Zara: IT for Fast Fashion
Identification of issues:
The case study, Zara: IT for Fast Fashion, focuses on the retail giant, Inditex, and how its largest retail chain, Zara, has been so successful with their business model of high fashion, product variation, low cost, speed, and flexibility. Several issues are identified in this case study. One glaring issue that is apparent relates to the fact that a long term Information Technology (IT) strategy does not exist. There is no formal system in place to plan and predict for their future needs, including operational and capital expenses. Another issue consists of the retailer not having a centralized distribution system in place, their stores do not share inventory counts, and the managers do not have a system in place to look up their inventory balances in their stores or other stores, (they accomplish this by canvassing the stores). Another significant current issue relates to the fact that their current IT system is unsustainable, as the equipment is obsolete and unsupported by Microsoft. Their IT system is not wireless, their screens are small, they are using styluses, which can be cumbersome, and older technology such as floppy disks and modems. The last issue involves a lack of shared knowledge of the current system in place; one person is relied upon and depended for knowledge of the systems functionality. Being so dependant upon one person places the whole system at risk.
Importance of the key issue:
The key issue in this case study involves whether or not Inditex should upgrade the retailer’s information technology infrastructure and capabilities or whether they should continue using their current system. The problem that Zara faces now is that their current system, P-O-S (Point of Sales terminals), runs on DOS, which Microsoft does not support any longer. Any hardware change in the POS terminal would not be compatible with their current POS software. Without an upgrade, they risk that their current supplier could no longer support them. Investing in IT infrastructure is inevitable as Microsoft DOS is obsolete technology and there is no guarantee that their POS vendor will continue supplying the same terminal without changes to their hardware. Personal Digital Assistants (PDA’s) are currently used in all Zara stores, POS terminals are not connected with Zara’s headquarters or with other stores. there is no system in place to link employees’ daily sales, causing employees to copy this information onto a floppy disk. Zara’s success and main business strategy is dependent upon their ability to respond very quickly to the demands of their customers. By upgrading their current system, they could add functionality and capabilities that could resolve other issues they face, such as sharing inventory, and being proficient at matching supply and demand. They can comfortably meet their mission by keeping current with fashion. Without the infrastructure to support it, it would be impossible to accomplish, as they would not have the security controls, and back up systems in place. This issue is more important than any other issue to resolve, as Zara’s mission, success and future depends on technology reliability and accuracy. If this issue is not resolved, it is impossible to address all of the other issues identified above. Key Stakeholders:
There are numerous stakeholders who are affected by the key issue of whether or not they should upgrade their IT Zara’s customers system want the latest fashions in stock, in their size and color, in a timey fashion. By having an upgraded, efficient IT system, Zara’s customers could experience better inventory controls to meet their needs. This in turn develops customer loyalty which equates to a higher volume of sales. Another key stakeholder is Zara’s employees. Employees want job security. A well defined, upgraded, efficient IT system can assist in sales volume, which turns into profit for the...
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