Zara is using the Microsoft Disk Operating System (DOS) which has become obsolete since Microsoft is no longer providing support. With the withdrawal of support, it is risky for Zara to continue using DOS. In case, they encounter a technical problem, or the system fails, the entire operations of the company could stall; from selling points at the stores to inventory management, as well as productions would be slowed down. The only result from this is a reduction in the number of sales volumes or no sales at all which will be a crippling loss in revenue. Besides, the vendor for the Point of Sale (POS) terminals has changed its’ machines to accommodate latest operating systems that have great capability than DOS. Without a contractual agreement that the vendor will not change the POS terminals to lock out the use of DOS, Zara is operating in a risky environment of uncertainty as a sudden change of heart by the vendor will cripple the entire business empire. With each delay in implementing new technology, competitors are gaining an edge and opportunity to cut into Zara’s market share. It is, therefore, time for Salgado to oversee the upgrade of POS systems (McAfee, Sjoman and Dessain).
The modern POS terminals rolled out by the vendor supports the networking capability. When networks are built in the stores, they can be linked directly to the headquarter, La Coruna. This will help stores and the distributions centers to easily, quickly check and manage accurately their inventories at any time, without having to make phone call inquiries. Also, wireless networks in the stores will eliminate the need of carrying floppy disks around to tally up sales. The drives can be easily damaged by exposure to dust or broken in accidental fall while moving around. With the wireless network, counting of sales can be done remotely easily by the store managers. Each Zara store should be networked to fasten the inventory checking and sales tallying processes. Since the company operates with a decentralized decision-making system, store managers should be allowed to check inventory balances in their stores and others. Having ease of access to inventory balances can help the employees in fast-tracking decision-making in the planning, ordering and timely delivery of products for sales from various distribution centers and headquarter. Given the ability to check other stores balances, a store experiencing high volume sales can easily coordinate the transfer of products (inventory) from the closest low-selling stores instead of relying on delivery from distribution centers which could be far away.
Business Model
The business model links consumer demand, manufacturing and distribution processes to respond quickly to rapid change in customers’ demands. This has been achieved via implementation of a decentralized decision-making system which has made Zara operations different from other clothing retails. Whereas other companies relied more on marketing and advertising to sell their clothes, Zara only did this to promote the yearly sales twice, and opening of new stores. The sales were based on Zara’s ability to deliver new styles that are popular and in demand within a given period of the year; persuasive marketing not needed here.
Unlike in other companies, store managers at Zara had the power to choose the garments to sell at their respective stores without the involvement of the higher level managers. Compared to other chains, the conceptualization and design of a collection were done by a group of people instead of a small team, specializing in Women, Men or Child wears. The seniors never questioned the manager's decisions at distribution centers to decide what clothes each store will get as an emphasis on autonomy in decision making. In contrast to other retails, Zara continuously introduced new designs throughout the year. Other firms would bring new creations at the beginning of spring/summer and fall/winter buying periods. When it comes to production process, it was distributed to different specialized facilities in a network spanning from La Coruna in Spain to northern Portugal which made sure that new clothes design were ready within three weeks. No company could match this.
Despite a remarkable success, failure to make long-range forecasts of sales and relying on guesswork about how well a new product would sell is a weakness that could hurt the business. This is because a company might engage in mass production in anticipation of high sales volume which might not happen. Forecasts can help cushion against such surprising losses.
Information relied on by the business model
Zara business operations relied on information from store managers to keep up supply with the changing demands of the consumer. Managers of stores in collaboration with store product managers would collect information about the kind of clothes that are selling and the customer’s tastes. They then pass the information to the design team to address the new needs by the buyers as soon as possible. Besides that, was required of store managers to make orders twice in a week at La Coruna to maintain a constant supply of products in demand. Once the orders are ready, a group of people responsible for shipping, working at the level of stock-keeping-unit, depended on aggregate order information from all stores and the distribution center’s (DC) inventory details on supply to divide the products among the stores and match supply and demand (McAfee, Sjoman and Dessain).
Approach to Information Technology
In the approach to Information Technology (IT), any business should take into account values or benefits that can be realized through implementation of modern technology that gives it a competitive edge over rivals. This is appropriate and applicable to any business firm. If the benefits outweigh that of old technology in use, new changes should be rolled out. However, this is not only a matter of keeping up with innovations; the most important key is to ensure business continuity at any given time despite the changing environment. POS terminals and operating systems have changed with improved capability. Zara’s IT has to change to make certain continuity as the vendors are discarding old technology. With new capabilities, the firm can fasten processes such as tallying of sales, inventory management and accomplish returns.
Zara IT weakness
The reluctance of Zara to fast track changes in IT infrastructure and strategy is a weakness knowing that Microsoft has stopped supporting DOS system, which if they fail could stall operations of the company. They are also using outdated POS hardware despite the existence of robust technology and complain by store managers about time-consuming Personal Digital Assistance (PDAs) devices during accomplishing of returns and the need to independently check inventories (McAfee, Sjoman and Dessain). A good IT strategy should be able to identify overhead costs that can be eliminated with the adoption of latest technology. Online retails are also growing popular with the young generation, and the number keeps on growing as it saves time on shopping. Zara’s website should, therefore, be re-developed to be an e-commerce site where clients can buy new items instead of just being used as a display.
Work Cited
Mcafee, Andrew, Dessain, Vincent, and Sjoman Anders. “Zara: IT for Fashion.” Harvard Business School, (2007).
