ZARA

Organization
 Founder

Amancio Ortega
1963 - Starting clothing factories
1975 - Zara’s first store in La coruna
1985

INDITEX
(holding company atop Zara)

Jose Maria Castellano Rios

(IT Manager)
 Ortega & Castellano

Zara’s needs
- quick respond to consumers’
demand
- Decentralized Decision making
Headquarter The Offer Stores
(La Coruna, Spain) In
The Order
worldwide
 Headquarter

“Commercials”
(deciding what clothes would be design
and produce)
 Commercials

Design Product Store Product

Manager Other
Team Manager
 Design Team
• 2 designer (each spesific collection)
• Creating,
• extending,
• and modifying the specific collection
to each section over time
 Product Manager
• 2 product manager (each spesific
collection)
• purchasing material,
• placing production orders with the
factories,
• and setting prices
 Store Product Manager
• Served as La Coruna’s main
interface,
• Having daily contact with the stores
based on their geographical region,
• Traveling to stores,
• Initiating store-to-store transfers
 Team of Commercials

Design
Team Store
Product

Product Manager
Manager
 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
 Stores

Store Manager
 Store manager
• Determined
replenishment
quantities,
• Learned about
newly available
garments
(consulting to IS at
La Coruna via
Handheld)
Operational
 Operational

The Offer
Headquarter Stores
(in La Coruna) The Order

The Offer
Information Store
System Consulting
The Order Manager

Twice a week
 Fullfillment
• Shipping clothes  stores,
• Match up the supply into DC with
store’s demand
• Information : - Agregated orders
- Total supply of
inventory in DC

SKU
• 1-2 days deliveries
 Design
Design
Store
Team
Product
Product Manager
Manager

• Typicaly years  11,000 new items

• Competitors  2,000 new items
 Manufacture

Group of factory
Cut fabric Garment
(small local workshop)
Finished garment

DC Zara’s facilities
 Design and Manufacture

New
concept Production DC
design

3 weeks

2 days

Stores
IT for Operational
 IT

Speed
and
Decentralized decision making
 IT
Technology
• Jose Maria Castellano
Steering
• Xan Salgado Bodas Committee
(Head of IT Division ),
Bruno Shancez Ocampo
(Leader of IT Technical)
Technology Steering Committee
• Determine new system,
• Writing application or accounting
software
Technology Steering Committee
In 2001 - 2002
Application development team

Inditex’s IT
IT employees
Spending was
was less than
0.5 % of
0.5 % of total workforce
revenue
Store solution
In contrast,
Other other IT
competitor’s competitor’s
spending wasIT
employees was 2.5% of total
2% of revenue
workforce Logistic support

Administrative system
Information Systems in La Coruna
• Support operation,
• Developed application :
1. for prepare “the offer” Stores
2. for receive “the orders” from
stores and agregate them
3. For compare
Agregate order : Available inventory

4. Highlight situationsupply & demand

imbalanced
5. Executed commercials decision
6. Kept track “THEORETICAL INVENTORY”
 Information Technology in
Factories
• Simple application used to plan
production,
Load factory
quantities
Factory manager
Due dates Schedule the
production

• Large computer controlled equipment

– Cut clothes into pattern
– How to position pattern (min scrap)
– Cut over 100 layers of fabric
 Information Systems in DC

• Great deal of automation and

computerization,
• IS tracked where each SKU was stored as
it entered DC,
• Controlled conveyor belts to pick up SKU
and drop off at appropiate place,
• IT Dept. wrote application that
controlled DC’s automation
Information Technology in Stores

Headquarter

• Handheld / PDA
• POS terminal

Other store
 Handheld / PDA

• In 2003

order
Stores Headquarter
Transmit information
(the offer)
Handling
garment
return
task DC
 POS terminal
• 10 years unchange
• DOS OS
• 2003 - microsoft doesn’t support dos
anymore
• Zara’s IT team internally developed POS
application
• Daily transmit comprehensive sales
information and other data  La Coruna
• More than 1 POS each store
• Only 1 POS in the store had a modem
 POS terminal

POS with Headquarter

Daily sales inf.
POS modem

POS

POS
 Salgado vs Sanchez
• Want to upgrade • Don’t want to
POS upgrade POS
• POS runs on DOS • Riskier to
• If POS hardware upgrade just to
vendor upgrade stay current
their machine & • POS works
not compatible stable and
anymore with properly
DOS
 Salgado vs Sanchez
• Became problem • Sales get
if Zara want to recorded
open new store • Transmit
• Could add everyday
functionality • Could mess up in
• Could add the middle of the
networking process
capability
 Salgado vs Sanchez
• Store managers • Store managers
ask for upgrade always ask more
POS • It was least
• Store managers important for
want to be able Store managers
to look up the to count the
inventory inventory
balance in their balance all the
store time
• POS is’not
broken
 Conclusion

Should the company continue to use of the existing

IT infrastructure that had worked for so long?

OR

Should the company upgrade the system into a

modern one with the updated Operating System
and new capabilities?
 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)
 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)
 Suggestion
• During this dilemmatic situation, it doesn’t make sense to buy the
current 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 company’s 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
• 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 in
each store worldwide to help maintaining the
new system