Information Systems and Operations Management

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Please read the article: Zara: Fast fashion from savvy systems available for free at http://www.flatworldknowledge.com/pub/gallaugher/41128#pdf-7 This article makes up Chapter 1 of the free, open access book titled, Information Systems: A Manager's Guide to Harnessing Technology, by John Gallaugher. Please ensure that you read the entire Chapter 1 of the book consisting of 3 parts (Part 1 Introduction; Part 2 Don’t Guess, Gather Data; and Part 3 Moving Forward). Now answer the questions below:

Question 1:
The Zara case shows how information systems can impact every single management discipline. Which management disciplines were mentioned in this case and how does technology impact each? (50% of the total mark)

The case study mentioned management disciplines including information gathering, processing, storing, distributing and use of information.

Gather market information
One of the successful factors in Zara is they know the market trends. Zara deploys the latest information technology tools to facilitate the information exchange and collect market data through both formal and informal channels – the PDA and POS systems.

The Personal Digital Assistants (PDA) system
Zara’s store managers were given personal digital assistants (PDAs) so they could gather customer input outside an office setting. The staff in Zara would regularly gather information from customers, such as the trend of fashion customers preferred and feedbacks of garment that they would like to see more in the shop. The range of information collected included colours, length and even small detail of the clothes were collected from customers through front line shop staff.

Besides getting information directly from customers, they staff have another channel to gather customers’ preferences. The staff will investigate the unsold items that customers tried on but didn’t buy, to find out their preferences in cloth, color, or styles offered among the products in stock.

The Point-of-sale (POS) system
Besides the informal channel to gather customers needs (through conversations), the head office will collect information through a formal channel, the store’s point-of-sale (POS) system. This system is a transaction process that captures customer purchase information, in order to show how garments rank by sales.

Since the POS system is linked with the PDA system, in less than an hour, managers can send updates that combine the hard data captured at the cash register with insights on what customers would like to see.

Information on customer needs and trend information collected daily are fed into a database at head office regularly. The PDAs support the connection between the retail stores and head office. Each store managers are assigned with market specialists, they will communicate regularly through PDAs to transmit all kinds of information to head office.[1]

Zara store management and staff use PDAs and POS systems to gather and analyze customer preference data to plan future designs based on feedback, rather than prediction.

Data driven product development
The data collected from PDA as well as POS system formed a valuable marketing database and provided data allows the design teams to plan styles and issue re-buy orders based on feedback rather than hunches and guesswork. The goal is to improve the frequency and quality of decisions made by the design and planning teams.

The designers from “The Cube” follow evidence of customer demand. When they deign new garments or decide which kind of fabric, cut and price points to be used or modify existing designs, they will base on information from PDAs and POS rather than create trends by pushing new lines via advertisements or catwalk fashion shows.

Vertically integrated value chain
Inditex is a vertically integrated group, it owns several layers in its value chain. The distribution center in La Coruña equipped with up-to-date equipment for fabric dyeing and processing, cutting and...
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