Zara It for Fast Fashion

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Executive Summary

The purpose of this document is to discuss the issue of Zara’s DOS-based IT infrastructure and how it affects Zara’s performance. The concern is the current system is out of date and there is a possibility that hardware vendors will upgrade their machines leaving them incompatible with DOS. As well, Zara’s core business model is speed and responsiveness, this system is unable to keep up with this model. By assessing the pros and cons of the new IT system, with Zara’s brand image, I determined that implementing the new operating system and POS terminals is beneficial for Zara because 1. It will help to improve efficiency of information flow between Zara’s supply chain networks, 2. It removes the risk of the system becoming obsolete and no longer compatible with vendor’s machine upgrade, and 3. The new system will eliminate the need for small screen PDAs and their continuous upgrades.

Issue Identification
Immediate Issues
* The current DOS system has not been supported by Microsoft since 2003. * Personal digital assistants (PDAs) have small screens and make it time consuming for managers to do daily tasks such as orders and returns. * The screens on the PDAs are small, therefore making it difficult to view new items. * The availability of several PDAs at each store location allows for redundancy at time of ordering. * The POS terminals and PDAs contain no information about theoretical inventory within each store.

Systemic Issues
* Hardware vendor for POS terminals could upgrade their machines which would no longer be compatible with the DOS system. While they have said they would not do so, there is nothing in writing, and so to ensure breathing room back-up terminals would need to be purchased. * Implementing a new system in all 531 stores worldwide will incur high costs: purchasing new terminals, new software, and training staff. * Having a system that is incompatible because it has not been upgraded with future software applications could lead to operational and security problems in the future. * The need to constantly upgrade several PDAs as devices are discontinued or as technological advances become available. The current PDAs have been in use since 2003, therefore will require updates shortly.

Environmental & Root Cause Analysis
Qualitative Analysis

Zara is the leading brand in “fast fashion”. The fundamental concept is to maintain design, production, and distribution processes that will enable quick response to consumer demands. To maintain and manage this rapid-fire supply chain, Zara follows three main principles: 1. Close the communication loop. Zara’s organization, operational procedures, performance measures and unique office layouts are all designed for seamless and timely information transfers. This system depends strongly on a constant exchange of information, throughout every part of the supply chain, from the customers all the way through to the designers. Exchange of information is done without any layers of bureaucracy bogging it down between departments, something many other companies have inserted into their supply chain. 2. Stick to a rhythm across the entire chain. The supply chain moves to a fast but predictable rhythm. To ensure this rhythm moves this way, Zara does not hesitate to spend money on anything that will help increase and enforce the speed and responsiveness. Zara’s vertical integration through the entire supply chain, from the designs, manufacturing, distribution and individual stores, allows the ability to set the pace at which products and information flow. 3. Leverage your assets. A common wisdom shared by most businesses, in a volatile market where product life cycles are short, is to own fewer assets. Zara, however, own the factories that produce over half of its products. By owning its in-house production, Zara has the ability to be flexible in the variety, amount and frequency of...
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