European Union And Its Application In Zara Commerce Essay

atomic number 63an wedding And Its Application In Zara Commerce EssayIn todays agonistic world, the organisations attain to focus on the development of stiff logistics and publish kitchen range that anyow for t anyy that it is equal to(p) to meet the demands of its customers at a consistent pace. With the advent of time and increased trend of globalization across the world, the tidy sum barriers be fading out and favour commensurate trade policies argon promoting fast and promptly exchange of equitables and services (European Commission, 2010).The up-to-the-minute trend in the securities industry is creation of an integrated logistics and hang on chain infrastructure that is supported by the technologically kick upst shinesd systems much(prenominal) as SAP, Enterprise Resource mean (ERP), E-Retailing, Radio Frequency Identification (RFID) and many much(prenominal) (European Logistics Report, 2012). All leading corporations that are in operation(p) on internatio nal level possess ensured that they have a well-coordinated Supply Chain Management and Logistics system that will employ the best systems for procurement, warehousing, inventory focus, storage and inbound and outbound logistics (Johnson Turner, 2006).In order to gain competitive edge in the market especially European market, the logistics and bring home the bacon chain system has to be veritable after exploiting all forthcoming options so that the inventory is effectively managed and in that location is proper balance surrounded by the demand and bring out of raw materials, inventory and goods (DeMeyer, Van Dierdanck Vercecke, 1996). There has been drastic shift in the European Logistics and Supply Chain Business operating systems as its market has been trans hited into single market that allows the operating firms to let in advantage of various economies of scale.European Logistics and Supply Chain transcriptionIn the European economy, two logistics and dishonor are considered to be its primary means of support that have mean the contributing cistron in the plentiful growth of economy. According to European Union (2012), there is strong relationship mingled with the economic growth and level of carry-over escalation. It is believed to be the fundamental part of each society that is the primary(prenominal) factor for intensive growth of every sylvans economy and creates ample opportunities of job for the citizens. In European Union, more than ten million people are employed in the conveyancing and logistics industry which makes a portentous contribution in GDP i.e. almost 5% (Evans, 2000).The European Commission (2011) highlighted in its annual calculate that a well-developed system of goation is the primary driving force for propelling performance of the member states. For all European companies, their logistics are the vital areas of concern as the storage and transport embody accounts for closely 10-15% of the hit cost of a pro duct that is completed and finished. Almost every corporation is spending certain persona of the bud stick around on effective transportation system for its goods and services which is unremarkably about 13.2% (European Commission, 2011).The market of European Union so-and-so work smoothly only when there is a well-integrated transport system which nominates avail in free movement of the goods deep down its territory it is mandatory for the cohesion of territories and long-term economic growth. The pre-requisite for an effective logistics and come forth chain system is the transport system that has interoperability of networks and harmonisation among rules.European off of training PolicyIn order to develop an excellent and well-defined European stockpile Policy for the constitutional European Union region, the European Commission has undertaken various steps to address the obstacles that are hampering the creation of an effective transport system. It is describe by Europ ean Commission (2012) and Harps (2002) that the region is the central hub for manufacturing of products for various leading companies and they are looking for completed logistics and submit chain system that can boost their performance in the market. The key mediums of transportation utilize are air, sea, road and rail but the latest trend is of intermodality.Intermodality is defined as the mechanism in which different modes of transportation are used on the entire chain of transportation to ensure that the boilersuit supply chain system is effective and promotes the attainment of desired economical logistics system objectives (Tseng, Yue Taylor, 2005). The European Transport Policy has been developed to provide guidance to the companies about developing an enamour and highly efficient logistics and supply chain system so that they can supply goods and services with precision worldwide (Cooper, Browne Peters, 1994).Since there are many companies that are operating in Europea n Union region, some(prenominal) markets and European Transport Policy have been modified to a greater extent to incorporate all the requirements of the players of the diversified industries ().Changes in European Market for enhanced growth of Logistics and Supply Chain systemUp till now, the market of European Union has evolved from national emphasis to regional and finally to pan-European but now it is moving more towards customer-oriented. With the advent of Single Market which is also known as Common Market, the logistics networks of all companies have evolved and they have been developed to ensure compliance with the latest market trends (EIU, 1999).The organisations are restructuring their strategies of statistical distribution in Europe and up to now revisiting their networks so that they can move closer to internationalisation by sourcing the products from other fields and ensure supply of products from one central location (). The developmental phases of the single market can be broken calibrate into three parts i.e. pre-1993 period, 1993-present period and future period.In pre-1993 period, there was no detail European logistics dodging has European Union was not established at that time. All companies had a single national frame-up along with a distribution boil down that was located in every major country of their operation. all(prenominal) organisation used to do sourcing directly from the plants of manufacturing present in Europe and the logistics strategy differed among every country as it was developed in accordance to the respective country. Most of the offerings for supply chain services were analogous as the providers followed the one-size-fits-all concept. The domestic carriers were the master(prenominal) source of transportation and majority of the third-party logistics providers were either regional or topical anesthetic companies (Harps, 2002).Larsen (2000) has stated that after the physical composition of European Union, all m ember states have been able to achieve robust