Zara Fashion Industry

INTRODUCTION

Zara's success comes from its ability to effectively capture and process current data, transforming it into information regarding up-to-date customer demand. Zara's IT systems are the foundation of a streamlined production cycle that allows the company to swiftly meet ever-changing customer demand. The linkages throughout its value chain produce product differentiation that gives Zara a competitive advantage over its competitors.

DATA, INFORMATION, & STRATEGIC IMPLICATIONS

Zara utilizes IT to capture data and create information from the start of its value chain. Retail workers email and phone the head office daily, transmitting up-to-the-minute demand data describing customer comments, sales, or even unique customer styles. The data flows into a database located at the head office. The computer program processes the data and turns it into information that is analyzed by HQ managers. The result is current information regarding consumer demand and evolving fashion trends. Zara uses the real-time information to start the production cycle on clothes that are interpretations of current fashion trends.

Managers also use the retail information to process re-orders of existing clothing lines. Retail workers use hand-held computers to place orders with headquarters based on daily sales. Zara increases the speed of reorders and new fashion production by marking its inventoried fabrics with clear instructions and definitional codes. This important IT inventory system transmits information to workers about the inventory and further increases the speed and responsiveness of Zara's production cycle.

Unlike its competitors, Zara maintains a highly vertical production chain. Although the company buys fabrics from suppliers, it produces a high percentage of its clothes in company-owned factories in Europe utilizing state-of-the-art automated equipment for fabric dying, cutting, and finishing. These machines process data regarding fabric and produce finished fabrics. They are the physical component of the fabric production process. The finished fabrics are then sent with clear written instructions to stitchers in Portugal who process the information in the instructions and quickly send the finished products back to Zara's