Proposal to Improve the IT/IS Strategy at ZARA
Be future ready!!!
Oct. 3, 2011
To grow at the same pace in the fast changing fashion industry, Zara should use advanced IT/IS systems as an enabler to improve the overall business process. Zara is facing a challenge today by using obsolete technology. Also due to a number of internally developed applications, there is no clear picture of the entire sales or inventory at any instant. In this report, it is recommended that Zara should upgrade their systems into a newer OS, replace existing POS terminals with ones which are compatible with the new OS and rollout an MIS system to integrate data across all departments.
Inditex is a multinational clothing retailer and manufacturer headquartered in La Coruña. It is a holding company atop a number of brands like Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius and Oysho. Zara is one of the largest international fashion companies producing and retailing trendy and fashionable clothing for men, women and kids. Since its inception, Zara has tried to remain in line with the customers’ demands and rapidly changing trends. Their short manufacturing lead times and effective design and production teams ensure launch of new design collections continuously throughout the year. This keeps them ahead of competition that launches new collections only at the start of fall or spring buying periods. The major issue facing Zara is obsolete hardware and software being used all across the organization. As per the current scenario, Zara has a lot of processes which can be improved upon with the use of better IT/IS system in place. To iterate a few of them: 1. The current IT systems run on DOS which has not been supported by Microsoft for years now. Microsoft moved to Windows OS in 1985 and have revolutionized the whole computer industry with the user friendly OS since then. 2. The hardware vendor for POS terminals could upgrade their machines anytime and make their machines not compatible to DOS anymore. 3. Store managers cannot look up inventory balances accurately to better plan the sales of goods from their stock or nearby stores if required. There is no automated system or method to calculate the existing inventory. The managers need to walk around the stores and talk to sales people to determine the selling garments. 4. A new design or garment designed by the product managers would be informed to the stores only in the night when the handheld computer is linked to IS at La Coruña via dial up modem. 5. Demand-supply management is manually done by the Commercials by looking at the “almost” accurate inventory figures received from the stores. 6. POS networks were not connected to each other via any in-store network, so employees have to copy daily sales from each terminal into a floppy disk, and then carry these disks to one modem-equipped terminal to send the sales details to the La Coruña office. 7. There are a number of internally developed applications built to take care of different operations. They are not integrated with each other, thus the management may not have the right picture of overall inventory, production, sales etc. at any point in time. As of now, Zara is leading with all the above practices in place, but it won’t be too late when the competition may take over and lead the industry. Zara needs to move ahead with the changing times and adapt to newer technologies – both in terms of hardware as well as software. Company’s goals/strategies
Zara believes in integrating retailing with manufacturing and distribution. Zara is a vertically integrated retailer. They control most of the steps in the supply chain by designing, manufacturing and distributing its products. Their target customers are young, fashion conscious city dwellers. Their positioning is different from any regular apparel company....