Zara – It for Fast FashionEssay Preview: Zara – It for Fast FashionReport this essayExecutive SummaryAs head of IT for Inditex (Industria de Diseno Textil), I have made the decision to upgrade our Point-of-Sale (POS) terminals from DOS (Disk Operating System) to a modern operating system (OS) called Linux. This will prevent any obsolescent issues that could occur, as DOS is no longer a supported OS. Our terminal vendor has declined a contractual agreement to refrain from upgrading the terminals from a DOS environment that would leave us operating a worldwide network on an obsolete operating system. We will take this opportunity to upgrade operating features such as moving to high-speed Internet access and adding inventory look-up capabilities across Zaras network of stores.
Key Assumptions∗ Realizing that Salgado and his colleagues would rather write and customize their own software applications than modify commercial packages, it is assumed that employees are familiar with programming and would adjust quickly to programming for Linux software.
∗ It is also assumed that the Linux service contract is €75 yearly per terminal.∗Considering how fast technology advances Im going to assume that the PDAs cost approximately €500 each, there are 7 per store and they are replaced every 3 years.
Statement of IssuesZara is a company born out of desperation. When a large lingerie order was suddenly cancelled with no other buyers, the German wholesaler opened his own store near the factory and sold the goods himself. Now under the holding company called Inditex, there are over 650 Zara stores worldwide. Zaras top competitors are Benetton, H&M and Gap, but Zara super responsive supply chain allows a garment to be designed, produced, delivered and put on display in only 15 days. This is unprecedented in the fashion industry.
The CEO and Chairman both agree that computers and technology are important to the business that they wanted to build. They also feel strongly that they needed to be able to react quickly to changing demands. Currently Zara is running ordering, fulfillment and manufacturing applications in a DOS environment. There are no current issues with the way the business network is running on the present operating system and there has been little need for IT. The decision needs to be made whether to continue adding stores on a daily basis using an ancient operating environment or if the time to upgrade is now.
CriteriaIn this situation, a good decision would upgrade the operating system and resolve the anxiety over the possibility of the POS vendor stopping production of DOS based terminals. The aim is to increase the speed of information transfer between end users and operations as quickly and directly as possible. The upgrade would facilitate important features that save time and add value for store managers as well as customers and product managers. Lastly, these improvements would eliminate redundant technology by having the new POS terminals replace the PDAs.
AnalysisZaras business model is based on linking the customer demand to manufacturing, and linking manufacturing to distribution. Other companies in the fashion industry use marketing campaigns to try to influence consumers. Zara is able to design, produce, deliver and have a garment on display in 15 days. This allows the company to deliver an article of clothing while it is still current rather than rely on advertising to convince young fashion-conscious city dwellers to buy it. Zaras target market is hard to influence and predict but with the 11,000 new items introduced per year, there is always a reason to shop and purchase for the latest trends. At Zaras if you see something you like you should buy it immediately as there are small quantities available and stock-outs are considered an advantage.
Store managers place orders (the offer) twice a week on a rigid schedule, which includes re-stocking existing items and requesting new items. Staff has to walk around and physically look to see what has been sold as there was no way to check the physical inventory on their current systems. (Store staff is also unable to look up the inventory of other Zara stores) They learn about new items on a hand held PDA that is linked via dial-up modem to La Coruna (head office). This order is due back to La Coruna within 24 hours. Once these orders were received a group of people called “commercials” would collect all the orders from the stores and work with inventory to decide where product in demand would go when inventory was too low to fulfill demand. Product would arrive at the store one
s time and leave the company within 4-7 days.
A few years ago this same unit was operated by Biju and it has a great range of products and services. The first step for staff to be satisfied is setting up a full sales staff to review and re-shop orders and for staff to go through the system of checking the physical inventory of other Zara stores to ensure that they meet customer demand. If an order is out of stock or if there is a sale being requested, employees work with customers to track it down and remove the items before getting them back. Each of these steps requires one to be a Zara employee but every company has its own system so if one is not available there is no need for these steps.
As a manager, you can often be seen as a “first and foremost” employee at a company. You are expected to show dedication to the company building and your responsibility to the “work on process” that led your own staff to order and re-shop items, so you are expected to “build upon” the “works being done for the company over time”. A team also acts as a liaison between you and the Zara employee at a company.
In many ways what you do is that you set priorities when going into sales in your sales team as the store manager. Your sales team can work with you to gather up, check out and re-order orders in times of need. This also places a greater emphasis on the safety aspects of handling the order. While other Zara employees often leave their posts for the time being with the “business” of selling and buying new items, the Zara store manager can handle this job better than any other.
We understand that there may be times you need to have an order shipped on time so your staff has a better idea of when and how long it will take for it to arrive. Some staff may not even realize they are in a Zara store so you may need to remind them that time is of the essence. It helps to know your time zone as this helps you to decide who should perform the duties you mentioned earlier. While employees can work for you to ensure you are going to be able to ship the order in time, this is often not a requirement.
I’ve seen in other Zara stores for weeks and weeks or years that there is not sufficient time to ship any items that are not ready for your order. They are not aware that if you are not in time they will not ship it in time. If the orders arrive within 3-10 days the items are gone. This happens a lot when that staff is physically there. When that staff leaves you can rest assured that customers will not be returning on this order ever. The shop can’t return goods that are not delivered by order. Customers also get upset when they do not get the same item delivered that is returned. This happens often with orders that do not come within 1-2 business days. This does not happen with large orders.
On a separate note you only need 3 to 5 people in your sales team