Zara Uses Operations Research to Reengineer Its Global Distribution Process Felipe Caro
نویسندگان
چکیده
Overcoming significant technical and human difficulties, Zara recently deployed a new process that relies extensively on sophisticated operations research models to determine each inventory shipment it sends from its two central warehouses to its 1,500 stores worldwide. By taking a retail size-assortment view of a store’s inventory, the model incorporates the link between stock levels and demand to select store replenishment quantities. Through a rigorous, controlled field experiment, we estimate that this new process has increased sales by 3–4 percent; this corresponds to estimated profits of approximately $233 million and $353 million in additional revenues for 2007 and 2008, respectively.
منابع مشابه
Zara Uses Operations Research to Reengineer Its Global Distribution Process
Overcoming significant technical and human difficulties, Zara recently deployed a new process that relies extensively on sophisticated operations research models to determine each inventory shipment it sends from its two central warehouses to its 1,500 stores worldwide. By taking a retail size-assortment view of a store’s inventory, the model incorporates the link between stock levels and deman...
متن کاملClearance Pricing Optimization for a Fast-Fashion Retailer
Fast-fashion retailers such as Zara offer continuously changing assortments and use minimal in-season promotions. Their clearance pricing problem is thus challenging because it involves comparatively more different articles of unsold inventory with less historical price data points. Until 2007, Zara used a manual and informal decision-making process for determining price markdowns. In collabora...
متن کاملInventory Management of a Fast-Fashion Retail Network
Working in collaboration with Spain-based retailer Zara, we address the problem of distributing over time a limited amount of inventory across all the stores in a fast-fashion retail network. Challenges specific to that environment include very short product life-cycles, and store policies whereby a reference is removed from display whenever one of its key sizes stocks out. We first formulate a...
متن کاملDemand Forecasting at Zara : A Look at Seasonality , Product Lifecycle
Zara introduces 10,000 new designs every year and distributes 5.2 million clothing articles per week to a network of over 1925 stores in more than 86 countries. Their high product mix and vast global network makes demand forecasting for Zara a challenging endeavor. This thesis sets out to incorporate the effects from seasonality, product lifecycle, and cannibalization into a long term aggregate...
متن کاملProcess Location and Product Distribution with Uncertain Yields
We present a framework to analyze the process location and product distribution problem with uncertain yields for a large multinational food processing company. This problem consists of selecting the location of processes, the assignment of products, and the distribution of production quantities to markets in order to minimize total expected costs. It differs from the traditional facility locat...
متن کامل