Zara Case Preparation

Summary:

·         Zara is the largest chain retail store owned by Intidex, one of the world’s largest fashion distributors

·         Biggest competitors are H&M, the Gap, and Benetton.   Unlike these companies, Zara does not predict trends; Zara produces clothes that are fashionable now and is constantly changing styles.   

·         Original design conception to finished production takes about 3 weeks and is on the sales floor two days later

·         POS application software was written internally by the IT department

Key Issue:

Zara is using DOS, an older Operating System that is no longer supported by Microsoft.  Zara has not upgraded in their Operating System for about 10 years and remains to be the only customer of their vendor that still uses DOS.  While this system still efficient and Zara is able to run their POS application on top of it, there is no guarantee that their vendors will drastically change their hard drive to no longer support their software.   There are over 550 Zara retail stores worldwide; however, they do not have a centralized network nor are they always connected to headquarters by a modem.  The PDAs that are used by all of the employees are not able to detect whether another store has an item in inventory; this causes employees to become less efficient because instead of having access to look up to see if a store has a particular SKU item, the employee will have to waste time calling the store to find out if they have a specific garment.  Also, Zara’s headquarters in La Coruña, have to wait until the end of the business day to find out what their comprehensive sales were for the day.

Requirements:

Network Capability 

Does not have technical issues 

Functionality and easy to use

Supported by current operating systems 

Solution:

·         Buy a substantial number of current POS terminals; therefore, in the event that their vendor does drastically change their hardware Zara will still be able to subside while they port their software to another Operating System

·         Use a different operating system and update POS software.  IT can create a network to that all companies are connected and can view each store’s inventory.

Recommendation:

I would suggest porting the POS application to a stable operating system that is current with technology.  Even though Zara is one of the biggest customers of their vendors, there was no contract that said the vendor would not drastically change their hard drive.  Zara is growing at a rapid pace and should not only focus in on what is working now operations wide, but should also be thinking on the future and not worrying about having an obsolete system.  The current PDAs which look up SKUs are accurate; however, it would be more efficient if all of the company’s stores were on the same network.  Zara is a company in which their employees are very autonomous; managers decide which clothes to order and decide which clothing goes on sale.  There are very tight deadlines in the Operations department.  When supply does not meet demand it is individuals that choose which stores receive the items.  I believe that there would be more accurate accounts for inventory if Zara invested in a new operating system that supported the newer POS application software.  Reports would be run more often to create optimal plans to begin production, stores would be able to check up SKUs from other stores, as well as have a faster system with more functionality.  There are too many potential problems that could come from not updating our system, our company can be running fine on today’s POS terminal, but we are living in a fast paced world and anything can happen.  Store managers will learn how to use the new system, and if they run into any problems that is Zara has an IT team that includes experts in Store Solutions, Logistical Support, and Administrative systems.  Amancio Ortega, founder of Zara, believed that computers were crucial to build his business; therefore, why not continue with his belief and keep Zara current with technology, so that the company grows even more and continues to be Inditex’s largest chain store.