Zara Case

Topics: Knowledge, Knowledge management, Tacit knowledge Pages: 24 (8104 words) Published: June 29, 2013
Q. Explain the role played by information technology at Zara. How did the information systems at La Coruna (headquarters) support the company’s operations located worldwide? A.
Zara was a company that followed a very European business model to some extent. Zara preferred to invest internally within its own software development rather than buying new technology developed by external companies. A perfect example of Zara’s business solvency and accuracy was their inventory control. Theoretical inventory would be inaccurate due to several factors and externalities. The company followed the 95 percent accuracy rule is good enough. The greatly outdated DOS system, which Zara was operating in for decades, stopped being supported by the vendor. At this point Zara does not have a reliable system which would support future planning, whatsoever. Not keeping up any historical data means being unable to predict any sells, plan or estimate loses / gains and margins on particular designs. One of the greatest costs of this operating system is a stressful work environment, which could be easily resolved by adding IT/IS support. The cost of developing a new system would be quickly offset by the benefit of getting work done more efficiently and accurately. Telephones are less reliable than computers due to workers mistakes, such as basic problems of mishearing and misunderstanding. Zara needs to implement spread sheets, emails, and other kind of communicating and transmitting data features.

Zara has been successful, but there is a lot of room for improvement. The vision of implementing accuracy is more cost effective without significant distortion of the revenue. Moreover, these adjustments would unite the company, improve internal integration, and help establish Zara as a long term leader in the industry.

Needs in terms of Functional Area ,Process, Decision Levels for IT Implementation: (1) Unreliable fax machines, 15 meter long inventory requests, inefficient inventory control process, disconnect between the stores worldwide and corporate office in Spain. (2) DC’s relied on automation and computerization, however, the stores did not. (3) POS terminals and PDAs could not share information within a store or across stores; specifically, inventory could not be shared between stores to meet localized demand if DC could not deliver in time. (4) Outdated IT infrastructure - Floppy discs still used in stores instead of modern day technology to increase efficiency and accuracy. DOS was still in use and no longer supported. While the factories do have high tech machines for cutting the material, there is no sophisticated way of scheduling. The distribution heavily relies on people’s work, without any help of IT /IS. Lastly, the stores are opened by inserting floppies, and inventories are counted by managers walking daily around the store. Also, the sales records and orders are communicated by phone instead of using emails or some kind of internal system. Zara lacked a significant level of infrastructure and organization in the IS/IT area. The company was missing a chief information officer, formal processes for IT budgets, and investments for strategies and IT projects. Theoretically speaking, Zara had an outdated business process and implementation within their operations (IS/IT). The decisions for facilitating IT/IS infrastructure were performed internally through development of software and applications. There was very limited effort in applying new IS/IT to the company operations.

Zara’s internally developed application is not a good match for the business needs because of the following: a. Zara is a rapidly growing company with a small IT department and in-house application development will use needed IT/IS resources. Zara’s IT...
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