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How do You Think IT/System Infrastructure and IT Strategy at Zara is Supporting the Business?
Zara is a leading retail chain group of retail companies. Spanish tycoon Amancio Ortega owns Zara brand together with such brands as Massimo Dutti, Pull and Bar, Oysho, Zara Hom, Utrqu, Stradivarius, Lftis and Brshka. It is headquartered in La Coruna, Spain, where it opened the first store in 1975. It is alleged that Zara takes only 2 weeks from design to the receipt of a new line on the market, compared with the average 6 months in the industry. Moreover, over the years it developed more than 10 000 designs. Zara was able to resist a common industry trend of placing the clothing production sites in countries with low production costs. Perhaps the most unusual strategy for Zara is to invest part of the profits into advertising. This policy resulted in the opening new outlets. Now Zara has over 2000 stores in 88 countries.
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Zara concentrates on three winning formulae to create its fresh fashions. First, short lead time means more fashionable clothes. One more is lower quantities = scarce supply. The last one is more style means more choices, and more chances of hitting it. Information systems of Zara help to fulfil its main business operations: ordering, fulfilment, design and manufacturing . Information and communication technology is at the heart of Zaras business. There are four critical spheres concerning information that promote Zara and guarantee its success. IT systems help Zara to collect information about consumer needs. Every day the data is collected in every store and on websites, and afterwards it goes to a database located in the headquarters. The gathered information includes customers preferences, daily sales, and regional tastes. As a result, this data is used by designers while creating new lines and modifying existing clothes. The great advantage is that such information is real-time and constantly updated.
The company is successful mainly because it is able to control every department of its business productively. The headquarters are in charge of distribution, production and design processes. This approach enables Zara to respond to changing fashion trends in a timely manner. Customer tastes and preferences are considered in the process. Clothes arrive to every shop twice a week, which ensures that new arrivals are in accordance with each new fashion requirement. That is why Zara is called fast fashion.
Zara processes all the information very quickly, which allows designers to prepare designs accurately and in accordance with the newest trends. Common definition and clustering organizes data and helps to prepare clear manufacturing instructions. Managers and marketing experts are the most flexible experts in Zara. Zara optimizes its processes as the stores do not have to wait for new material because they are using available inventory. The main reason for storing information about every product and inventory management is a more efficient information system.
One of the key business processes is logistics. All goods should be sent to all locations using the most effective means. It is the task of distribution management. Interestingly, distribution management does not involve much human intervention. It is fulfilled by IT systems at Zara. Zara has around 200 kilometers of underground tracks that transport goods from Zaras manufacturing plants to the 400+ locations ensuring that each order reaches its right destination. Sorting out is conducted by using optical reading devices. The rate of distribution is more than 60,000 items of clothing per hour. Here, information and computer systems save much time for the company.
Additionally, information technology systems facilitate communications Zaras fast fashion trend requires constant exchange f infrmatin among all parts f supply hain. Zaras supply chain includes customers, store managers, market specialists, designer production staff, buyers, subcontractors, warehouse managers, distributors, and others. Zaras IT systems do not create any bureaucracy. It means that communication within the departments is fast, easy and instant. The absence of bureaucracy and the presence of transparency are peculiar for all operational procedures, and even Zaras ffice layout. Zara demonstrates high flexibility in sales, communication, production, distribution and its stock management. Additionally, Zaras services are extremely precise so that the companys supporters and those who favor it always know the schedule of production arrivals to local shops. Zara is creating new designs so quickly that constant updating makes customers attend stores much more often than those of any other clothing brand. Zaras shops are the major points of information gathering. Every manager is sending required information to designers who are located in the headquarters. Customers have direct influence on new collections, because their feedback is taken into account, including preferable trends in styles, colors or fabrics. Zara is an example of democratization of fashion.
One of Zaras best information system components is its online shop. It caters for the number of customers who want to save their time or do not have a Zara shop in their city. In such cases, effectively automatized delivery process allows Zara to extend its market and involve new customers. Zaras e-shop also gathers information about customers preferences and their feedback. At the same time, personal data and contact information of buyers can be used to send advertisements and notify about new trends.
