Post-war dry cleaning and organizational innovation at Inditex: a contractual perspective of lean supply chain management

Abstract

Recent market trends, with frequently changing preferences and increasing customization requirements, have highlighted the fragility of those companies whose offshore outsourcing has not considered the costs of coordinating suppliers with very distant locations. The paper analyzes this problem using the case of Inditex, a company that, inspired by Spanish dry-cleaners in the forties, has reshaped the management of their supply chain in response to the lag caused by rapid changes in fashion and limited responsiveness of industrial infrastructure. Inditex’s strategy, with important lessons for other sectors, has enabled it to benefit from lower production costs while reducing lead time and coordination costs inherent in the customizationof products.