Zara Case

1472 Words Aug 21st, 2008 6 Pages
Q1a. Should the company upgrade the POS terminals to a modern operating system?
It might not be in the retailer’s best interest to perform such upgrade, as the new system will replace three of the existing legacy systems in terms of ordering and fulfillment. The IS department will perceive such upgrade as a radical move and is expected to show high resistance in response to it. Even though Zara has a decentralized decision making process, the retailer’s IS department exercises absolute autonomy on the IT infrastructure and design. The fact that “only one person had left the department” in the past 10 years further confirms that the retailer is suffering from cognitive and action inertia, and thus creating a huge barrier for such
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The “commercials” at La Coruna have great discretion in deciding what clothes would be designed and produced, unlike other companies which use a small elite team for design and production.

Weaknesses within Zara Business Model
-Since Zara has a short lead time for delivering products, it keeps no buffer stock and most, if not all, logistics arrangements were centralized at the head office in La Coruna. This makes Zara very vulnerable to accidental incidents.
-As the store managers are empowered to decide what products to be put in the store, their business sense are crucial. However, since the store managers are not expertise in this area, they may not be able to pick hot items and certain sales opportunities may be lost.

Information needed to operate in this business model
-To operate this business model, the store managers should have the access to accurate and updated sales and inventory data for them to decide what to order and what not to order. In addition, they should know the availability of the products they would like to order eg. by having access to the inventory level of other stores.
-With the tight order deadline with La Coruna, the store managers need on-time inventory balance to plan for the re-order point and optimal order quantity.

Q3. What current or potential weaknesses do you see in Zara’s IT infrastructure and IT strategy?
IT infrastructure
-Critical core services are relying on

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