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Presented By:Chandan Gupta Sah

Prateek KhareDeepak Jaiswal

Abha Chaudhary Sagar Jena Abhinav SharmaPulkit Sinsinwar

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Inditex (Industria de Diseño Textil) was a globalspecialty retailer that designed, manufactured andsold apparel, footwear, and accessories for women,men, and children through Zara and five other chains

around the world. At the end of the 2002 fiscal year, itoperated 1,558 stores in 45 countries. The 531 storeslocated outside of Spain generated 73.3% of the totalrevenues of € 3,974 million. Inditex employed 26,724

people, 10,919 of them outside Spain. Their averageage was 26 years, and the overwhelming majority were women(78%).

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Zara prefers developing applications internally for its use,instead of buying the commercial available software. At thetime of the case, the company relies on an out-of-dateoperating system, the POS (Point of Sale), for its store

terminals and has no full-time network in place across thestores. The POS system runs on DOS, which is not supportedby Microsoft. As much this system is outdated, it is still easy tomaintain and operable and with this Inditex has built anextraordinary well-performing value chain. However, in 2003,

Zara’s CEO must decide whether to upgrade the retailer’s present system and risk the reliability with the current system,or continue with the old system that will not be compatible forfuture changes or improvements. The case describes this value,concentrating on its operations and IT infrastructure.

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Link customer demand to manufacturing

Link manufacturing to distribution

Following forward integration by opening the Zarastore in La Coruna in 1975

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In the process of speed and decision making Ortegaand Castellano wanted to share their beliefs about thecompany.

They wanted that Zara needs to respond quickly to

the changing fashion trends, which were very hard topredict and hard to influence.It needs to target the young, fashion-conscious city

dwellers.

Deliver the style which are hot and classy.Take the advantage of disintegrated decisionmaking.

Just in time technique used to control the inventory

cost.

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Marketing, Merchandising, and

AdvertisingZara believes that its customers and stores are the

form of marketing rather than advertising. No Advertising Marketing Strategy .Cost advantage over competitors .Highly efficient distribution system.

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Inditex: 1558 stores in 45 countries550 ZARA chain stores.ZARA: 73.3% of the group’s sales.

Women: 60% of sales.Net income of 502 million USD on revenueof 4,554 USD. Ample space of growth in Italy and western

European infrastructure could be largely supported with its current infrastructures.

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Cycle process: Ordering, Fulfillment, and designand manufacturing.Store managers could not look up their inventory,canvassing was only way to learn about stock levels.

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There are another group of commercials who used to do the fulfillment(Shipping) process to match the demand with supply.

It used to be done in two ways.

By taking the total orders from all the stores

By placing the order the store

These process were done at the stock keeping unit (SKU)

The supply of the orders was decided by the commercials.

Commercials could also ship the products that were not ordered.

Products were delivered as soon as possible and were put into the sales

immediately.

There was no Back room.

DC in La Coruna was active all the days of the week.

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Zara used to bring new items continuously as compared to it’s

competitors

Their focus was on, manufacturing and distributing in short time

period.

Effective use of network to provide new products.

But, They didn’t have the long range sales forecast.

They next production of the garments was depended on theStores’ orders.

Zara’s focus was on customer demand rather than it’s long term

sales.

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Satisfies its need for speed & decentralized DmPreferred writing applications themselvesDeveloped apps internally for ordering ,fulfillment &

manufacturing .Divided into 3 parts i.e. store solutions ,logistics support& administrative services

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Not compatible with upgraded POS hardwareOutdated & less added functions.Non provision of the synchronized device platforms.

More decentralized mechanism & inconvenient.Non practical theoretical inventory mechanism.Manual order making & monitoring mechanisms.

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Their DC’s relied on a great deal of automation andcomputerizationUse automated conveyer belts which facilitate the ongoing

various tasks (picture as follows).

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Would up gradation put at risk the robust and scalableinfrastructures?What if vendor for POS changed the machines andZARA are no more able to use DOS?

Is it the right time to go for change in operatingsystem of ZARA’s POS?

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Current POS system is written by Sanchez which puts the business continuity at high risk depending on Sanchez’sknowledge.ZARA should prepare for online and digital sales: e-commerce is an essential part of today’s business. Up gradation will enable them to use accounting software of different countries.Cost of adopting the new system will be quickly offset bybenefit of getting work done more efficiently and accurately.Store managers will get to know about their current positionsof the inventory and it will be easier for inter-store transfersreplacing telephones.Emailing, spreadsheets and other kinds of communicating andtransmitting data features can be used if they up grade the OS.

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THANK YOU

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