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Zara: IT for Fast Fashion - Coggle Diagram
Zara: IT for Fast Fashion
Stakeholders
Amancio Ortega (Owner)
Xan Salgado Badas (Head of IT)
Bruno Sanchez Ocampo (Technical Lead for POS System
Store Managers
Employees
Customers
Suppliers
Investors
La Coruna
Timeline
Amancio Ortega started working with clothing factories in 1963
The first Zara store opened in La Coruna in 1975
Inditex was formed as a holding company atop Zara in 1985
Jose Maria Castellano Riso (IT Manager) joined the company in 1985
Zara introduces personal digital assistants (PDAs) and POS systems in 1995
Castellano became Inditex’s CEO in 1997
Zara switched PDA manufacturers in 1998
The present setting: PDAs are primarily used for ordering, DOS operating system is no longer supported by Microsoft, and Salgado and Sanchez are arguing about staying with the working POS systems or upgrading to a new one. August 2003
Relevant Facts
Ortega and Castellano shared two beliefs about the company:
(1) Zara needed to be able to respond quickly to the demands of target customers
(2) Ortega, Castellano, and other senior managers wanted to take advantage of the intelligence and trust the judgment of employees throughout the company instead of relying on a small set of decision makers
Zara has an emphasis on speed and decentralized decision making
Zara does virtually no advertising, only to promote its twice-yearly sales and to announce the opening of a new store
Zara spends heavily on its stores
Zara established three cyclical processes for operations - ordering, fulfillment, and design and manufacturing - all largely developed internally
No IT support to open a new store with the current system
No CIO
No formal process for setting a budget
Writes majority of applications internally
Application development and other IT activities were the responsibility of an IS department, divided into 3 groups: Store Solutions, Logistics Support, ad Administrative Systems
DOS is no longer supported by Microsoft and is an outdated software
Current DOS POS works perfectly for Zara
Zara is the only company using the DOS POS
One store must call other stores to ask about inventory
Key Problems
DOS POS is likely to be discontinued
Why does the problem exist?
DOS is already outdated, and POS can update their technology
What is the cause?
This is a likely problem because Zara is the only customer using the DOS POS and although they are using it in all their store and they have over number of stores, the POS company may want to focus all these resources on modern technology for everyone instead of old technology for one company
How did it happen?
Time passed and the current POS system was getting far behind current technology
What is the consequence?
This could lead to a very large increase in unplanned costs if Zara had to suddenly switch to a new POS
This could also lead to operations being negatively impacted if there are issues during the change
How did it impact the IT group?
Instability in operations for a while until they get back on track
How did it impact the organization?
Loss of money
Who is responsible?
The tech lead and head of IT are responsible for this. It is their job to decide to switch to a new POS or get the POS company to sign a contract that the DOS POS will not be discontinued.
Zara store manager determines replenishment quantities by walking around the store and determining what had been sold by counting the garments and talking to the salespeople
Why does the problem exist?
The CIO not taking any steps
What is the cause?
The CEO thinks that the company can continue to rely on DOS POS that they don’t need to focus on the IT to use other platforms to manage their inventory and product sales
How did it happen?
There was never a desire to put a more efficient process into place
What is the consequence?
Once the DOS POS stop working that they have nothing to rely on will cause a huge mess in their company. The store manager doesn’t know what to do which will cause a huge loss to the company
How did it impact the IT group?
The IT group will not be able to handle the situation if DOS stop working since there is no backup plan for the company since they too rely on DOS
Who is responsible?
The top manager such as the CEO
Zara stores are not able to keep or share inventory
Why does the problem exist?
Senior management’s desire for speedy processes above all overshadowed the importance of keeping inventory, so no process was emphasized or put into place for it
What is the cause?
THE DOS POS doesn’t allow this functionality
How did it happen?
Clothes flowed quickly, and without stopping, from factories to DCs to stores, where they were immediately put on the sales floor; Zara stores had no “back room” where excess inventory could be kept because of this
What is the consequence?
The store will need to place a new order whenever an item is out and this could mean other stores that are not selling that item as quickly will have it in excess which could lead to a loss if they have to move them to clearance.
How did it impact the IT group?
Increased cost, reduced profit
Possible delay in delivery if the order from supplier process takes time
How did it impact the organization?
Possible loss of customers with delay in delivery
Who is responsible?
The tech lead and the head of IT and partly other stakeholders are responsible for IT decision-making and approval at the company.
Solutions
Upgrading to a modern operating system
Pros:
The system, if upgraded, would no longer be obsolete, eliminating this worry from the company
The hardware vendor for POS terminals could change the machines in such a way that they could no longer use DOS; no guarantee that this won't happen; this potential issue would be eliminated with an upgrade
Potential better features/ease of use for the company
Guaranteed customer support
Cons:
The current system works fine and does everything the company needs it to
Keeping and enhancing the POS application itself
Pros:
No need to fully upgrade to a completely new system
Enhancing and purchasing more of the current POS terminals could serve as insurance against the unpleasant surprise of the sudden loss of vendor support
The system would still not be supported by a vendor if vendors decided to get rid of POS altogether
Purchasing a bunch of POS terminals might be a waste of money and not a good long term solution
Cons:
The system would still be somewhat obsolete in comparison to a new one
Building networks within and between stores
Pros:
More interconnectivity would allow the POS system to communicate with the PDAs, Zara headquarters, and other stores, eliminating the inefficiency
Cons:
The cost of the technology and resources needed to connect all necessary devices together