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MGMT 6620: Operations & SCM HBS Example Zara: THIS for Fast Fashion 4/9/2013 1 . Precisely what is the Zara “business model? What weaknesses, if any, do you noticed in this business structure? The value propositions offered by Zara to their main customers who will be young, style conscious city-dwellers is offering fresh styles inside the time-frame of several weeks as well as providing range of choices for consumers and the uniqueness of clothing styles fitting individual customer needs. To achieve this Zara’s business model had the next: 1 .

Incorporating the horizontal structure for positioning orders and deciding which usually items to press aggressively simply by delegating decision making responsibilities to store managers, installment payments on your Low volume production of any item and high inventory turnover, which will secured better tracking of “hot items, which can be sold well, 3. Reduction of losses in items which are not selling well- Company was eliminating inventory build-up by simply managing low inventories through their frequent updates organization achieved substantial foot traffic in its stores and used the businesses as points of interest of the marketing campaigns.

Weak spot in Zara’s business model is the fact each shop is highly dependent on decision making capabilities of retail outlet managers, that might cause the condition if some of them decide to leave. Moreover, seeing that company depending upon small retailers scattered through Spain and Portugal due to its production any economic downturn in those countries can cause the increase the cost of developing or COGS. 2 . Within your opinion, what are the most important areas of Zara’s approach to IT? Are these methods applicable and appropriate anywhere? If not really, where will they not really work well?

The Most important aspect of Zara’s approach to Information technology is the use of DOS-POS in its current shop to track customers demand quickly, decentralize the organization and provide client with trendy clothing options. Yes these types of approaches happen to be essentially suitable starting from production till distribution, but Zara’s current It really is outdated and desires to be upgraded from future sustainability viewpoint to network with various retailors and syndication centers. Zara could confront challenges in longer operate from operation front with new technology.

Zara must keep improving them with the newest technology to beat the opponents that might cost high. New technology demands teaching on consumption to worker that again involve cost. 3. Should the company build in-store sites? In our group’s opinion, Zara should build in-store sites. First of all, their grocer manager has difficulties in ordering with out in-store sites. Aim of Zara is to present its clothes quickly even though the system which in turn Zara presently has are not able to reach this kind of requirement.

The store personnel could not look up all their inventory through in-store computer, they need to speak to salespeople to determine the quantities, which can be time-consuming. Subsequently, for the fulfillment method, the level of the SKU is hard to determine without in-store systems. More importantly, if in-store networks would not always be built, the infrastructure that Zara shops currently have are not able to provide details among shops about the SKU. Shop personnel have to use outdated methods such as having telephone call or having disks to report the inventory or calculate the total sales.

What is more, the low expense wireless sites help and favor home up of in-store networks. Zara, as a business, which has a promising future, must also update their network infrastructure, as its organization scope is going to grow bigger. 4. Just how would you suggest Salgado to proceed about upgrading Zara’s POS system? The POS terminals using 2 has been unchanged for over 10 years, which made Zara hard to manage the daily operation effectively. Updating Zara’s Pos software would use the large display screen, keyboard and mouse to quickly provide service to buyers.

It is very important because time is definitely money. Clients are now extremely busy with their daily schedule, faster assistance will attract even more customers. Furthermore, the modern DETRAS terminals would be able to execute more sophisticated capabilities including sharing with additional stores the inventory. This is essential for the organization to manage the inventory and promote the brand network. It shows for the customers that Zara store is a global network and has the same value of providing the very best service to buyer anywhere. It will reduce the expense of phone call utilizing the communication inside company’s on the net network.

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