Zara: IT for Fast Fashion Essay

1 . Is usually Zara’s usage of IT different from similar firms? First, I want to highlight Zara’s business model and their business practices which are unlike its opponents, from which I will draw comparison on utilization of IT between these businesses.

Zara’s business structure and organization idea differ from many of its peers. As mentioned in the case – “The unique business thought was quite easy. Link consumer demand to manufacturing and link manufacturing to distribution.

That is the thought we still live by”. Accordingly, you will discover three major differences in procedures can be seen from the competitors. a) Zara is convinced that their particular target customers’ tastes in clothing will be hard to influence. Consequently, Zara planned to be able to develop and deliver styles which can be hot instead of relying on persuasiveness of marketing. b) Zara’s choices were not came up with and designed by a small, top notch team. Rather, collections were created, simply by teams of commercials every single dedicated to a piece of store. c) Zara did virtually no advertising.

Hence the promoting expenditures as percentage of revenue are very low in comparison to its rivals. Zara’s way of Information technology can be consistent with its preferences intended for speed and decentralized decision making. Zara is definitely using IT to obtain better cordons across the worth chain – both internal and external.

It has applications to prepare offers and to disperse it to stores, to get orders and aggregate these people, to keep track of ‘theoretical inventory’, to plan creation, and to monitor SKU’s on the DC’s. Most of the applications were developed under one building. There was simply no CIO with out formal techniques for establishing an THIS budget. And according to the foot notes offered, Inditex’s 2002 IT spending is approximately zero. 5% of annual earnings compared to normal of 2% at additional large suppliers.

Similarly, THIS employees made up less than 0. 5% of total labor force compared to normal of 2. five per cent workforce dedicated to IT at other significant retailers. These types of show that even though Zara has used THIS to deliver value to consumers, its use of IT is tailored to match the business idea and organization practices, and thus it is unlike use of THIS at various other retailers or perhaps similar businesses. Also, Zara doesn’t offer clothes more than Internet where as its rivals Gap and H&M are into online retailing.

2) Really does Zara provide an IT technique? What is a great IT strategy? – is known as a particular era of an organization’s overall objective(s), principles and tactics associated with the technologies that the business uses. Such strategies mostly focus on the technologies themselves and in some cases the individuals who immediately manage those technologies. The strategy could be implied in the organization’s behaviours towards technology decisions.

The data systems approach should specify ‘what’ the business needs intended for the foreseeable future, based on an analysis in the business, it is environment and the general organization strategy. An info technology strategy defines ‘how’ the requirements will be fulfilled based on the priorities inside the IS strategy. Zara has used IT widely to deliver worth to it is customers. It has got many applications developed to fit its business needs. Its THIS infrastructure worked for number of years.

But as pointed out in the case, the company had no chief details officer and no formal processes for establishing an IT budget or deciding on certain technology expense or projects. Instead, mind of IT and CEO were part of early on discussion of endeavours. There was no formal approval for IT work, nor had been cost/benefit studies for suggested efforts. The Point-of Sales units will be over a decade old and use DOS-based operating system.

The inventory depend has to be performed physically; as well they can’t communicate in real-time with other stores. As i have said in the case, Zara doesn’t offer clothes above Internet since the company’s distribution centers were not configures to get picking little orders and shipping them. This shows that the devices decided their particular business approach instead of different way. Thus I believe that Zara doesn’t have a long term IT strategy.

3) Will need to Zara upgrade? Improved effect time to tendencies, quicker replies to store products on hand levels, increased competitive positive aspects and more powerful communication are some of the benefits which can come from up gradation. If we look at current use, Zara’s POS terminals are being run on a DOS centered system, which is not supported anymore. The current practices put importance on man intervention – intuitive research, forecasting by way of commercials and decentralized making decisions.

But if functioning at the business idea, that places a huge importance on rapid respond to trend-influenced consumer demand and relies on simply no advertising. So I recommend that Zara should update. So far the program has worked perfectly, but it cannot afford to be forgotten in the technology application in the market. It was pointed out that the DETRAS vendors wouldn’t sign agreement promising match ups. It has threat of losing market share considering that the other merchants have real time communication.

With evolution of technology, contemporary operating systems and internet connections shall no longer be luxuries, but are necessary for endurance and expansion. By changing technology, the feedback loop can be increased and Zara can convey more accurate inventory numbers on which to basic judgements.