IT Technologies in Zara's Production: Challenges & Opportunities

Introduction

After having a close look at the case and after a thorough research into the company, I learnt that ZARA has been performing exponentially well financially and has created a unique consumer base that is loyal and keeps coming back for more. The company has a very smooth Supply Chain and Production system coupled with unique style of design and manufacturing that makes its customers coming to the stores in every two weeks to check the new designs and stock. The strength of the company is it’s decentralized decision making which serves to increase the efficiency of ZARA because decentralized decisions lead to more timely decisions. These are a few core competencies of ZARA that gives it competitive advantage over its rivals like H&M. The only area where ZARA can work and improve for better efficiency and a more successful business is its current P-O-S terminal. The major problem for the company is that it uses a P-O-S terminal that works on DOS which was discontinued by Microsoft many years ago. The terminal gives amazing solutions without any technological hiccups and solves the purpose of the company but with more and more technology coming in.

I am afraid that the P-O-S terminal will not be able to receive support from the hardware manufacturing vendors. Therefore, based on this, I would suggest in ZARA’s best interest, to move on to a newer technology like Windows operating software for more efficient supply chain management and it will also eradicate the uncertainty that the current P-O-S terminal bears. It should update it’s operating software keeping in mind its compatibility with the current P-O-S terminal and the latest terminals in the market. ZARA has allotted different people who look after their respective departments which makes its structure a bit rigid, but a little flexibility and fluidity to the company and unified communication will only enhance its business IT alignment. It is very important for ZARA to give more emphasis on communication between line and IS personnel. Using the current POS terminal might put ZARA into an uncertain situation where the software DOS might stop working and walk out of the door anytime leaving the operations at halt.

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Problems

This major problem leads to many other problems because not just the IT department but all the other departments at ZARA are dependent on that particular POS terminal and software. Regular inter departmental meetings should be conducted in order to understand the needs and strategies of the departments, an IS expert must understand the needs of marketing while a marketing expert should understand the working of IS department.This will help the IS personnel in understanding the needs of the store managers, logistic managers and commercials. The company needs to concatenate its management, creative, operations and IT department so that every department knows what changes are required in the other department and how their changes will affect the working of other department. The strategies of all these departments need to be focused towards one goal in order to take ZARA forward as a brand.

The current POS terminal hampers the normal functioning of the company. The terminal requires the store manager to walk up to the sales people and ask them about the number of garments sold and counting each garment to determine the replenishment quantity.The major setback of using the POS terminals was that the store managers were not able to check inventory balances on their computer and the only way to check the availability of the stock was by consulting a handheld computer that was linked each night, this process might hamper the user experience for the store managers and might make them feel frustrated and overworked. The POS could not share the relevant important information about the stock with PDAs and did not contain useful information about the SKUs (Stock Keeping Unit). When a store manager wanted to know if a nearby store had a particular product in stock, the store manager had to call up the other store manager to ask if it was available at that store. Although the POS system was easy to roll out, the entire process was time consuming since it had small screens and styluses. The POS terminal and its peripheral like small handheld computers do not seem to be user friendly. It does not promote smooth interaction between the user and interface. Also, the company that manufactures the peripheral devices such as the handheld computer with small screens and styluses might discontinue its production since not many companies are not using terminals that support DOS. Therefore, there might not be any service centers for the peripheral and purchasing new ones might also be a problem. If a customer comes to the store manager and asks him/her to check inventory for a particular product and the store manager counts each garment, he/she might not be able to answer the customer and the customer might walk away, this will lead to ZARA loosing its customers. The software is so redundant that it will make all the more difficult for the for the IT department to troubleshoot it which will directly affect the overall functioning of the business.

Solution And Conclusion

To tackle this problem, the company could use Windows and use the same applications that it used with DOS with minor changes that integrates all the other software such as accounting software, order fulfillment, manufacturing, marketing, etc. Using Windows will allow the store managers to use new hardware like larger keyboards, monitors, headphones and microphones for better communication among stores and warehouses. The replenishment orders can be communicated easily and inventory can be checked with one click. A wireless broadband network can also be connected to the new operating software which will enable the store managers to access the inventory or stock information from anywhere in the store. It will also enable the store managers to connect to design teams, commercials and other authorities via mail and messages.

One technology that the company could adopt is RFID (Radio Frequency Identification). The software is easy to use and needs no formal training. Person with no computing knowledge can use it. Developing and installing the necessary software instruments means a massive investment and in-house effort but the cost of installation of Windows is not much as its one time license costs 140 Euros and annual maintenance fee is 30 Euros and the total cost of installation per day is 2000 Euros. Using RFID tags will enable faster scanning of the garments, the store manager will be able to keep a track of the inventory, thus, store replenishment will be faster. The RFID machines increase labor productivity. The store manager will not be required to call other store managers to check if they had a particular piece at their store, he/she will have all the information at his/her disposal with the help of RFID tags. RFID also improves the supply chain by tracking the movement of goods after manufacturing and assembly. As per my opinion, the only solution to the problem that ZARA is facing currently regarding to its P-O-S terminal is upgrading to a new operating software,Windows and the company could also consider adding RFID technology to stores . It serves all the departments of the company, i.e, marketing, supply chain and enhances customer experience. Relationship among various departments and coordination of tasks will help ZARA in aligning its Business and IT goals.

References

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