This paper will define Zara’s key strengths and competencies in reference of its business model. Role of information system is also evaluated within its business operations, strategies and processes. In the end, consideration of upgrading the information system of Zara will be addressed.
Strengths and Core Competencies of Zara
With an increase of competition, companies started the assessment of core products, technologies and markets, which were close to their future and current capabilities of growth. Prahalad and Hamel (2003) stated that key strategic focus of firms was on the identification and exploitation of core competencies. Zara has been successful to bring people from different functions for information sharing about the markets and develop more innovative products. It impressively takes a short time span for transforming the ideas into their store offerings. Information technology is the main player in the success of Zara, which manages every aspect of the product design, production and distribution. Core “fast fashion” system also depends on the information exchange considering every aspect of supply chain system of Zara. The information flow is constantly managed in every department. Zara keeps the logistic as an essential capability for supply of products to merchandise at the right time.
Additionally, Zara’s strategy of providing “fast fashion” to customers has also diversified it from other competitors. Once the garment has been made, it is delivered to one warehouse and shipped to the stores within a week. Zara’s strategy is supported by the competencies in the design, IS and supply chain management (Hill and Jones 2008). Employees of Zara do not face hurdles of communication, instead, they use the enterprise data efficiently to increase the pace of coordination, get fast respond and speedy decision-making.
Role of Information System in supporting Zara's operations
IS is the core system for inventory management, tracking of sales, product pricing, products’ selling, and customers’ services. By coupling the IS with communication features of internet, Zara holds out strength to improve the effectiveness of the company for customers’ value creation. Zara is a fast responder to demands of young, and fashion related dwellers with their quick changing tastes. Zara involves the people of different functions for new products development through information sharing (Cravens and Piercy 2009). Analysis of Zara’s SCM provides the evidence that how the IS is compatible with the decision making, fast response and emphasizes on the different phases. Information collected from customers is saved in the database at headquarter. The feedback from customers and record sales is integrated with design, manufacturing data and distribution functions. Designers check the information collected about the feedback of products and use this information to modify or produce new products. Designers have real time access of the information on fabric price, cut and points of new product’s price. In this way, Zara spots trends earlier and adjusts the stock within days of the week. Through the strong IS, Zara has been able to manage thousands of trim and fabric specifications (Motiwalla 2009). This explains why Zara can be so market-oriented and identify its potential markets and customers accurately.
Information System of Zara improves its competitiveness
According to Porter and Miller (1985), the information technology encompassed all those information, which businesses create and use all linked technologies for information processing. Although the IS of Zara makes a useful connection between distribution centers, store keeping units and conveyor belts, it requires human assistance for transferring the garments from conveyor belts into boxes. This is the important opportunity for Zara to reduce the human intervention and improve the process flow for...