This document discusses the case of Zara, a large international clothing retailer known for its rapid response to fashion trends. It describes Zara's business model, which relies on vertical integration, in-house production, quick response times, centralized distribution, and low advertising costs. The document also discusses Zara's use of information systems across various parts of its business to gather customer data, track sales, coordinate design and production, manage logistics and distribution, and engage in other activities. Some challenges of implementing and maintaining such information systems are also outlined.

1. Case Analysis
Amitava Manna Ankit Sharma
Amritanshu Ankita Varma
Mehra Anuj Chhabra
Animesh Ranjan

2.  Zara is by far the largest, most
profitable, and most internationalized
of the chains.
 Zara‟s marketing strategy focuses on
product variety, speed-to-market, and
store location.
 Zara‟s success is based on a business
system that depends on vertical
integration, in-house production,
quick response, one centralized
distribution center, and low
advertising cost all of which made it
so successful thus far.
 Zara faced tough competition
internationally with companies
including H&M, Gap, and Benetton.

3.  Collecting vital information, such as daily sales
numbers, allow designers to approximate what
types of fashions are selling well.
 The designers have real-time information
available when deciding which type of fabric, cut,
and colors to use when designing new clothes or
modifying existing ones.
 IT advantage has shortened the time it takes to
go from design conception to the time of arrival
at the distribution centers and finally to the
stores to be placed on racks.

4. DESIGN
SOURCING AND
RETAILING
MANUFACTURING
DISTRIBUTION

5. DBMS ERP
SQL , Oracle SAP ,people soft
CENTRALIZED
SERVER RFID
NAPSTER

7. Sourcing and manufacturing
 About 40% of finished garments were manufactured
internally, and of the remainder, approximately two-thirds
of the items were sourced from Europe and North Africa
and one-third from Asia.
 The most fashionable items tended to be the riskiest and
therefore were the ones that were produced in small lots
internally or under contract by suppliers who were located
close by, and reordered if they sold well.
 More basic items that were more price-sensitive than time
sensitive were particularly likely to be outsourced to Asia,
since production in Europe was typically 15%–20% more
expensive for Zara.

8. DESIGN
 The teams used information systems to track customer
preferences and sales
 Zara‟s store managers lead the intelligence gathering effort that
ultimately determines what ends up on each store‟s racks.
 Digital assistants (PDAs) are used to gather customer input, staff
regularly chat up customers to gain feedback on what they‟d like
to see more of.
 The valuable data allows the firm to plan styles and issue re-buy
orders based on feedback rather than hunches and guesswork.
The goal - to improve the frequency and quality of information
system allows for the best design trends.

9. Sources of Information
 POS data
 Industry Publication
 TV Internet
 University Campuses

10.  Zara uses software like C-Design and Corel Draw. Based on
the power of CorelDRAW Graphics Suite, C-DESIGN Fashion is
a computer assisted design (CAD) and technical pack tool that
allows ZARA to create and merchandise its collections quickly
and efficiently.
 Customers can choose a single software solution that
supports the full creative lifecycle including design, textile
drawing, technical packages, collection plans, line sheets and
visual merchandising.

11. Distribution
 Zara has its own centralized distribution
system.
Sources of Information
 Centralised Distribution System
 Mobile Tracking Systems
 PDA
Distribution center in La Coruna

12. Vertical integration
 Zara defies most of the current conventional
wisdom about how supply chains should be
run. Zara keeps almost half of its production
in-house and uses smart technologies to
have a competitive advantage.
 Rather than chase economies of scale, Zara
manufactures and distributes products in
small batches

13.  Instead of relying on outside partners, the
company manages all design, warehousing,
distribution, and logistics functions itself. It
uses latest technologies to keep up with
latest trends.
 Under computerized system, the company
reduced its design to distribution process to
just 10 to 15 days.

14.  The IT implementation of the OR models was
relatively challenging, in that it required
establishing dynamic access to several large, live
databases (store inventory, sales, and warehouse
inventory) to compute, under very stringent time
constraints, many decisions that are critical to the
company's distribution activities

15.  About three-quarters of the merchandise on
display is changed every three to four weeks,
 The average time between visits given
estimates that the average Zara shopper
visited the chain 17 times a year, compared
with an average figure of three to four times a
year for competing chains and their
customers.

16.  Promoting Quick response
 Coordination between retailing and manufacturing
 Sales and trend forecasting
 Marketing Strategies for different markets
 The aggregated demand is ascertained and the supply
is allocated according to past performance of the
various garments at the stores

17.  Pricing was market-based.
 Zara uses information systems for
customer profiling, to analyze the
purchase patterns and direct targeting
 The company is able to more quickly
respond to fluctuating customer
demands in fashion trends. Zara's
Unique Selling Proposition (USP) is to
create or imitate the latest trends within
a short two-week period
 Zara uses policy of zero advertising the company preferred to invest a
percentage of revenues in opening new stores instead.“
 Zara's marketing strategy is very effective because of its
 1) affordable prices
 2) unique response to market demands.

18.  Challenges can be broadly seen under the
following heads:
People
Data Process
Software Devices

19.  The resistance of change to new process methods by
management and supervision.
 Inadequacy, inconsistency in the requirements agreed upon at
the planning phase of the IS design phase and the actual
requirements fulfilled by the system.
 General lack of user acceptance when the System has gone live.
 Inadequately educating the workforce to operate the new system
properly.
 Possible changes to kitting demand during „go live‟ may stretch
the new system and those operating it on a learning curve
beyond capacity.

20.  Values between the systems were incorrect, so
comparisons need to be made on the values from
the legacy system with those on the new system.
 Possible failure to cut over to the new system
through the inappropriate systems testing of
volume, stress and data conversion.
 User authorization problems, such as, password
and user level clearance.
 Temporary halt of work on the stores due to
unavailability of systems.

21.  Transaction problems while dealing with multiple
systems and problems in accurate
communication between diverse systems.
 The possible failure of providing inadequate and
ongoing support after implementation.
 Maintenance difficulties may occur on bridged
legacy systems and with external partner
systems.
 Issues may occur in the security implementation
and encryption of the data being transmitted.

22.  At Zara PDAs were used primarily for ordering and for
tasks such as handling garment returns to
distribution centers and transmitting information to
all the stores.
 The PDAs may result in problems of lack of expertise
in staff which may lead to manhandling of the device.
 Connectivity issues may be there between PDA and
the main backend system.
 Proper maintenance activities need to be regularly
carried out for each store location.

23.  The POS terminals used at ZARA stores used back
dated DOS operating system that was no longer
supported by Microsoft. This could lead to
problems if in future the hardware vendor decides
to upgrade its software.
 The employees had to copy daily sales data from
each terminal onto a floppy disk and then carried
these disks to one modem-equipped terminal to
accomplish the data. This could lead to serious
implementation issues from human errors of
copying sales data.

24.  The IS at ZARA need to use sophisticated mathematical
models to generate “Optimal Solution and Plans”. Hence a
better software with the necessary capabilities will be
required.
 The data from the Customer Relationship Management
System (CRM) can become cumbersome and difficult to
understand for an ill-trained user.
 The IS needs to be able to handle multiple access to the
system from varied geographical locations simultaneously.
 The roles of each individual accessing the system needs to
be clearly defined and appropriate rights and privileges
need to be administered.

25.  Accurate capturing and storing data from
multiple points need to be ensured.
 Gaps may occur while transmitting data
between various systems in an IS leading to
inconsistencies.
 Data theft and other data loses may occur if
the data is not secured.