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Zara: IT for Fast Fashion

Summary of the Case:

As a well-known apparel company, Zara had been seriously considering upgrading its information systems, especially POS, to make its business more efficient. However, then-operating system still worked very well without any big problems so that the managers were worried about risks if they change the system. Especially, due to the rapidly changing trends, Zara had been focusing on quick decision making so that improved information system needed to give Zara good decision making functionalities. In addition, its three cyclical processes вЂ" ordering, fulfilling, and design and manufacturing вЂ" also needed to be considered to be given some functional improvements by the state-of-the-art information system.

I. Assess Zara’s management of IT in the case. Here, “assess” means that you analyze both what Zara did well and did not do so well.

Zara, famous for Fast Fashion strategy, had a great achievement in market rapidly. Its IT system contributed to its success as follows.

1. Approaches and Organization

- Speed and decentralized decision making was possible by Technology Steering Committee which determine what new systems were required and which IS department personnel should work on them

- Internally developed applications that supported ordering, fulfillment, and manufacturing rather than buying commercial software..

2. La Coruna(Headquarter)

- Internally developed applications were systematically worked. That means it used to prepare the offer and distribute it to stores around the world and also to receive orders from all of the stores and aggregated them.

- Another application compared the aggregated order to available inventory for each SKU, highlighted unbalance between supply and demand. and executed commercial’s decision.

3. Factories

- Simple applications furnished managers with quantities and due dates for all production requests.

4. Zara’ Distribution Centers (DCs)

- Relied on a great deal of automation and computerization.

5. All Zara stores

- Had identical handhelds which would communicate with La Coruna, and had internally developed POS application which had proved to be stable, effective and easy to maintain, so no IT support required to open a new store.

Even though, Zara had a lot of advantage in its IT system, there were some concerns in its system.

1. Zara was apt to be affected by vendor’s policy because Zara was its only customer using the DOS system.

2. Some problem occurred to its using the PDAs, an updated POS application could solve this functional problem.

3. Until now, they have not prepared wireless network, which would no longer be necessary to carry floppy disks around store. Wireless network can make Zara install cheaper within a store and know the theoretical inventory of all its SKUs.

II. Suppose that Zara implements an information system to improve its decision making.

A. What functionalities should the system provide to support decision makings? (Pay more attention to Zara-specific situations.)

1. Quick response to the demands of target customers:

- Satisfy demands from target customers, young and fashion-conscious city dwellers

2. Broader communication throughout the company:

- For employees’ participation and responsibility throughout the company

3. Effective decision making for “Commercials”:

- Commercials should be able to make effective decisions by using the improved information system.

4. Effective decision making for “Store Product Managers”:

- In order to backup store product managers’

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