Design for the Supply Chain Pt 3: Useful

JonathanLofton

Continuing the story of a man, his dog, and … actually we’re continuing a conversation reflecting on the “10 Principles of Good Design” as applied to Supply Chain and Supply Chain Management (Design for the Supply Chain).

The topic this week is Principle #2: Good design “Makes a product useful”, which states that,

“A product is bought to be used. It has to satisfy not only functional, but also psychological and aesthetic criteria. Good design emphasizes the usefulness of a product whilst disregarding anything that could detract from it.” – ‘Dieter Rams: ten principles for good design’

Usefulness almost seems self-evident for the supply chain given the focus on ‘Continuous Process Improvement’, ‘Business Re-engineering’, ‘Cost Reduction’, etc. I think it’s in our blood to try and make supply chains efficient and effective. But what about the psychological and aesthetic appeal factor, that element that makes it fun and interesting both for the driver and the consumer of the supply chain? I think it’s that “blue ocean” thing – creating a supply chain solution that is differentiated and innovative enough to inspire those who manage it to take pride in making it stand out while at the same time providing real benefits to the customers of the supply chain.

One supply chain that I have been enamored with for years that has most facets of its operations designed for and incorporated into its supply chain is the clothing and accessories retailer Zara. “Zara has over 2,000 stores strategically located in leading cities across 88 countries. Zara’s designers and customers are inextricably linked. Specialist teams receive constant feedback on the decisions its customers are making at every Zara store. This feedback inspires Zara’s creative team which is made up of over 200 professionals.” – Inditex

Zara:

  • Introduced the idea of fast fashion some two decades ago, then developed a highly centralized design, manufacturing, and distribution system built on an unconventional idea: speed and responsiveness are more important than cost.
  • Is renowned for its ability to deliver new clothes to stores quickly and in small batches. Twice a week, at precise times, store managers order clothes, and twice a week, on schedule, new garments arrive.
  • Designers, buyers, planners, and marketers are co-located in central command (“the Cube”) and information about what’s selling, and what isn’t, flows in from store managers around the world, allowing designers to make quick changes to garments, buyers to order more (but not too much more—exclusivity sells), and planners to decide what items to cull from a store.
  • Produces about 450 million items a year.
  • Gets 85 percent of the full price on its clothes, while the industry average is 60 to70 percent. Unsold items account for less than 10 percent of its stock, compared with an industry average of 17 to 20 percent.
    Zara’s Fast-Fashion Edge

Based on the above and other case studies and articles examining Zara’s operations, this is how I sum up their supply chain in terms of this second principle for good design:

supply chain design

In terms of Industry 4.0, I’m curious to see how Zara embeds technologies such as virtual dressing rooms, computerized fittings, consumer self/co-design, and 3D-printed clothing into its supply chain. It will be interesting to see how they evolve (or find other blue oceans) as these technologies mature and competitors adopt them.

Do you have a favorite “Useful” supply chain example to share? My thanks in advance!

Want to learn more about Design for the Supply Chain? Check out the rest of the series:

JonathanLofton

Jonathan joined Kinaxis in early 2014 after many years of supply chain strategy and management experience in the telecommunications industry. He now works with customers and provides expert guidance in leveraging Kinaxis’ product offerings to solve complex business performance challenges in their distributed value chain. Jonathan holds a Master of Science in Mechanical Engineering with Certificate in Computer Integrated Manufacturing Systems from the Georgia Institute of Technology (GaTech).

More blog posts by Jonathan Lofton

Discussions

  1. My favorite example is also Zara. They are more innovative than most people realize. They build brand awareness but they don’t run ads. Until now I always supposed that ‘not-running-ads’ is a low cost marketing strategy that they can afford because they are so good in meeting their customer expectations. But now you’ve got me thinking that it is also the only feasible marketing strategy if you have this fast supply chain. How can you decide what clothes to display in the photo shoot, if the best garments will be decided on six months from now, directly by the customer? In effect, they were social company 20 years ago, when no one knew what that meant. And they are also Industry 4.0 company in the way that real consumer demand drives supply chain. They hit the innovative jackpot then, and it will be really interesting to see if they will continue to do so with new technologies.
    My second favorite example is IKEA. Especially if we are talking ‘useful’ – flat-pack furniture and warehouse self-service is extremely useful supply chain. I’ve heard that they are experimenting with repairing the furniture now. That may be added on as a new trend on your list of future innovations: return and repair/reuse. Patagonia is famous for it, but it seems the trend may go mainstream one day. When it does it will have huge impact on supply chain management, since those processes will certainly be much more complicated than simple forward selling process (which we haven’t really mastered yet).

  2. Branka,
    Thanx for continuing to contribute to this conversation! I really appreciate you taking the time to provide insightful comments. Also, good to hear from someone else who’s kept an eye on Zara. I hadn’t heard about IKEA’s move into repair/reuse, but it sounds promising. I wonder if they have data on what elements of their furniture ‘fails’ today so that they can do some form of statistical forecasting for repair. If they start doing repair they will definitely have some real data to help forecasting as well as to inform their (re)design and manufacturing to reduce future failures.

    Thanx again for keeping the juices flowing.

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