| |Zara: IT for Fast Fashion | |Case report | | | |
| |6/19/2013 | |
To address the current issues of upgrading/not upgrading of the Point of terminal (POS) in the ZARA’s stores all over the world, I will propose in the upcoming company budget to allocate €14 million for the upgrade of current obsolete operating system that we use. A Pilot project will be implemented in one of Zara’s store in Spain to discover any flaws or ideas. It will be a long process to implement hence; we will be implementing this into our stores gradually all over the world.
The decision is of strategic importance as far as IT is concerned, we just cannot afford if one ...view middle of the document...
Store managers have been complaining that executing returns transactions is time consuming on current POS terminals. The process of tallying sales in the store by carrying floppy disks is time consuming and needs improvement. Incorrect recorded sales and shipments (sales decrease the inventory and shipments to the store increase it) of the store makes theoretical inventory count inaccurate.
Root Cause analysis
We don’t have any contract with our POS terminal maker assuring us that they won’t upgrade their machines, and vendor’s informal assurance is not enough. Zara has never assigned anybody, nor made any processes for setting an IT budget. There was literally no thought process or formal justification for a proposed effort, no cost/benefit analysis ever done as far as IT is concerned. Since there is no contract between Zara and POS terminal maker, it has created tough situation for both the parties.
Microsoft doesn’t support DOS since a decade now; it makes Zara look so much behind current technology. Due to this fact, there are no added capabilities with any added functionality to Zara’s POS terminals. The three cyclical processes (ordering, fulfillment and manufacturing) of its operations were supported by internally developed applications and look after by an Information system (IS) department of just 50-odd people. Staff retention is not a problem but few years down the line when they retire, they will take away all the knowledge with them. Because Microsoft doesn’t support DOS anymore, universities may discontinue teaching the system in near future.
Store managers walking around the store to find out replenishment items and to determine sales data is the only way to know about stock level is not feasible. Also, order form on PDA’s screen size looks congested and doesn’t seem user friendly at all. It is also very difficult for managers to place orders based on new design, patterns and exact color for any new item due to reason above. Inventory management is not user-friendly because stores are not connected with each other, store managers need to call other stores to get information about particular Stock-keeping unit (SKU) which makes the process lengthy and counter-productive. Receiving and
Zara’s business model tends to give store managers more responsibility and authority to decide which items to put on sale, placing orders for the items they think would sell rather than controlled by headquarters. But at the time of order fulfillment in case of demand/supply imbalance then commercials at La Coruna would decide for them which are contradictory in nature. This communication gap can be mitigated with the help of IT.
Zara believes in two aspects; respond very quickly to the demands of customers and intelligence of all their employees (by decentralizing decision making throughout the company). Responding very quickly by overspending on stores (prime retail locations), changing store layouts (every...