ZARA: IT for Fast Fashion

Business Informatics Case Study

Presented by: Akriti Agrawal Abhishek Shukla Amit Kumar Anjana Carri Rakhi Varma Vatsala Ratanpal

Company Profile ZARA strategies Case Overview Zara IS Implementation Components of IS and Implementation issues Recommendations

Founded by Amancio Ortega First store - La Coruna in 1975 One of the largest international fashion companies catering for Women, Men and Children segments Largest and most profitable chain of Inditex Operations into 45 countries with 531 stores located in Europe, Middle East, Asia-Pacific and the Americas.

Short lead times: Allows responding to fastchanging and impulsive tastes of customers

Increased availability of new styles: Higher chance of hitting the jackpot

Small batches per product: Reduces exposure to a single product and creates an artificial scarcity

Keeping Costs down: Produces more than half of its clothes, minimal expenditure on marketing, spends less on product development and design

High autonomy amongst employees throughout the company instead of employing a small, elite team

To combine moderate prices with the ability to offer new clothing styles faster than its competitors.

 Zara

relies on an out-of-date operating system (OS) for its store terminals

The Point-Of-Sale (POS) terminals used by Zara run on DOS which Microsoft does not support

No full-time network in place across the stores

POS terminals and PDAs not always connected to Zaras headquarters or other stores: Inventory management difficult

Zaras parent company, Inditex, runs on Window OS and has built an extremely wellperforming value-chain

 Zara

builds on ability to respond very quickly to the demands of target customers using its current system Problem Statement:

-involves identifying trends of the customer in advance based on intuitive analysis and decentralized decision making

To continue using DOS: extremely stable, effective, easy to use

OR Upgrade to modern OS, enhancing the POS application itself, and/or building networks within and between stores

Q1) Discuss the case study as an IS practical implementation, showing its potential for supporting enterprise growth. (Consider the value chain)

Design

Production

Distribution

Retailing

commercials involved

Collections were created and modified over time. Sources of information:

fashion trends seen from major fashion shows, local trends, intuitions of store managers ,POS data (data collected from customers).

Product managers- part of commercial teamspurchase materials, placed production orders with the factories and set prices. Highly Automated and Capital Intensive factories. IT intensive.

Fully Automated Order Application Resource allocation- dependent on a software. Resource planning- IT oriented- managers were presented with quantities n due dates for requests.

Finished garments sent to Zara facility- ironed, inspected, machine readable tag and sent to a DC. Automated conveyor belts facilitates the task of receiving the bulk quantities of each garment from factories.

Efficient segregation and sorting of garments- IS tracks the storage of each SKU

store managers autonomy over ordering.

co-ordination between retailing and manufacturing. Sales and trend forecasting

constant monitoring and updating of information gives designers a heads up over the competition in developing new styles.

Sales and trend forecasting-

Helps in taking quick decisions

Decentralized decision making.

Inventory Control

high frequency of ordering, replenishment 75% of inventory changed in 3-4 weeks intervals. helps better order management as Zara typically doesnt keep an inventory in their warehouse for more than three days.

 Short lead time- due to vertically integrated

manufacturing operations

Time take to develop a fashion line

ZARA: 3 months

Others: 9-12 months

Constant stream of information

Leads to constant input in product development process. Control early investments in raw material, direct and

indirect of process and production capabilities.

Question 2) Outline and discuss implementation issues of all parts of the IS, people, procedures, devices, software, and databases, where appropriate

Procedures

Device

People

IS

Software and Database

 Designing: dependent upon expertise and individual

discretion. Some facts and figures are required for decision making.

Production: Purchase of raw materials- intuition n

qualitative info. Autonomy of factory

Distribution -possibility of human errors while packing. Retailing : manual collation and transmission of data
while ordering

Design and Purchase of Raw Materialdown standard of procedures.

no laid

Manufacturing-

monitoring of the work was not done on any stage to a great extent.

Distribution- no major issue as process was automated.

Labour involved in packing

Retailing-

sales and trend forecasting, procedures set for ordering and fulfillment of orders

Design- no use of devices at the design stage

Production- Computer controlled complex equipment to cut
the fabric- the application needed to be modified due to fast changes in fashion

Distribution- automated conveyer belts.

Retailing- PDAs and POS terminals used in the stores-no real

time connection with the central network- PDA device which did not share the information with the POS system -made it really difficult to access all information effectively.

Software and database

ProductionDistributionsoftwares to control no provision the conveyor belt provided for operations and estimating purchase tracking SKUs. no of raw materials. software to track the Cutting equipment flow of garments from factory to stores which equipped with software with latest increases the chances of theft designs

Retailingexisting software did not provide any idea of inventory to store manager. Also, they were not able to forecast sales

Designno use of any software at the design stage

1.

Upgrade from DOS:

DOS- obsolete no contract or guarantee from their POS terminal vendor that they will continue supplying the same terminal with out much changes in the hardware for any specific period of time

2. Upgrade the ordering system.

Allow PDAs to share information with POS system. will help in increasing the functionality and networking capability Will allow real time inventory management

3. Develop

a software to track inventory in

stores