Management Information Systems
The objective of this document is to discuss the issue of Inditex’s DOS-base IT infrastructure and how it affects Zara’s performance. Inditex is concerned about its IT infrastructure being antiquated and the possibility that hardware vendors will upgrade their machines leaving them incompatible with DOS. Because Zara’s core business model is vertically integrated, it could specialize in speed and efficiency and the fast fashion trend. By assessing the pros and cons of the new IT infrastructure with Zara’s brand image, they determined that implementing the new POS networking system is beneficial for Zara because 1) it creates a more robust and scalable system that is more responsive to Inditex’s supply chain network, 2) it removes the risk of the system becoming obsolete and no longer compatible with vendor’s machine upgrade, and 3) it helps to maintain and improve efficiency of decentralization because information flow can be improved between stores, DC, and plant.
Zara is the most profitable brand of Inditex. It has opened his first store in 1975 in La Coruna in Spain. Today, it has become the central headquarters for Zara. This brand is present in all continents: Europe, America, Asia and Africa. Zara has developed a business model based on short deadlines, decrease quantities and a great choice of style and clothes. The company succeeds to make moderate prices with a large choice of new clothes every time. The success of ZARA is based on two principals: follow the trend to be able to sell garments at a moment where people want this kind of style, without using any advertisements as the concurrence does. They don’t want to convince people to buy their clothes but give the public what they desire at the moment. Secondly, the trust that had been given to employees allowed the company to delegate. They decide what clothes should be in stores and design the garments by pairs for a specific collection. Their role is to create clothes not to be sold for a long time but only for a short period in appropriateness with the current trend. The goal of the firm is to convince the consumer to buy their clothes. Their bid is that they propose and deliver all fashion style at the moment and they don’t want to make marketing for old or past fashion collections. To quickly meet consumer demand Zara established three cyclical processes i.e. ordering, fulfillment, and design and manufacturing.
Zara and its competitors sell clothing for men, women and children, and women section is the major section of these clothing retailers. However, Zara is different from its competitors in few ways: 1) Zara does virtually no advertising (twice-yearly ad promotion on sales and opening new store announcement). Thus, Zara’s marketing expenditures averaged 0.3% of revenue, instead of the 3% to 4% for competitors. 2) Zara only sells trendy clothes and not tries to produce “classic” clothes which would always be in style. Zara’s clothes have fairly short life spans. About 75% of the merchandise changes over every three to four weeks. The shoppers do not expect Zara garments to be highly durable. 3) Zara introduces substantially new design collections throughout the year. Other competitors introduce new design collections at the start of the fall/winter and spring/summer seasons.
Zara only works with stores. They don’t make merchandising on the internet simply because the DCs are not configured for picking small orders and shipping them to consumers. The stores are based in the strategic place of towns. The design and the organization of the stores are changed every four years behind the indications and orders of La Coruna in order to be creative and innovative all the time. Zara introduces approximately 11,000 new items each year much more than its competitors. In the beginning of 2003, they had 1158 stores in 45...