Spanish Inditex’s most successful retail clothing store Zara is known all across the world for its trendy apparel (Mcafee, Dessain, & Sjoman, 2004).
The company has been very successful throughout the years but management has recently decided that the IT infrastructure may need updating. The store currently runs off of a POS system supported by DOS, which has not been supported by Microsoft for several years (Ferdows, Lewis, & Machuca, 2004).
The POS system has been working flawlessly for many years, however, management is worried that the hardware vendor for the POS machines will stop providing this outdated machines (Ferdows et al., 2004).
The purpose of this paper is for Salgado, the head of the technical department at Inditex, to analyze whether Zara should keep the system that has worked well for so long, or to upgrade it to a newer technology with more advanced features. The issues surrounding the DOS system, dial-up modem, networking abilities, manual inventory system, and handheld computers will be discussed in detail. Out of the alternatives and options examined, I will make recommendations to the company in favor of updating the POS system to Windows, as well as set an implementation plan for how they can rollout this project.
Monitors and controls will be decided on how the project will be evaluated. Introduction Zara, Inditex’s most successful retail clothing store has come to a crossroads in regards to its IT infrastructure (Mcafee et al. , 2004).
INFORMATION SYSTEMS In a general sense, the term information system (IS) refers to a system of people, data records and activities that process the data and information in an organization, and it includes the organization's manual and automated processes. In a narrow sense, the term information system (or computer-based information system) refers to the specific application software that is used ...
The company is headquartered in La Coruna, Spain (Mcafee et al. , 2004).
There are 650 Zara stores across 50 countries (Mcafee et al. , 2004).
Zara’s marketing task is focused on customer’s responsiveness to demand supplying small batches of clothing within three weeks of the emergence of the fashion trend (Mcafee et al. , 2004).
This allows them to rely on their loyal customers to frequently visit their stores (Mcafee et al. , 2004).
Zara’s competition includes The Gap, Benettons, and H&M (Mcafee et al. , 2004).
Zara manufactures it’s clothing to be worn a few times and prices are fairly affordable (Mcafee et al. , 2004).
Zara does not use a heavily advertised business model, as they only spend 0. 3% of sales on marketing and advertising (Mcafee et al. , 2004).
Zara’s uses a vertically integrated business model to produce trendy women’s, men’s, and children’s fashions and quick and efficient as possible (Ferdows et al., 2004).
They own most of the manufacturing and distribution part of the supply chain, as well as developed all of the software related to their IT department (Ferdows et al. , 2004).
Zara’s management uses a decentralized decision making strategy. A group within the company, called “Commercials” find the latest styles and decide what clothes to manufacture, and store managers decide what clothes they will sell in their stores (Mcafee et al. , 2004).
The current IT infrastructure is run off of a POS (point of sale) system developed by Salgado, the head of IT for Inditex (Ferdows et al. , 2004).
The system is run off of a DOS program, which Microsoft has not supported for many years (Ferdows et al. , 2004).
Although the program has worked well for many years, the company is afraid that the hardware vendor for the POS system will stop providing this outdated technology and the company will be left without a POS system (Ferdows et al. , 2004).
In the below analysis, Salgado will analyze the facts and come to a decision whether to upgrade the current computing infrastructure. Issue Identification The following issues dealing with Zara’s point-of-sale system will be discussed: 1)DOS system 2)Dial-Up Modem3)Networking Abilities.
Manual inventory system 5)Handheld Computers Environmental and Root Case Analysis DOS System Our current POS system, supported by a DOS operating system, presents an issue as DOS has not been supported by Microsoft since 2003 (Ferdows et al. , 2004).
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Therefore, all new computer systems are not compatible with DOS. Zara’s hardware vendor could stop supplying the DOS compatible POS systems at anytime. The current program operating under DOS was written by myself and has worked so well for us for many years, as new stores do not need any training on it, and have not had any issues with it.
We designed the program specifically to our wants and needs. However, some new features could be helpful. For example, the current POS program does not automatically track daily sales (Ferdows et al. , 2004).
Getting a new operating system is urgent because POS systems are essential for business and there is uncertainty in how long the current system will be available for. The cost for new POS terminals at each store is €5,000 (Ferdows et al. , 2004).
A Windows operating system for the new POS terminal would be a one time fee of €140 per computer and an annual maintenance fee of €30 per computer (Ferdows et al., 2004).
It will take 32 hours per store and cost €2,000 per day to install the new programming to the new POS system and train the staff on how to use it (Ferdows et al. , 2004).
Dial Up Modem Our current IT infrastructures in our various Zara stores are supported by dial-up modems (Ferdows et al. , 2004).
Dial-up modems create problems, as only one computer in each store is able to connect to the Internet to communicate sales and orders with our headquarters (Ferdows et al. , 2004).
Also, computers are not able to connect simultaneous to each other across a store.
Store managers have to use a floppy disk to transfer information between computers (Ferdows et al. , 2004).