growth in their economic performance and they have exploited all benefits for doing expansion globally at an accelerating rate. After the era of 1993, European Union opened its borders internally because global outsourcing was heavily demanded by the companies and factories of the manufacturers were head start to become focussed on global level. As a result of shift in the logistics strategy, the organisations revamped their supply chain management structures so that they were consistent with the European Logistics and Supply Chain Business Operations System.In major countries across Europe, the Pan-European Distribution Centres marked their developments in the region and they extended their importance by incorporating all processes required in the effectiveness of logistics and supply chain system. These centres postponed the role of manufacturing and combined some value-added activities to various handed-down activities such as recei ving of raw materials, transportation of inventory and shipment of the finished goods. In fact, Pan-European Distribution Centres allowed the companies to transfer their transport needs to the integrators who had the facilities of doing direct shipment from one central location (McDonald Deardsen, 1994).With the help of the centralised and Pan-European networks of distribution the products were easily shipped to the customers living in far off distant places and they helped the companies in saving long do of time and money. However, the companies are changing their logistics and supply chain systems to develop a perfect blend of both decentralised and centralised facilities for distribution so that they can strategically fulfil all their business objectives. With the developments pickings place at an accelerating pace in the market, the entire logistics and supply chain system will get extraordinary efficient and competent for the organisations (Cousins, Lawson Squire, 2006).Key Drivers of change in European Transport PolicySince transport is the crucial element of logistics and supply chain system, the European Transport Policy has been developed by the European Commission so that the companies can abide by the laws related to the transportation policy. According to Walker and Jones (2012), the main driving forces that are impacting the European Transport Policy are as followsPolitical Developments The liberalisation in the transport sector like US-EU Open Skies Initiative has a significant impact on Europe as it is anticipate to increase the traffic and create competition within the region. The international liberalisation of the trade has redden boosted the transport as there is an increase in need of transportation of goods and services because of outgrowth trend of outsourcing. There has been a rise in the environmental concerns which is leading immense pressure on sustainability within the environment.Economic Developments There are many economi c drivers that are impacting the development of Europes economy on the targeted level. The key economic factor impacting the economy is the rising oil prices along with an increase in the transportation level that is closely linked to the economic growth level. As the income of people is increasing, there is an increase in the number of car ownerships and there is an increase in the GDP of the country as a whole.environmental Issues The environment is one of the main areas of concern for any country and the transport sector has responsibility of about 28% of the Carbon dioxide emissions in European Union. The policymakers are identifying the alternatives that control the emission of Carbon dioxide by investigating various options for the road transport. As a result of growth in transport, the routes have become congested that have been hampering the transportation at both commercial and passenger level.Technological Drivers Since both increase in prices of fuel and environmental issues are primary areas of apprehension, there is an increase in the work of researchers to indentify excellent alternatives for the transport technologies. However, an enhanced level of efficiency is expected in the transportation of all goods by adoption of latest technologies such as RFID.Socio-demographic Changes The European workforce is getting older now and there is a commodious reduction in the labour force. The companies are forced to recruit women in the manufacturing and logistics sector. The organisations are even compelled to provide additional training to the workforce so that their skills are enhanced and they have to incur more cost for recruiting new workers who are more competent and skilled.ZARA Leading Fashion Retailer in EuropeZARA is a top-ranked Spanish retailer of clothing and accessories that is headquartered in Artexio, Galicio. It was founded by Rosalia Mera and Amancio Ortega in 1975 and it is the leading flagship chain store of the Inditex group. ZA RA has been successfully meeting the demands of its customers by employing an entirely different strategy from its competitors. According to Zhelyazkov (2011), ZARA follows a differentiation strategy of Porters generic wine strategies and focuses on enhancing the value chain by developing highly efficient and effective logistics, distribution and supply chain system.According to Cook, Heiser and Sengupta (2011), ZARA used to follow time-to-market strategy i.e. competing on the basis of time before the formation of European Union. After 1993, it shifted its policy to agile supply chain which meant that every step in logistics and supply chain was visible and well-coordinated. It is believed that the partnership needs only two weeks of time to develop the unique products and possess them to the stores and it has do a reputation of launching more than ten thousand new objectives on each year basis (About US, 2012). The three key success factors of ZARA are short lead times, limit ed number of products and prolonged range of styles.Agile supply chain of ZARAIn order to get competitive edge in the market, ZARA is employing an agile supply chain which allows it to make the best use of Quick-Response System. Agile supply chain is draw as the supply chain in which all elements work together in the form of a cross-functional team with the aim of eliminating unnecessary steps and predicting the demands of customers beforehand so that the products are gettable in advance in the market (Zhelyazkov, 2011). ZARA has been successful in the market because of its focus on designing of an excellent and efficient logistics and supply chain system.The entire process of supplying the goods to ZARA stores is started at the cross-functional teams who are working in the design department located at the headquarters of company in La Coruna. Almost all the designs are contemporary and inspiration for them is drawn from conducting various researches in the market by visiting uni versity campuses, pubs, fashion shows, competitors offerings and cafes in addition to other