The History of Zara

The History of ZaraZara is the most successful brand of Spanish company Grupo Inditex. Its owner, Amancio Ortega, open first sell hive away in 1975 in La Coruna, a dainty port in Spain. Zara became the worlds largest personal manner retailer by 2008 end. By this time it had stack aways in everywhere 70 countries, out per claying its rivals desire Gap of USA and Sweden based HM (Hennes Maurits) (http//www.guardian.co.uk/business/2008/aug/12/retail.spain).Zaras advance(a) OperationsDaniel Piette, director of flair, LVMH has described Zara as possibly the most lay waste to and innovating retailer in the world http//tbmdb.blogspot.com/2009/12/business-model-example-zara-devastating.html, owing to the companys innovative and ludicrous approach in fashion retail.Zara follows the concept of a perpendicularly corporate cut string, in which the company has a tight control over most of the design phase, fruit phase and distri onlyion scheme to its chain of retail outlets. Th e rest of these processes is handled by its sister concerns with nearby fixs. Unlike its competitors Zara does non outsource its production to Asian developing countries the proximity of production units eases Zara by giving flexibility in production so that the company wad meet the ever-changing gets of the consumers more efficiently than its competitors.Zara has integrated the body of POS (Point Of Sales) and has organise a unique method that helps in the production of sassy designs. POS helps in monitoring what designs atomic number 18 bringing in maximum sales at the retail shops. The store tutors argon onlyowed freedom to decide which designs to display and which bingles to sp ar back in the store, depending on the sales of those designs. Zaras employees at the retail outlets collaborate feedbacks from the customers and convey the tuition to the render with the help of hand-held PDAs that both(prenominal) employee is involve to carry. At the headquarters, the design teams immediately respond to feedbacks sent via PDAs and begin invention natural clothes correspondly. The clothes are manufactured and mobilised to the retail stores within a short period of 2 to 4 weeks owing to the vertical integration of its supply chain. While its rivals are busy finding and identifying what the in vogue(p) trends ability be and finally take 4 to 9 months to distribute new designs to their respective stores, Zara manages to design, manufacture and distribute new designs in a matter of just of 30 days.Taking advantage of the prodigal become around time, Zara eschews the concept of producing just one collection per season, like its rivals do. kind of the designs keep on changing frequently so that Zara manages to deliver new designs twice a week to its retail shops. Zara only produces small quantities of from separately one style so that there is continuous demand of popular designs. It cuts deal on manufacturing appeals as intumesce. Thus Zara manages to deliver around 12000 contrastive styles in a year whereas its competitors prat produce only 4000-5000 per year. Hence, the company-coined phrase, dissipated fashion http//www.3isite.com/articles/ImagesFashion_Zara_Part_I.pdf.Current Technology in Information CommunicationZaras usance of engineering science in information technology is unique from its competitors. Firstly Zara uses very much slight technology, in toll of pulmonary tuberculosis and work- military unit, than its competitors just 0.5% of its work force compared to 2.5% of employees that its rivals utilise. Similarly Zara spends only 0.5% of its revenue on information technology compared to expenditure of 2% by its competitors. Secondly Zara employs a unique combination of military man and IT intelligence. Managers at the stores and the market survey done by the employees, form the valet de chambre intelligence while IT intelligence consists of the PDA devices used to send information collec ted by the managers and different employees carrying the PDAs. An send form is transmitted to each managers PDA asking for information such as availability of change states and patterns of garment sales. The managers of each retail outlets then(prenominal) divide this order form into sections and these sections are transmitted to the PDAs of each employee to fill up, based on customers feedback and the kind of designs sold. Employees then transmit back their respective sections to the managers PDA, after entering the customers requirements. The managers of each store are given total authority to determine and identify which sections are to be retained in the order form. The edited order form is then sent back to headquarters where the designing teams start workings on the basis of the order forms. This unique hybrid of humans technology helps in managing the inventories efficiently and quick and efficient link between demand and supply, thus successfully helping in their own d octrine of fast fashion.Summing up Zaras use of technology http//leoborjblog.wordpress.com/2009/08/10/zara-it-for-fast-fashion/Gather customer requirements PDAsLogistics and contagious disease of order form POS terminals and modems.Quickly designing new style frump (Computer Aided Design)Advantages of such an Innovative SystemVertical integration of supply chain and short turn around time lead to higher(prenominal) turnover of product.Quick and efficient distribution helps to eliminate warehouse requirement, delivery on additional storage costs.Searching the market for la scrutiny fashion trends and responding quickly to the consumer requirements with the help of hand-held PDAs.Complete autonomy and flexibility to the employees and managers who are in direct contact with the customers.POS terminals run on DOS in operation(p) arranging, which is cheap and easy to maintain and operate.Perceived limitations of this System http//www.slideshare.net/koffman/zara- lesson-study-278 0928Zara and its sister concerns declare been using DOS as their main operating system in all the processes. It is an outdated operating system.As the POS vendor supplies DOS OS to zara only, it net always stop its supply, while continue to supply other operating systems to its other customers.Store managers are the decision bushelrs. Zara headquarter relies solely on the experience and intuition of the managers.Instead of looking after customers, managers and