This is a very outdated technology and this upgrade is inevitable. This is a more urgent requirement as this type of Internet connection is limiting our ability to conduct business. The cost per store for wireless Internet is a one time fee of €430, in addition to €240 annually (Ferdows et al. , 2004).
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Networking Abilities Another issue we have with our current IT infrastructure is that we don’t have ideal networking abilities.
For example, our Zara store sales information is not sent to headquarters until the end of the day when managers manually transfer information to the only computer hooked up to the dial-up Internet (Ferdows et al. , 2004).
Store-to-store networking is also non-existent, as Zara stores have to call each other to see if another store has a certain product (Ferdows et al. , 2004).
Inventory transfers and returns to headquarters would be simplified with wireless Internet. Since management views communication between different functions as a vital part of business, this is considered as a priority upgrade.
Once each POS terminal is connected to wireless Internet, it should be easy to get much better networking abilities without an added cost. Manual Inventory System Zara currently operates under a manual inventory system. This means that store managers have to physically walk around the store to get an understanding of what items are on the shelves (Ferdows et al. , 2004).
This is time consuming for the store manager when they are conducting product orders and it doesn’t allow them to see what a popular seller is.
Finding out what were popular selling items means having to talk to the salespeople to see what they sold most of. Part of this new inventory system should include a system for showing a more accurate total of inventory, compared to the theoretical inventory method they currently use. Inventory should also be constantly available for the headquarters to see. This is not an urgent requirement and can get done whenever the new operating system is working properly. The cost of programming the new inventory system is €450 per day and it will take roughly 5,000 hours total (Ferdows et al., 2004).
Handheld Computers (PDA’s) Our store managers use small handheld computers (PDA’s) to see what new clothing the commercials are offering, and use these to also order new shipments (Ferdows et al. , 2004).
These PDA’s are also used to handle garment returns to the headquarters. The negative thing about these PDA’s is that they are not connected to the POS system or the headquarters. Store managers also complain about the small screens and how the PDA’s are constantly being discontinued or replaced because of technical advances (Ferdows et al. , 2004).
Abstract The purpose of this report is to determine whether it would be feasible for the Style Shop to add a computerized register to the store. The Merchandising Society is the largest club on F. I. T.'s campus. It provides the opportunity for its members to enhance their college experience at the Fashion Institute of Technology. Its members are dedicated to gaining exposure to the fashion ...
Even though this creates a hassle for our employees, this is not as urgent of a problem as we are still able to conduct business with the PDA’s. Upgrading our POS system would also require us to incorporate the ordering system onto the new operating system so that we no longer require PDA’s. Once the new operating system is installed, there are no additional costs to adding the functionality of the ordering process. There will actually be saving benefits, as PDA’s will no longer be required.
Alternatives and Options OptionProConAlternative Keep the DOS POS systemReliable, Cost efficient, No training required Obsolete technology, risk with hardware vendor, Limited functionsUpgrade to new POS system Purchase extra POS terminals supported by DOSGain extra time to make a decisionInvesting more money in technology that is obsoleteKeep the DOS POS systems as the hardware vendor assured us that they will not discontinue them Upgrade all POS terminals and transfer to Windows operating systemCan add more functionality to software, more communication, same system other stores rely onExpensive (€13,000 per store), Not as many personalized functions, Have to train staff on new system (€2,000/store) (Ferdows et al., 2004).
Develop own software Develop a new operating system software using their IT knowledgeCan customize to suit Zara’s needsTime and labor consuming, limited to IT department’s knowledgePurchase already created operating system Recommendations From the above analysis, it is clear that it is time for Zara to upgrade its POS terminals and operating system. It is inevitable that the hardware vendor will at some time stop providing Inditex with the DOS operating POS system, and it would not be logical to continue investing in this technology if it is only short lived.
The new POS operating system should be outsourced to a well-known system, such as Windows, because my knowledge and the rest of the IT department’s knowledge may be limited. Thousands of other stores currently use a Windows operating system and have no problems with it. The new functionalities that can be added will greatly improve the efficiencies of the business. Such functionalities include an automatic inventory system, daily sales and trends per store easily accessible by headquarters, product ordering, and communication to headquarters and between stores.
RFID tags are limited for tracking consumer products worldwide. Manufacturers’ uses this tags to track the location of their products from the time of being delivered and until the consumers received it. The automated wireless AIDC systems are super effective in the field of manufacturing and producing items where barcode labels are eliminated or could not survive. AIDC commonly used for ...
This rollout will be mostly conducted by Inditex’s IT department and support staff. A pilot store will first test the technology and give feedback on how it is working for them. IT support staff will then train all store managers on the new POS system and begin to transfer all inventory data. The rollout of the new POS terminals and system will be conducted during slower retail shopping season and PDA’s will be phased out. After each Zara store is set up with new POS terminals and operating systems, a post rollout assessment will be conducted by IT support staff where the managers will give their input into how the transition went.