These terms are used in different ways.

The most common usage of "upstream"

marketing relates to the need to gather information from the market to drive product
direction and strategies. Pragmatic Marketing typically uses the term "inbound"
marketing to refer to these activities. Downstream marketing is what we would
generally label "outbound" -- the marketing activities that influence targeted buyers'
attitudes and decision processes.

I have also seen these terms applied to different parts of a channel sales model. A
manufacturer who sells through partners but markets directly to buyers would be
engaging in upstream marketing, encouraging buyers to "pull" products through the
channel. When that manufacturer "pushes" product through the channel,
encouraging the partners to sell their product, they are engaging in "downstream"
marketing.

UPSTREAM:
Of or relating to earnings or operations at a firm that are near or at the initial stages
of producing a good or service. For example, exploration and production are
upstream operations for a large integrated oil company.

DOWNSTREAM:
Of or relating to earnings or operations at a firm that are near or at the final stage of
consumption. For example, marketing and transportation are downstream operations
for a large, integrated oil company

Every marketing exchange requires at least two parties—both with something

valued by the other party, both capable of communication and delivery, both free to
accept or reject the offer, and both finding it appropriate or desirable to deal with the
other. One agreement to exchange constitutes a transaction, part of the larger idea
of relationship marketing. Through relationship marketing, organizations aim to build
enduring, mutually satisfying bonds with customers and other key parties to earn and
retain their long-term business. Reaching out to a target market entails
communication channels, distribution channels, and selling channels. The supply
chain, which stretches from raw materials to the final products for final buyers,
represents a value delivery system. Marketers can capture more of the supply chain
value by acquiring competitors or expanding upstream or downstream.

ZARA FASHION:
From a general standpoint, this article has the great merit of being very factual and
quite well informed when compared to the other sources available on the Zara case.
It also has the quality of bringing to light the full range of issues affecting the
company, from its strategic positioning to its outbound logistics, and covering its
policy for assembling collections and the internal organization of its services on the
way. Zara’s specific positioning is only clear when all of these elements are taken
into account.

At this point, it is useful to remind ourselves of how Zara’s design / procurement

chain (value chain) differs from the other traditional models:Design and creation rely
extensively on re-using (copying) fashion trends observed at the fashion shows and
at competitors’ points of sale, allied to the very acute sense of fashion shared by its
buyers and designers alike. In the vanguard of this ever- changing industry, Zara’s
need for a responsive design / procurement chain is absolute. The fact of being very
close to fashion trends explains why this brand has a very high sell through ratio
when compared to other sectors. Somewhat contrary to what is stated in the article,
it should be remembered that Zara’s strategy does not exclusively rely on the “Made
by Zara” design but is also based on purchasing products finished by their network of
“ medium term” suppliers (allowing for purchasing lead times of 4 to 8 weeks).

In fact, the Zara method for designing and assembling clothing collections is simply
the one which allows them to have the “ right” product within the shortest possible
procurement lead time. There is thus a subtle interplay, which is still not fully
understood, between the supplies of finished products designed by the suppliers, and
those coming from the company’s own studios.

Let us remember that the greatest proportion of the procurement lead times for
textiles comes from the time requirements for the raw materials (threads and cloth),
which account for nearly two- thirds of the overall lead time in the case of a purchase
ordered “ from scratch” (“ made to order” in SCOR parlance). The key for the brand
names is thus to overcome this constraint, which at first sight Zara seems to be
incompatible with a short term procurement policy (overall supply times of less than
8 weeks– shipping included).Because of this fact, Zara’s suppliers, like those for the
majority of the other chains, are split into two groups:Volume and long term suppliers
(mainly in Asia and Mexico) which offer the benefits of low prices, but generally
produce less "fashionable" products Short and medium term suppliers (Europe, North
Africa) for the more“ fashionable” products.

Zara has a bigger proportion of "medium term" suppliers than its large scale
competitors (H&M, GAP, The Limited, ETAM…), which explains why it is generally
regarded as having a more“fashionable”positioning than its competitors.

For the first group, the forecast planning cycle is particularly important, because the
fact of working on long-term cycles means that these suppliers are distanced from
the demand and thus a more significant risk is created with regard to volumes. This
explains why this procurement policy is applied to the more“ basic” and therefore
less risky products.

For the second group, either the supplier has the capacity to make the products
within the specified time limits, which supposes that it has managed to resolve the
issues regarding the availability and supply of materials from upstream at short
notice, or Zara has to produce the raw material on its own manufacturing sites, thus
having the power to control its own scheduling. This explains why Zara has
integrated the“ textile” part of the operations into its subsidiary activities, but not the
actual making up (sewing together).

In all of the cases, there is a real bottleneck on volumes for these medium term
suppliers, which results automatically from the fact of working on the most readily
available goods (“ made to stock " in SCOR parlance).

Because of this bottleneck in the availability of materials, there are problems

regarding the purchasing of volumes upstream. While the process of estimating the
volumes to be purchased does indeed depend on effective co-operation between
designer/purchaser/point of sale, as is described in the article, the capacity of the
purchaser and supplier to find this volume is it more uncertain. It is certain that in
reality, Zara’s purchasing policy draws its competitive advantages from the greater
opportunism of its buyers, who seek out one or more products that are similar (or the
same?) and which are ultimately suitable for providing the market with the required
volumes. These elements explain the high number of products (10,000) marketed.
On this point, there is no precise benchmarking, but a number of analysts agree on
the fact that this figure is in excess of those for Zara’s competitors.

Overall, all these factors mean that one can justifiably talk about Zara having a“ one-
shot” design and procurement strategy until its stocks run out, whereupon the out of
stock article is replaced by one which is“ nearly the same” . This system of upstream
procurement is therefore somewhat lacking in structure, but the financial standing of
a brand such as Zara enables it to organize its suppliers effectively around this
apparently makeshift strategy.

The aspect of the Zara case which remains complex and not widely understood by
the experts occurs upstream from the downstream procurement and relates to the
matching-up plan, which ensures the correct references and quantities of products in
terms of style, material, colour and size are allocated to the different points of sale
according to regional specificities (north/south, coastal/continental, urban / semi-
urban, large retail outlets/ medium-sized retail outlets…). Strictly speaking, however,
this question does not relate to the supply chain.

From this point on, the thinking behind the operation of the downstream logistics
activity is quite simple, since it is a question of resupplying the points of sale until the
stock is exhausted, and relying on the daily input of data from sales recorded on the
point- of-sale terminals to operate the algorithms for the automatic restocking
process.

The remaining question posed by the Zara case relates to the increased
centralization of logistic resources concerning the warehouses of La Coruña and
Saragossa, in particular, although this issue is not confined to clothing. In this sector
as in many others, one can observe the trend towards the grouping together of
logistic centres, which means they can reach considerable sizes (over 50,000 m2 and
up to and beyond 100,000 m2). Yet it is not certain that this rush towards economies
of scale will be to everyone’s benefit, especially when the whole of the European
market from north to south has to be supplied from one single point.
This said, it is quite a difficult question to answer, and in Zara’s case, gigantism has
done nothing to weaken its performances, quite the contrary.

In the end, in taking a broader look at the case, it is interesting to wonder whether
Zara’s procurement policy, which is strongly linked to the development of collections,
has not, in some way, reproduced on a large scale the formula which has been so
successful for the Sentier in Paris or the Fashion District of New York.