employees draw the time-consuming task of manually entering the garment details in small PDAs. This could result in the employees failing to assist some customers in choosing and might miss out on few garment sales.Inventory is keep manually as well.Information transmitted is one way only. Managers have no knowledge of the inventories at headquarters and the stores distribution centre. Consequently managers back endnot stipulation a customer if a particular garment that has been sold out, house be replenished and in ho w some days.Promises do to customers not kept endure damage Zaras reputation, so the managers need to know about the garments inventories at headquarters and the distribution centres. there is a great demand for Zaras garments even though new designs are available twice a week. Zara may submit increase in production to meet these ever growing demands. assemblage of information therefore may need to be upgraded in terms of frequency.Its competitors can change to a better OS or software system package and increase their turn around time, neutralizing Zaras edge of fast fashion over them.New IT Technology for Sustainability http//www.123helpme.com/view.asp?id=97642BenefitsNew technology may not help Zara in increasing the competitive edge over its competitors but entrust help in sustaining that edge.A new operating system go forth help in installing software packages that volition help in efficient access of stock at the stores as well as headquarters and distribution center s.Upgrading to new OS go away hit the companys dependency on its current supplier of DOS.Using more than one IT supplier go forth increase Zaras bargaining power.A Network can be set up between HQ, production centers and retail stores.POS system can be automated so that each sale will automatically update the POS devices.If the POS system of all stores can be interlinked all the store managers can easily know the line online and can make and keep their promises to customers demanding a particular garment.POS automation will help flash back overall workload of the employees and managers, as they will not have to manually enter every detail required in the order form.There will not be any need of hand held PDAs. use POS software will ensure that orders will now be made on the basis of theoretical inventories and will be more accurate.Orders can now placed continually increasing the frequency from twice a week to daily.Ideal software to be used for integration would be ERP (Enterp rise Resource Planning). Linking all the process in the supply chain, from HQ, design centers to retail stores, will not only help the managers in accessing inventories but will also help HQ to regulate the supplies more accurately according to the orders placed.Production will become even leaner than before.ECQ (Economic Order Quantity) can help in determining quantities of different garments that buyer can order so that there is sufficient stock for the customers. This will reduce inventory cost as well.Knowing reorder levels will streamline managing of the inventory and help in maintaining the autonomy of the managers. Managers can determine from the reorder levels whether a particular garment needs to be ordered before it will go out of stock and can transmit the same to the production centers that are now linked to the retail outlets.Of course manual checks will still be needed occasionally to check a stores palpable time inventory is same as the theoretical inventory in case of exceptions like garments getting stolen or gone missing.Designers at HQ will now not depend entirely on the managers courtesy and can observe themselves sales of new designs out-of-pocket to two-way system integration by ERP.Just in case a store does run out of stock on a particular garment, the manager can easily check the inventories of local nearby stores for availability and apprize the customer to go there.Inter-store connectivity will have added advantage of shipping garments to some other store that has more demand of a particular garment. This will besides increase the speed-to-market.Besides HQ even managers of different stores will avail if they know through network what is selling at other stores and what is not. cost AnalysisZara will have to upgrade to better OS that will support ERP like Linux, Unix or Windows NT.Implementation cost of Linux is lowest of the terzetto OS. But recurring costs like service-contract is much higher (McAfee et al). yearbook cost of using Unix is the lowest and if functionality remains more or less same, Unix will be best suited.If other costs like plans for systems ill fortune are not taken into consideration then implementation cost will relatively much lower than prospective ROI (Return On Investment). fortune AnalysisChanging software and operating system in all retail shops world over is not an easy task.Due to location of Zaras retail outlets all over the world, there will be many extra tangible costs. comprise of replacing current POS system with the new one.Cost of installation of new cables in each store and by chance new infrastructure to support the cables.Cost of external IT support, hiring professional consultants.Cost of internal IT focus and technical considering of personnel.Time taken to train the personnel till outside assistance is not required cannot be determined as level of knowledge and learning will be different at different locations around the world.Risk Reduction both(prenominal ) current and new systems should operate together till the personnel of each store can run the new system smoothly this will not interrupt any service provided to customers.Zara has a huge vanish outlet that is around 1,500 square meters. Zara can use this as training facility from its personnel from all over the world. Zara can use it to test the new system as well.Zara can hire experienced software professionals and open an in-house department for software management and development.Zara can outsource the management and development to experienced software companies. However Zara will have to trade-off between highly efficient and expensive companies.Zara should develop a mishap plan and an exit plan as well in case the company cannot continue with the up gradation for some reason.Robust information backup is required in case the new system crashes due to mishandling by inexperienced staff.