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ZARAOrganization

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Founder

Amancio Ortega1963 - Starting clothing factories1975 - Zaras first store in La coruna

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I N D I T E X

(holding company atop Zara)

1985

Jose Maria Castellano Rios(IT Manager)

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- quick respond to consumers

demand

Ortega & Castellano

Zaras needs

- Decentralized Decision making

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Headquarter(La Coruna, Spain)

Stores

In

worldwideThe Order

The Offer

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H

eadquarter

Commercials(deciding what clothes would be design

and produce)

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Commercials

DesignTeam ProductManagerStore Product

Manager Other

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DesignT

eam 2 designer (each spesific collection)

Creating,

extending, and modifying the specific collection

to each section over time

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Product Manager 2 product manager (each spesific

collection)

purchasing material,

placing production orders with the

factories,

and setting prices

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Store Product Manager

Served as La Corunas main

interface,

Having daily contact with the stores

based on their geographical region,

Traveling to stores,

Initiating store-to-store transfers

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Store

Product

Manager

Design

Team

Product

Manager

Team of Commercials

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Other Teams of Commercials

Which stores would get clothes and

which would not,

when the total orders from those

several stores exceeded availability

for an item in any period

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Stores

Store Manager

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Store manager

Determined

replenishment

quantities,

Learned about

newly available

garments

(consulting to

IS atLa Coruna via

Handheld)

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Operational

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Headquarter

(in La Coruna)

Stores

The Order

The Offer

Operational

Store

Manage

Information

System

The Offer

Consulting

Twice a week

The Order

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Fullfillment

Shipping clothes stores,

Match up the supply into DC with

stores demand

Information : - Agregated orders

- Total supply of

inventory in DC

SKU

1-2 days deliveries

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Design

Typicaly years 11,000 new items

Competitors 2,000 new items

Store

Product

Manager

Design

Team

Product

Manager

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Manufacture

Group of factory

Cut fabric Garment

(small local workshop)

Zaras facilitiesDC

Finished garment

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Design and Manufacture

New

concept

design

Production DC

3 weeks

2 days

Stores

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IT for Operational

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IT

Speed

and

Decentralized decision making

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IT Jose Maria Castellano

Xan Salgado Bodas(Head of IT Division ),

Bruno Shancez Ocampo

(Leader of ITTechnical)

Technology

Steering

Committee

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Technology Steering Committee

Determine new system,

Writing application or accounting

software

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Technology Steering Committee

Application development team

Store solution

Logistic support

Administrative system

In 2001 - 2002

Inditexs IT Spending was 0.5 % of

revenue

Other competitors IT spending was

2% of revenue

In 2001 - 2002

Inditexs IT employees was less than

0.5 % of total workforce

In contrast, other competitors IT

employees was 2.5% of total

workforce

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Support operation,

Developed application :

1. for prepare the offer Stores

2. for receive the orders fromstores and agregate them

3. For compare

4.Highlight situationsupply & demand

imbalanced

5. Executed commercials decision

6. Kept track THEORETICAL INVENTORY

Information Systems in La Coruna

Agregate order : Available inventory

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Simple application used to plan

production,

Factory manager

Large computer controlled equipment Cut clothes into pattern

How to position pattern (min scrap)

Cut over 100 layers of fabric

Information Technology in

Factories

quantities

Due dates Schedule the

production

Load factory

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Great deal of automation and

computerization,

IS tracked where each SKU was stored asit entered DC,

Controlled conveyor belts to pick up SKU

and drop off at appropiate place,

IT Dept. wrote application that

controlled DCs automation

Information Systems in DC

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Information Technology in Stores

Handheld / PDA

POS terminal

Headquarter

Other store

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In 2003

Handheld / PDA

Stores Headquarter

DC

order

Transmit information

(the offer)

Handlinggarment

return

task

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10 years unchange

DOS OS

2003 - microsoft doesnt support dos

anymore

Zaras IT team internally developed POS

application

Daily transmit comprehensive salesinformation and other data La Coruna

More than 1 POS each store

Only 1 POS in the store had a modem

POS terminal

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POS terminal

POS

POS

POS

POS withmodem

H

eadquarterDaily sales inf.

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Salgado vs Sanchez

Want to upgrade

POS

POS runs on DOS

If POS hardware

vendor upgrade

their machine &

not compatible

anymore with

DOS

Dont want to

upgrade POS

Riskier to

upgrade just tostay current

POS works

stable and

properly

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Salgado vs Sanchez

Became problem

if Zara want to

open new store

Could addfunctionality

Could add

networking

capability

Sales get

recorded

Transmit

everyday

Could mess up in

the middle of the

process

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Salgado vs Sanchez

Store managers

ask for upgrade

POS

Store managerswant to be able

to look up the

inventory

balance in theirstore

Store managers

always ask more

It was least

important forStore managers

to count the

inventory

balance all thetime

POS isnot

broken

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Should the company continue to use of the existing

IT infrastructure that had worked for so long?

Conclusion

Should the company upgrade the system into a

modern one with the updated Operating System

and new capabilities?

OR

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Continue with the existing system The system had been stable and working so well

No need IT support to install the software in blank POS terminal when

open new stores

the need of floppy disk to save and transfer the daily sales data in each

POS to modem-equipped POS for transmitting the data to La Coruna

Check the store inventory stock by counting it manually

The use of PDA to handle the garments return transactions (which are

time-consuming, ineffective with small screen and styluses)

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Upgrade into modern system Buy new POS machines with the updated Operating System (ex:

Windows)

Re-write the POS application to be new-OS compatible

Add new capabilities:

New feature to be able to look-up the inventory in stores and

other stores

Network within stores and between stores (wireless network,

internet connection), so each POS could transmit the daily sales

information to La Coruna

POS could handling garments return transactions (previously

handled by PDA)

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Suggestion

During this dilemmatic situation, it doesnt make sense to buy thecurrent POS terminals (DOS OS) since there was no legal statement

stated in contract that the machines would not be changed.

Therefore company should upgrade the system, because sooner or

later a hardware vendor will be no longer use DOS which is out-of-

date

To keep companys consistency to its goal (speed and decentralized

decision making), which had been proven by the highly supporting

of its current IT infrastructure, so company should be more

prioritizing for IT investment to accommodating the future need and

following the technology trend that is always improving and growing:

By increasing the IT budget

Optimizing the function of IT Department along with the personnel inside

Recruit the new personnel if required for the development team as well as for the

implementation & support team

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To minimizing the mess situation during its

migration process (from the old system into the

new system), the company can attempt to: Running the new system in a parallel with the old

system until the new system could individually

running well, then the old system could be taken off

Allocating IT Technical Support personnel ineach store worldwide to help maintaining the

new system