SCM EXAM 4Case study1.What were the key lessons Ortega took away from his early scare?To be successful, “you need to have five fingers touching the factory and five touching the customer.” Translation: Control what happens to your product until the customer buys it.2.What are some ofthe things Zara can do because of the super-responsive supply chain it has built?The company can design, produce, and deliver a new garment and put it on display in its stores worldwide ina mere 15 days which is unheard of in the fashion industry.3.How is Zara’s supply chain different from most other supply chains in their industry?Unlike so many of its peers in retail clothing that rush to outsource, Zara keeps almost half of its production in-house. Far from pushing its factories to maximize their output, the company intentionally leaves extra capacity. Rather than chase economies of scale, Zara manufactures and distributes products in small batches.Instead of relying on outside partners, the company manages all design, warehousing, distribution, and logistics functions itself. It holds its retail stores to a rigid timetable for placing orders and receiving stock. It puts price tags on items before they’re shipped, rather than at each store. It leaves large areas empty in its expensive retail shops. It tolerates, even encourages, occasional stock-outs.4.What are the three principles Zara lives by? Know what these principles mean and how they are carried out.1.Close the communication loop.Organized to transfer both hard data and anecdotal information quickly and easily from shoppers to designers and production staff. The goal is to close the information loop between the end users and the upstream operations as quickly and directly as possible.2.Stick to a rhythm across the entire chainRapid timing and synchronicity are important, hence using “penny foolish pound wise” approach. It spends money on anything that helps to increase and enforce the speed and responsiveness of the chain as a whole.3.Leverage your capital assets to increase supply chain flexibility Zara has made major capital investments in production and distribution facilities and uses them to increase the supply chain’s responsiveness to new and fluctuating demands. It produces complicated products in-house and outsources the simple ones5.Describe Zara’s Design and Production center in La Coruna.Consists of three spacious halls—one for women’s clothing lines, one for men’s, and one for children’s. Unlike most companies, which try to excise redundant labor to cut costs, Zara makes a point of running three parallel, but operationally distinct, product families.separate design, sales, and procurement and production-planning staffs are dedicated to each clothing line.