 

ZARA’s design process is much more focused on the customer than we might realise. It is also a very good example of continuous improvement or kaizen at work.

Using this strategy ZARA has cut the time it can deliver new styles to market from six months to just three weeks.  

– #5. One Piece Flow

One-piece flow is the opposite of mass production.

– Mass Production is the production of large quantities of standardised products.

– One Piece Flow is the movement of a product one piece at a time through the production process.

With mass production, the more items are produced the lower the production cost of an individual item. Whereas One Piece Flow reduces all types of wasteful activities, it enables businesses like ZARA’s to be agile and respond to customer demand much more quickly and efficiently (https://www.linkedin.com/pulse/how-zara-used-lean-become-largest-fashion-retailer-nathan-robinson/).

Zara – Supply Chain practices

Zara buys large quantities of only a few types of fabric (just four or five types, but they can change from year to year), and does the garment design and related cutting and dyeing in-house.

This way fabric manufacturer can make quick deliveries of bulk quantities of fabric directly to the Zara DC – the Cube. The company purchases raw fabric from suppliers in Italy, Spain, Portugal and Greece. And those suppliers deliver within 5 days of orders being placed. Inbound logistics from suppliers are mostly by truck.

The Cube is 464,500 square meters (5 million square feet), and highly automated with underground monorail links to 11 Zara-owned clothing factories within a 16 km (10 mile) radius of the Cube.

All raw materials pass through the Cube on their way to the clothing factories, and all finished goods also pass through on their way out to the stores. The diagram below illustrates Zara’s supply chain model.

Zara’s factories can quickly increase and decrease production rates, so there are fewer inventories in the supply chain and less need to finance that inventory with working capital.

They do only 50 – 60 percent of their manufacturing in advance versus the 80 – 90 percent done by competitors. Zara does not need to place big bets on yearly fashion trends. They can make many smaller bets on short term trends that are easier to call correctly.

The Zara factories are connected to the Cube by underground tunnels with high speed monorails (about 200 kilometers or 124 miles of rails) to move cut fabric to these factories for dyeing and assembly into clothing items. The monorail system then returns finished products to the Cube for shipment to stores. Here are some facts about the company’s manufacturing operations:

• Zara competes on flexibility and agility instead of low cost and cheap labor. They employ about 3,000 workers in manufacturing operations in Spain at an average cost of 8.00 euros per hour compared to average labor cost in Asia of about 0.40 euros per hour.
• Zara factories in Spain use flexible manufacturing systems for quick change over operations.
• 50% of all items are manufactured in Spain
• 26% in the rest of Europe
• 24% in Asia and Africa

Manufacturing is centered in northwestern Spain where company headquarters and the Cube are located. But for their main distribution and logistics hub they chose a more centrally located facility. That facility is located in Zaragoza in a large logistics hub developed by the Spanish government. Raw material is sent by suppliers to Zara’s manufacturing center. Then finished garments leave the Cube and are transported to the Zara logistics hub in Zaragoza. And from there they are delivered to stores around the world by truck and by plane.

 

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