Inditex has become a global fashion empire, with more than 6,000 stores spread all over the world. To give us a small idea of its success, it is enough to know that only last year it earned more than 4 billion euros. In this article we will discuss what has undoubtedly been the key to its great success as well as their impeccable and efficient logistics methods, which has allowed Inditex to establish itself as one of the most powerful fashion companies on the planet.
The model invented by Amancio Ortega is a praxis that is unique to the world, which has allowed it to differentiate itself from all its competitors. It is based on short productions so that the clothes are constantly renewed in the store, so that the garments are always changing although the trends are followed through collections.
The quality-price ratio offered by the industry is almost impossible to match, since it follows a very unique protocol: the price is not fixed depending on the cost of the item, but first the price that consumers will pay is determined and from there it is manufactured. The productive and logistical system, as we say, is the cornerstone that moves everything: thanks to the perfect coordination that exists between workshops and its distribution center, which ensures that the same shirt can be bought at the same time in Sydney, Bangkok or Los Angeles leaving from the headquarters in La Coruña.
The Logistics of the Inditex Model
Unlike most multinationals, Inditex is characterized by its centralization: it does not have subsidiaries around the world, but it has its headquarters in Arteixo. In this Galician municipality, the Inditex facility occupies 90 thousand square meters (the equivalent of 11 football fields) and has 4,000 professionals from 140 different nationalities. It is the company’s distribution center, which acts as an intermediary between the factories and the stores. From here the clothes are systematically distributed twice a week to each of the stores spread all over the world. In this way, stores do not need a warehouse because they do not accumulate stocks and can allocate their entire inventory that’s for sale.
In addition, there is a constant feedback between Arteixo’s headquarters and all the stores in the world, which constantly send information about which items are sold the most. Since a store requests a new shipment of clothing until it receives it, it takes about 48 hours. The process is the following:
- A proposal is made in the store of the product offer.
- The order is confirmed through the computer system.
- The commercial managers consolidate the order.
- The factories begin to make the cut and confection of the garments.
- The external suppliers carry out basting (55% are distributed between Spain, Morocco and Portugal, while the rest are done in developing countries such as Cambodia and Thailand).
- The garments go back to the factory and the final finish is made.
- Quality control is done.
- Clothes are distributed from the Logistics Center of La Coruña to anywhere in the world.
The new products are transported by road or plane, depending on how far the destinations are. The good synchronization that exists between their design and manufacturing teams, is what allows the logistics center to respond so quickly.
The importance of information technology in Inditex logistics
The great logistic system of Inditex is possible thanks to a private computer management system, supported by its own network of servers in the cloud that guarantees the company real-time control and access to stores anywhere in the world.
All the employees have an RFID reader in the stores, with which they control the clothes (the garments that are missing, how many are left in the warehouse, which ones need a new consignment) connected to an international communications network, private and virtual, which is controlled from the Arteixo power station. In this way, those responsible for the different lines have access at all times to the situation of the nodes. Inditex stratifies the information that arrives at the plant and orders it by priority, so that the machines access more or less quickly according to the needs of the company.
The keys to success: a system planned to the millimeter
In addition to logistics, the Inditex Model has certain inimitable characteristics. Speed has been the key to success for Amancio Ortega, not only in manufacturing and shipping clothing, but in finding solutions: if a garment is not sold, simply take advantage of the same fabric to do something else. In addition, Inditex does not invest money in advertising, but its strong point is the location that brands choose (always in the heart of large cities and shopping centers) and the studied design of their windows (which change twice a year as dictates Arteixo).
We could ensure that Inditex is a firm focused on selling what the consumer wants and that does not give much importance to fashion, to the point that a design never comes to light if it does not pass the filter of commercials. Definitely, it has been innovation in logistics that has allowed this model to triumph, since low-cost fashion would never be possible without fast and efficient distribution.