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Unlike most ompanies, whih try to eise more workers and labor to ut osts, Zara is changing the organization of sales by running three produt families that are parallel, but distint, and designed for men, women and kids. Aordingly, there are different designs, sale techniques, and prodution-planning methods dediated to eah of these three lothing lines. It is more epensive to control three clothing lines, but information systems allows the flow for eah hannel to be fast, diret, and unenumbered by the issues in other hannels. Therefore, the verall supply hain is more responsive. Designers, markt spcialists and prcurmnt as well as production heads conduct constant cross-communication. Physical and rganizatinal primity f the three grups increases bth pace and quality f the design prcess. Designers can confirm sketches with clleagues quickly and infrmally. Market specialists prvide quick feedback abut the lk f new designs and suggest pssible market prices. Prcurement and prductin planners make initial estimates f manufacturing csts and accessible capacity. Zara pays great attention to the manner it uses the latest infrmatin technlgy tls t promote the infrmal echanges between specialists. Fr eample, it is using custom cmputers t supprt the cnnectin between retail shops and headquarters. These cmputers facilitate regular phne cnversatins between the stre managers and market specialists.
The persistent flow of updated data within Zara eliminates the occurrence of supply chains amplifying tiny disturbances. Information systems help Zara to avoid pricy overproduction as well as discounting, which are so popular within the retail industry.
All in all, Zaras business strategy includes effective information technologies and information systems. The acquired speed of data processing, manufacturing, feedback, reaction to the customers and communication make Zara a synonym for fast fashion. The IT and system infrastructure increase the competitiveness of Zara on the global arena. As a result, while the fashion is changing, the company is adjusting to any environments and market demands.
What Current or Potential Issues (if any) do You See in Zaras IT/System Infrastructure and IT Strategy?
Zaras IT infrastructure and strategy have many advantages. First, they facilitate communication within company and with partners. Moreover, they provide fast services that, together with smart management, posit Zara as fast fashion. Information technologies optimize processes and attract more highly skilled workers. Additionally, it is important for Zara to communicate with customers and receive their feedback to form the basis for future work. Technological infrastructure of Zara includes hardware (processors, keyboards, devices for storing data), software (operating systems, programming languages, database management system) and telecommunication technologies (devices and protocol programs used to manipulate and transmit data).
Alongside with advantages, Zara has several potential issues that are mostly related to the essence of information technologies and information security. First, Zara has a very peculiar IT infrastructure. It includes headquarters (La Coruna), factories, distribution channels and stores. One of Zaras weaknesses is that its products are epensive. The firm has many levels of IT/IS infrastructure, which are epensive to maintain, and thus they influence the price of the clothes. Any IT service is epensive, and such a big company as Zara requires constant presence of the best IT eperts. The hardware should be very reliable, and the same applies to software. If the company relies heavily on information systems and computer technologies, as it is the case with Zara, the risk of business failure because of system breakdown is too high.
Additionally, as any other information system, Zara can be a target for different information threats. Zaras information security requires constant strengthening against viruses, cyberattacks, unauthorized access to information, influence of unstable political situations in different countries, and ensured physical information security. Thus, Zara requires backup systems and cyberprotection. Any failure in payroll, transaction processing, decision support, finance or IT systems could bring great loses to the company. For the transaction processing system, validation and verification of data are crucial.
Compared to competitors, Zara cannot propose many jobs. Involving information systems in business means less people working, as they are not needed if computers can accomplish the same tasks faster. Sometimes, problems with employment cause the alienation of clients. Additionally, if Zara wants to be more competitive and discover new business or technological possibilities, it needs to develop new information systems or replace the old ones, which would be too costly and time-consuming.
All thing considered, the management of information systems has ceased to be the only attribute of a large-scale, high-cost business. Specialized information systems are designed to synchronize the internal structure of the enterprise. Modern software tools allow to establish effective interaction with eternal stakeholders in order to make transparent internal functional processes. As a result, the overall cost of doing business is reduced and enterprise competitiveness is enhanced. Zara is a highly effective company with elaborate managerial systems. Zaras use of IT system and an effective infrastructure has made this company one of the global clothing leaders. The issues that Zara may potentially encounter include threats to the information (hacking or damaging), high cost of IT services, validation and verification of data, financial IT systems security, dependency on computers and employment issues. Nevertheless, they are possible to prevent or eliminate.
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