Mango Supply Chain Essay Example

“We have a very focused strategy,” notes Enric Casi, Mango’s chief executive.

“We target women who want the latest in fashion trends. If we were aiming at the entire public, we would not be loyal to our true customers. ” Casi asserts that his target is “30% of the people who pass by our shops; we could not try to attract all 100% because we would lose our identity. ” Casi adds, “Our women don’t go shopping; they go to Mango. " In addition to various promotional campaigns, the values of the brand are strengthened “by stylishness and design because we bring out four collections each year hanks to the teamwork of our more than 900 designers.

” He adds, “The shops aren’t only for selling [garments] but also for getting information [about them]. ” According to Casi, when a customer chooses a garment to try on, it is because she likes the design, the material, and the colors. So why not buy it? “With the feedback we get from our shops, we continue to improve our designs because our ultimate goal is to provide design and style at a good price,” he adds. “Although we are a chain, we want each of our shops to be a fashion boutique where everything is coordinated. This strategy involves looking for a balance between two variables: price and exclusivity, so that “just because something is cheap, that doesn’t mean that it is something ordinary.

” Consider the example of Paris, he suggests. “Years ago, going to the capital of France was something glamorous. But now, because of budget travel, no one thinks twice about going there to

spend a weekend. It is something totally normal and within the reach of everyone [in Spain]. ” So, he concludes, Paris illustrates the importance of developing a brand that represents values such as exclusivity, but not at a prohibitive price.

Behind the scenes Nevertheless, says Planellas, Mango’s greatest success “is rooted not only in those factors that you can see with the naked eye but also in what goes on behind the scenes; for example, such important factors as its logistics system. ” Says Casi: “Logistics is an integral factor in the story of Mango; logistics is viewed as a relay race in which each department passes the baton to the next so that things arrive on time. ” For the system to work correctly, there are three keys: velocity, information and technology.Technology is essential, especially in a logistics chain that is as complicated as any multinational’s. “We design and distribute the garments but we do not manufacture them,” notes Casi.

The company counts on more than 140 suppliers around the world, and each region specializes in one type of clothing that it can manufacture “at a competitive price. ” Actually, “logistics management pays off for the company” because its shops, unlike those of its competitors (including Zara) are managed through a franchising system.That has enabled Mango to expand rapidly in international markets as well as personalize each of its shops. Mango’s shops have avoided an image of uniformity.

According to Casi, “When we begin to use a new supplier, we give them orders little by little, checking out their quality. ” The product is the property of Mango, and it is shipped to franchisee-owned shops,

which pay the company according to how much they sell. The logistics system replenishes its stock every day in its European shops, and twice a week in its shops elsewhere around the world, says Casi.The company’s main logistics center is in Barcelona, site of its corporate headquarters.

Logistical support is provided in three other locations – New Jersey, Hong Kong, and Shanghai. “The key is to minimize time and costs,” asserts Casi. He says that “without the Internet, it would have been impossible to make a profit from a chain that has a traditional structure,” nor to grow at such a rapid rate. Mango took about four years to develop a computer platform to manage its supply chain. It connects all its agents and partners [on one network], along with its suppliers.

This integration is one of the things that has cost us the most but now we can monitor everything and make decisions by using information” about, for example, the sorts of designs that are most popular in each region or the daily sales of each outlet. Thanks to this system, Mango can manage its more than 7,000 direct employees as well as the additional 22,000 people who work for Mango indirectly. Although most of the shops in the chain are franchises, the Andic brothers also own their own establishments, so the company owns 40% of its shops. Casi says that 80% of the company’s personnel are women; their average age is about 30.They are motivated by an internal promotion plan that provides the best employees with positions of greater responsibility. Planellas believes that Mango’s success comes from its “differentiation strategy, which is based

on the way it segments its brand to the public.

” The company specializes not only in targeting women as a whole but on a very specific sort of woman. “What differentiates Mango from its competition is that it has done a very good job of identifying its core business (designing and distributing garments), and that it has outsourced everything that it is not interested in doing (manufacturing).This enables the company to be more efficient since the manufacturing part [of the supply chain] is one of the areas that uses the most manual labor. ” Thanks to this system, Mango is also the sort of company that can ride out any type of crisis.

Its business model enables it to be more flexible whenever there is a change in the pattern of demand. It can increase or reduce the number of its suppliers without incurring the cost of extra personnel or by increasing its inventory, says Planellas.