Case Questions_session

8/13/2019 Case Questions_session

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ISM-IIASSIGNMENT-3

ZARA:IT for Fast Fashion

Submitted By:

Abhijeet SinghDialine Lazar

Manish Tuljapurkar

Priya Parmar

Sudhanshu Ranjan

Vartika Agarwal

2012PGP0042012PGP103

2012PGP197

2012PGP277

2012PGP377

2012PGP423


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Q.1.Zara Business model wasBusiness idea that Zara followed and they lived by was to link customer

demand to manufacturing and link manufacturing to distribution

Quickly respond to demands of target customers who were young fashion-conscious city dwellers

as their tastes changed rapidly

Intelligence and judgment from employees throughout the company, Zara store managers decidedwhat garments to be on sale at their stores

Commercials (A)A group of people had discretion in deciding what clothes would be designed and produced andZaras collections were not conceptualized and designed by a small team.(B) Store product managers could initiate store-to-store transfers if they saw that some garmentsselling slowly in one area were popular in another.

Teams consists of two designers and two product managers, who purchased material, placedproduction orders with the factories, and set prices.

Supply/demand information when total orders from stores exceeded the availability for an item in

any period, commercials decided which stores would get clothes and which would not based on datathat which stores historically had a better track record

It relied very little on marketing or advertising their own designs than to cash on the styles anddesigns that were in demand at the time.

There was little inventory anywhere in Zarassupply chain. Garments were produced and deliveredonly when the stores needed.


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Zara did not rely on accurate long range sales forecasts. It responded to the fast changing andunpredictable tastes of its target customers by setting up flexible factories with short leadtimes(time from design to production-3weeks; shipping from DC to stores- 2days)

This enabled Zara to bring out new items throughout the year unlike the competition. Zara

introduced 11000 new items in a year(competitors averaged 2000-4000). The company intended itsclothes to have fairly short life spans, both within stores and at the customersend( clothes to beworn 10 times)

Information needed to operate its business model:

The most important information is the requirement of both replenishment of existing items andrequests for newly available garments sent from the stores to La Coruna in the form of order

The order from all the stores was aggregated and was compared with the total supply of inventoryat the DC at that time in SKU units. If demand was greater than supply sales information at thestores was used to determine the distribution of inventory. Based on demand levels future

production levels were also determined.

Each store provided information about the inventory available to the headquarters which helped inplanning the production process

The storage and handling of each SKU at DC was done through automated systems

The stores did not have information regarding the SKU at another store which might be helpful incase of a stock-out at one stores which could be replenished from a nearby store


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Various weaknesses inherent in ZarasIT infrastructure and IT strategy were :

1. They did not prefer to sell clothes over the Internet. A website www.zara.comwas used onlyas a digital display window.

2. There was no formal justification for IT efforts and no cost/benefit analysis was conducted

3. The company had no CIO, no process for setting up an IT budget or deciding on specifictechnology investments.

4. Its IT infrastructure was capable of keeping track of theoretical inventory level only and itdidntaccount for theft, damage or other losses.

5. In absence of efficient applications factories used applications that generated sub-optimalplans and schedules.

6. POS terminals at ZARA still used DOS operating system that were outdated by then

7. The POS terminals nor the PDA was always connected to the headquarters.

8. Within a store, POS terminals and PDAs could not share information.

9. POS terminals and PDAs did not contain features to know if a nearby store had a particular

SKU in stock.10. There was a threat that if hardware vendor for their POS terminals upgraded their machines,

then all of ZARAsDOS running systems would be rendered useless.

Q.2.
http://www.zara.com/http://www.zara.com/http://www.zara.com/http://www.zara.com/http://www.zara.com/http://www.zara.com/


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Q.3.

Factors supporting the upgradation of POS

terminals

Factors supporting the use of

current POS terminals

Due to absence of an in-store network, end-of-

day figures had to be transferred to the central

POS terminal using a floppy

Store canvassing and counting were the only

ways to check a store's inventory balance

It was not possible to check the inventory status

at nearby stores

Information could not be stored with PDAs

It was time consuming to accomplish returns

using PDAs

The current application was developed for DOS,

which was no longer supported by MicrosoftIn case of upgradation by hardware vendor, no

future hardware support would be available

Current application was stable, effective, easy

to roll out & maintain

Employees could easily operate terminals

Employees could manage POS infrastructure

without outside help

In case of a problem, software reinstallation

was straightforward

No IT support was required (for POS

terminals) to open a new store or to assist

existing stores


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On the basis of the above concerns, we support the upgradation of the current POS

terminals being used by Zara stores. This would lead to the following advantages:-

1. Allowing online other-store lookup and online inventory transfer would lead to

reduction in time required to enquire about inventory at other stores (no phone callneeded) and an increase in sales (in event of shortage at one store, the required SKUs

can be quickly procured from neighbouring stores)

2. Allowing automated same-store inventory lookup would lead to more efficient and

accurate order placement

3. It would no longer be required to manually transfer data between different POS

terminals

4. Upgrading to a latest OS like Windows or Unix or Linux would open up thepossibility of adding more functionalities later on

The cost of using Windows upgradation is calculated in the following slide. It can

similarly be computed for the other two OSes.


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WINDOWS SOLUTION- PER STORE COST OF UPGRADING EXISTING STORES

Annual per store cost

1. AMC 302. High-speed internet connection 240

TOTAL 270

One-time per store cost

1. License cost 140

2. Wireless router (1 per store) 180

3. Wireless ethernet card (1 per POS terminal) 2504. Port existing application to new OS 843750

5. Look-up of same store inventory 168750

6. Look-up of other-store inventory 56250

7. Inventory transfers 56250

8. Installation 4000

9. Establishing wireless network 200010. Training staff 2000

TOTAL 1133570

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