Zara Uses Operations Research to Reengineer Its Global Distribution Process

Felipe Caro (), Jérémie Gallien (), Miguel Díaz (), Javier García (), José Manuel Corredoira (), Marcos Montes (), José Antonio Ramos () and Juan Correa ()
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Felipe Caro: UCLA Anderson School of Management, University of California, Los Angeles, Los Angeles, California 90095
Jérémie Gallien: MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142
Miguel Díaz: Zara, 15142 Arteixo, La Coruña, Spain
Javier García: Zara, 15142 Arteixo, La Coruña, Spain
José Manuel Corredoira: Zara, 15142 Arteixo, La Coruña, Spain
Marcos Montes: Zara, 15142 Arteixo, La Coruña, Spain
José Antonio Ramos: Carrefour, 28028 Madrid, Spain
Juan Correa: Dell Computers, Austin, Texas 78759

Interfaces, 2010, vol. 40, issue 1, 71-84

Abstract: 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.

Keywords: retailing; fast fashion; inventory management; field experiment; sizes distribution (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (17)

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