Zara: IT for Fast Zara: IT for Fast FashionFashion

By:By:Jared AltmannJared AltmannMichelle ClarkMichelle ClarkDaniel HinrichsDaniel HinrichsKristen RappKristen Rapp

Michael WilsonMichael Wilson

PreviewPreview Introduction of the problems & Introduction of the problems &

decisiondecision Company backgroundCompany background AnalysisAnalysis

Company StrengthsCompany Strengths Company WeaknessesCompany Weaknesses OpportunitiesOpportunities ThreatsThreats

Our recommendationsOur recommendations ConclusionConclusion

Issues & DecisionIssues & Decision Technology is an increasingly important Technology is an increasingly important

aspect of businessaspect of business Companies are faced with the challenge Companies are faced with the challenge

of making the right decisions about what of making the right decisions about what procedures will benefit their businessprocedures will benefit their business

Zara has practiced many of the Zara has practiced many of the same strategies since they were same strategies since they were developeddeveloped Small IT departmentSmall IT department Using same computer applications they wrote Using same computer applications they wrote

years agoyears ago Not many resources into technology systemsNot many resources into technology systems

Decision: Upgrade IT systems or Decision: Upgrade IT systems or don’t change what is not broken????don’t change what is not broken????

Zara BackgroundZara Background

Fashion retailerFashion retailer Founded by Founded by

Amancio OrtegaAmancio Ortega First store opened in First store opened in

La Coruna, Spain in 1975 La Coruna, Spain in 1975 Believe retailing and manufacturing Believe retailing and manufacturing

need to be closely linked need to be closely linked

““Link the customer demand to manufacturing, Link the customer demand to manufacturing, and link manufacturing to distribution.” ~ Zara and link manufacturing to distribution.” ~ Zara business Modelbusiness Model

Major Events of 1985Major Events of 1985

InditexInditex Worked as an IT manager Worked as an IT manager Holding company formed atop Zara & other retail Holding company formed atop Zara & other retail

chainschains Multinational clothing retailer & manufacturerMultinational clothing retailer & manufacturer Zara is Inditex’s largest chain of retail storesZara is Inditex’s largest chain of retail stores

Jose Maria Castellano Rios joined Jose Maria Castellano Rios joined companycompany

Worked as an IT manager Worked as an IT manager Shared Ortega’s beliefs in the importance Shared Ortega’s beliefs in the importance

of technology of technology Became CEO of Inditex 1997Became CEO of Inditex 1997

Zara StrengthsZara Strengths

Local ManufacturingLocal Manufacturing Fast ProductionFast Production Distribution CentersDistribution Centers Basic ITBasic IT

Zara WeaknessesZara Weaknesses

No CIONo CIO No formal process to No formal process to

allocating IT budgetallocating IT budget Point-of Sales units over a Point-of Sales units over a

10 years old10 years old DOS-based operating DOS-based operating

systemsystem Physical inventory countPhysical inventory count Can’t communicate in real-Can’t communicate in real-

time with other storestime with other stores

Zara OpportunitiesZara Opportunities

Communication Communication with potential buyers with potential buyers

Online SalesOnline Sales Expand Store LocationsExpand Store Locations

ItalyItaly

Zara ThreatsZara Threats

POS vendorsPOS vendors Only company using “ancient Only company using “ancient

operating system”operating system” Would not sign contract promising Would not sign contract promising

compatibility compatibility PDA vendorsPDA vendors

Zara is not updating operating Zara is not updating operating systemssystems

Probably not DOS-compatibleProbably not DOS-compatible Other retail chains have real-time Other retail chains have real-time

communicationcommunication May lose market share to May lose market share to

competitorscompetitors

Our RecommendationsOur Recommendations

Upgrade PoS, then worry about Upgrade PoS, then worry about upgrading the networkupgrading the network Set up a wireless networkSet up a wireless network

Appoint an innovative CIOAppoint an innovative CIO Set a budget according to needs, Set a budget according to needs,

not off of industry standardsnot off of industry standards Share inventory information via Share inventory information via

networknetwork Keep PDA’s for backup useKeep PDA’s for backup use Use the demo store to test new Use the demo store to test new

systems, then integrate them systems, then integrate them into the other storesinto the other stores Network, PoS terminals, etc.Network, PoS terminals, etc.

Make a decision now!Make a decision now!

ConclusionConclusion

By upgrading IT systems, By upgrading IT systems, Zara will keep up with Zara will keep up with competitioncompetition

Direction, leadership, Direction, leadership, prioritizingprioritizing

Global networks and Global networks and global markets are global markets are changing & upgrading changing & upgrading very quicklyvery quickly Zara can’t be left in the Zara can’t be left in the

stone age!!!!stone age!!!!