Salgado head of IT,sanchez boss
Salgado wants a new POS system. Sancez technical lead for POS

Risky to upgrade. Age structure running on DOS, not supported
Hw vendor could change so DOS mabe will not be by supported. Maybe they will not be able to grow

Sales get recoded in stores and transmitted
No issues. Very reliable. Little involvement when expanding.
Limited functionality . no networking capability

Store managers want more.
Cant look at inventory in own stores and other stores. Sanchz does nit think its important.

Business Model-link customer demand to manufacturing, and link manufacturing to distribution.

Founded in 2003 . owned by Ortega. Started in 1963. Believes that retailing and manufacturing needed to be closely linked in the apparel industry. Castellano (Ceo) was in IT

Speed and decision making
2 beliefts (oretega, castellano)  responds very quickly to the demands of target customers, who were young and lived in cities. Taste changed quick . hard to predict and hard to influence.
Zara even wants to use the faship misses to gain revenue.
Ortega, castellano and other senior mgrs. Wanted to take advantage of the intelligence and trust the judgment of emploees throughout the company , instead of reluing on a small set of decision makers.
Store managers decided what garments wold be on sales at their stores. They placed orders for the items they thought would sell, rather than simiply accepting and displaying what HQ decided to send them
Commericils Great discreation in deciding what clothes would be designed and produced vs other vendors who relied on small elite team.
Commericals included product managers and 2 designers. Another group of commericals called store product managers satnext to designers and product managers. These guys connected with store managers to see what was selling vs not. And communicated back .. store product managers could initite store to store transfers when they saw garments slowly sales.
More move like store to store transfer and who gets what.. etc. set pricing.. decentrazlied power

Marketing, other comp 4% on markging. Zara 0.3 . spent heavily on stores. Design done through HQ.
Price set at factory. No classic styles. Short life span clothes. . 75% of the merchanidze was changed in stores 3-4 weeks.

Internet sales- no sales at this time. Not configured for picking small orders.. NO IT ??
NO model to handle returns.. returns could be 50-60% on online stuff

Finance
2003—inditex op 1558 stores. 45 countries. 550 were zara.
Store a day. 46% of sales in spain. France 2nd largest mkt
Zara contributed to 73.3% in sales. Women accounted for 60% sales with the rest evenly split between men and children

Netiincome 502 US million. Rev of 4554 million, earnings have tripled between 1996 and 2000. See graph 5 and 6
Need more stores.

Operations
To respond quickly and accurately and respond to shifting demands.. zara establisted 3 processes. Ordering fullfilment and design/manufacturing.
Ordering ( of garments by the stores) was the most regular, precisely defined and standardized around the world.

Ordering

Order twice a week. Replenishment of exisinting items and initial request for new garmends
If the deadline was missed. Only replimenshment order based on what the store sold since previous order.

Store managers had to do an inventory count by walking around the store and checking whats poular and counting.
Could not look inventory balances on any instore computer.. so manual work required

Dial up modem was used to connect handhelp computer to get newly avaibale garments.

24 before the deadline digital order form was sent to all stores. Had details around the new products and the replisment items available to that sotre.
Each offer was different . offers were developed by a team of commercials and were based on garment availability regional sales patters, predictions about what what would sell.
Many people involved in ordering..

Fullfilment required another group of commericals .job was to match up the supply of finished clothes coming from factories into the DC with the stores demands for these items.

No communication… if inventory demand and supply didn’t meet.

Design and manufacturing
Vertical intregration helped enabled this contant introduction of new items and also ensured short lead times. Various factories around spain who did the capital intensive intial prod of cutting and dyeing. Sewing happened in small local workshops .. shipped to DC where they were ironed, inspected, given a readable tag and sent to DC

This model helped zara to move new diesign to production to DC in 3 weeks \

Did no thave to rely on accurte long range sales forecasts.

IT

Approcch and org
Was consistent with speed and decetrrazlied decision making. No CIO and no processs for setting an IT budget. No one to deciding on specific technologu investment or project.

There was a little or no formal justification for IT efforts, nor were cost/benefit analysis typically conducted for a proposed effort

Team wrote applications they needed . thought commercial pacakages wont do it due to unique needs.
Would mean that account pacages would have to be extended and modified. . all accounting, ordering fulfillment and manufacturing were largely developed internally.

It divided in store solution, logistic support and admin systems. .. staff retiontaiton not a problem

La Coruna

Several systems were used to support zara operations. Internall application were used to prepare the offer and distribute it over the internet to stores around the world and also to receive orders from all of the stores and aggregate them.
Another app compared the aggregated order to avaibale inventory for each sku , highlighted situations where supply and demand didn’t match and forced coomercials to make decisions on how to allocatied.

Another application track of theoretical inventory of each sku at each store. . shipments to store increased this inventory and sales decreased it. .. if the shpments and sales were not recorded perfectly stores inventory be inaccurate, theft damage and other losses would cause issues.

Didn’t care about the inventory to be 100% accurate

Factories.
More applications were used to plan production. Did not have optimal plans and schedules. Gave factory managers dates and qtys for all production requests.. . load their factories and put jobs in sequence.
Most advanced thing was the computer controllers cutter.

DCs depended on automation and computerization. Received bulk qtys for each garments from factories and recombining these garments into shipment for each shote.

Information syustems tracked where eack sku was stores as it entered the DC, then controllerd the belt to pick them up and drop them at the right places.

IT wrote the applications with the belt manufactures.

Stores.
Identical handhelds or PDAs. And POS systems. Introduced in 1995 ..

They used fax order forms back and forth to all stores but it was taking too long. Time consuming and not reliable.

Used various PDA’s

Zara constantly upgraded storeages PDSs as new modesl came out.

POS terminals
Unchanged for over a decade.
DOS OS. Not supported by MS. Used a ported application on top of DOS made it stabell effective and easy to rollout.
Could turnoff and on the POS systems without issues. Store managers could maintain the Pos THEMselves. No IT support was required.

Neither the pos terminals nor the pds were always connected to zaras HQ. only used at end of day to tranders sales info and other data to HQ. only one POS had the link so managers copied it from terminal to terminal to get the data. No link between POS systems.
PDA’s used this termainl modem to receive the offer and transmit order. Pda and POS couldn’t share information.
No connection with other stores.

Conclusion

Growing on obsolete IT. What if the DOS is not supported on HW.. vendor has already told the zara that they are last customer using this. No written confirmation that the vendor will not change the product.

Time to go to new OS on linux, unix or windors. Or go buy more of OLD POS.

Complaints included store managers had pdas what that it was time consuming to use the small screen and stelyes to accompist returns. .. newer system could do this faster.

Maybe new systems can have network in the store and company. With wirless network floopy wont be required.. to tally up the sales.

And if everyone was connected to HQ everyone whould know the inventory in other stores.