places where the target customers can be found. Further data about the customers is gathered from heroic poem data and online sources from across the websites.When the design that has been proposed is accepted, the specialists of commercial department move ahead with their tasks and do negotiation with the suppliers, settle down about the purchasing price, carefully analyse the cost and margins and then fix price position of cross-currency for garments. It has a global sourcing policy which is organised by the buying offices present in the Netherlands, China and UK the wide supplier base ensures that the best fabric is selected and there is less risk of dependence on one supplier. more than 40% of the garments which have the least transitory appeal are mainly imported in the form of finished goods from various low-cost centres of manufacturing located in the Far East, while, the rest are pr oduced on agile responses in Spain by using the automated factories of ZARA that has a small network of contractors (Godsell et al., 2011).Value Chain epitome of ZARAZARA ensures that there is a proper balance between in-house and outsourcing operations. The operations that enhance the cost-efficiency of the company via economies of scale are done in-house such as packaging, labelling, cutting and dyeing. The labour-intensive tasks required at the finishing stages are usually done by the subcontractors network that comprises of more than 300 firms and each one of them has specialisation in specific garment type or process of production.In order to respond quickly to the demands of the customers, the process is on the table and the production level is always kept slightly less that the expected level of sales so that the stock is always moving. It believes in having under-supply of stock as opposed to stocking huge amount of inventory. When the finished goods have been labelled, p ackaged and price- attach, they are then transported by the third-party contractor either by road or air to their destinations. There is only one distribution centre that is located in the companys headquarters i.e. La Coruna. all(prenominal) store of ZARA gets fresh stock twice a week that has been pre-determined by the design department of the company (Zhelyazkov, 2011).Figure Designing, production and marketing cycle of ZARA(Source Godsell et al., 2011)The entire cycle of designing, production and marketing has declined to 22-30 days that is excessively less when compared to the industry average of nine months as the lead time. The main factor that has supported such an efficient logistics and supply chain system is the investment in Information technology. The 500,000 sq m. and five storey centre of logistics comprises of about 200 kilometres of moving rails along with an automated routing system that delivers all electronically tagged garments at the proper bays of loading f or dispersal through the third party distributors.Almost all the products can be dispatched within eight hours of their arrival and it has been found that almost 98.9% perfect and the shrinkage level is even less than 0.5%.Implications of changes in EU PolicyWith the changes in EU Policy especially transport policy, ZARA has been able to develop a highly competent logistics and supply chain system. It has been able to utilise all available options within European countries to a maximum level. With the help of development of a good logistics system within the region, the transportation of goods, materials and inventory has become quick and responding to the customer changes on fast pace has become expedient for the companies. The biggest advantage for ZARA has been that it has been able to expand into European countries strategically and has even exploited all available opportunities so that it can maintain its core competencies in the production and operations area.Future of Logist ics and Supply Chain System in European UnionSince European Union is continuously striving to develop a good transportation system for development of an effective logistics and supply chain, there are huge chances that the countries are able to take advantage of developments in the transport and logistics sector. In years ahead, there kind of revolutions are expected in this sector i.e. increased trade globalisation, development of the information era and continuously changing preferences and demands of customers.In order to provide excellent logistics and transport sector to the companies, the concerned authorities will have to take certain steps to develop the best logistics and supply chain system for the business operations. Some of the suggestions made by the European Commission (2012) areImprove interoperability by standardising the processes of loading units.Set up an entire network of transfer of nodes across Europe.Eradicating all differences found in the national regulatio ns that are the barriers for achievement of bendable and smooth interoperability around Europe.Using Information Technology to boost the performance of key players and define a single most authentic and worthwhile ICT system that can meet all requirements of the participants.Ensuring harmonisation of paperwork and diminution and simplifying the number of the documents required for transportation.Review the current regulations at both international and European levels for development of an orgasm that is integrated for implementation of the measures required for security related to the transportation along with the assessment of risk along the entire chain.Enhance the co-operation among the players among the supply chain that can result in improved competitiveness via the cut back costs, high service quality and smaller lead times.ConclusionAll organisations that are competing in todays dynamic and ever changing environment have to ensure that they have a well-coordinated and hig hly integrated transport and logistics system that will allow them to meet the requirements of their customers. E-commerce and RFID are gaining immense popularity in the market and it is expected that the every supply chain will have to employ these technologies in their systems to have an efficient inventory management system along with warehousing facilities, cordial relations with suppliers and enhanced production locations that assist in appropriate deployment of finished goods.Third party logistics service providers have become an integral part of the entire logistics and supply chain systems and it is vital for the companies to implement an appropriate policy of logistics management. All the companies in Europe have huge potential of growth as the trade barriers have faded and there are ample opportunities available for them to enhance their production and operations within the region. Hence, European Union offers immense range of options to the organisations for development o f a cost-effective and flexible logistics and supply chain system for efficient management of their business operations.