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ZARA: IT for Fast FashionBusiness Informatics Case Study
Presented by:
Akriti Agrawal
Abhishek Shukla
Amit Kumar
Anjana Carri
Rakhi VarmaVatsala Ratanpal
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Company Profile ZARA strategies
Case Overview Zara IS Implementation Components of IS and
Implementation issues Recommendations
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Founded by Amancio Ortega First store - La Coruna in 1975
One of the largest international fashioncompanies catering for Women, Men andChildren 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.
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Short lead times: Allows responding to fast-changing and impulsive tastes of customers
Increased availability of new styles:Higher chance of hitting the jackpot
Small batches per product: Reducesexposure to a single product and creates anartificial scarcity
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Keeping Costs down: Produces more than
half of its clothes, minimal expenditure onmarketing, spends less on productdevelopment and design
High autonomy amongst employeesthroughout the company instead ofemploying a small, elite team
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To combine moderate prices
with the ability to offer newclothing styles faster than its
competitors.
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Zara relies on an out-of-date operating system(OS) for its store terminalsThe Point-Of-Sale (POS) terminals used by Zara run on DOS which
Microsoft does not support
No full-time network in place across the storesPOS terminals and PDAs not always connected to Zaras headquarters
or other stores: Inventory management difficult
Zaras parent company, Inditex, runs onWindow OS and has built an extremely well-performing value-chain
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Zara builds on ability to respond very quicklyto the demands of target customers using itscurrent system
-involves identifying trends of the customer in advance based on intuitiveanalysis and decentralized decision making
Problem Statement:
To continue using DOS: extremely stable, effective, easy to use
OR
Upgrade to modern OS, enhancing the POS application itself, and/or buildingnetworks within and between stores
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Q1) Discuss the case study as an
IS practical implementation,showing its potential for
supporting enterprise growth.
(Consider the value chain)
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Design Production Distribution Retailing
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commercials involved
Collections were created and modified overtime.
Sources of information:fashion trends seen from major fashion shows, localtrends, intuitions of store managers ,POS data (data
collected from customers).
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Product managers- part of commercial teams-purchase 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 presentedwith quantities n due dates for requests.
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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 fromfactories.
Efficient segregation and sorting of garments- IS tracks thestorage of each SKU
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store managers autonomy over
ordering.
co-ordination between retailing and
manufacturing.
Sales and trend forecasting
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Sales and trend forecasting-constant monitoring and updating of information gives
designers a heads up over the competition in developing newstyles.
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 threedays.
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Short lead time- due to vertically integratedmanufacturing operations
Time take todevelop a
fashion line
ZARA: 3months
Others: 9-12months
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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.
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Question 2) Outline and discuss
implementation issues of allparts of the IS, people,
procedures, devices, software,
and databases, whereappropriate
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IS
People
Procedures Device
Softwareand
Database
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Designing: dependent upon expertise and individualdiscretion. Some facts and figures are required for decision
making.
Production: Purchase of raw materials- intuition nqualitative info. Autonomy of factory
Distribution-possibility of human errors while packing.
Retailing : manual collation and transmission of datawhile ordering
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Design and Purchase of Raw Material- no laiddown standard of procedures.
Manufacturing- monitoring of the work was not doneon any stage to a great extent.
Distribution- no major issue as process was automated.Labour involved in packing
Retailing- sales and trend forecasting, procedures setfor ordering and fulfillment of orders
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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 fastchanges in fashion
Distribution- automated conveyer belts.
Retailing-PDAs and POS terminals used in the stores-no realtime connection with the central network- PDA device which didnot share the information with the POS system -made it reallydifficult to access all information effectively.
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Software and database
Design-
no use of any
software at thedesign stage
Production-
no provisionprovided for
estimating purchaseof raw materials.
Cutting equipmentequipped with
software with latestdesigns
Distribution-softwares to control
the conveyor beltoperations and
tracking SKUs. nosoftware to track the
flow of garments fromfactory to stores whichincreases the chances
of theft
Retailing-
existing softwaredid not provide anyidea of inventory to
store manager.Also, they were notable to forecast
sales
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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 thehardware 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
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