Presented By: Chandan Gupta Sah Prateek Khare Deepak Jaiswal Abha Chaudhary Sagar Jena Abhinav Sharma

Pulkit Sinsinwar

Inditex (Industria de Diseo Textil) was a global specialty retailer that designed, manufactured and sold apparel, footwear, and accessories for women, men, and children through Zara and five other chains around the world. At the end of the 2002 fiscal year, it operated 1,558 stores in 45 countries. The 531 stores located outside of Spain generated 73.3% of the total revenues of 3,974 million. Inditex employed 26,724 people, 10,919 of them outside Spain. Their average age was 26 years, and the overwhelming majority were women(78%).

Zara prefers developing applications internally for its use, instead of buying the commercial available software. At the time of the case, the company relies on an out-of-date operating system, the POS (Point of Sale), for its store terminals and has no full-time network in place across the stores. The POS system runs on DOS, which is not supported by Microsoft. As much this system is outdated, it is still easy to maintain and operable and with this Inditex has built an extraordinary well-performing value chain. However, in 2003, Zaras CEO must decide whether to upgrade the retailers present system and risk the reliability with the current system, or continue with the old system that will not be compatible for future changes or improvements. The case describes this value, concentrating on its operations and IT infrastructure.

 Link customer demand to manufacturing Link manufacturing to distribution

Following forward integration by opening the Zara

store in La Coruna in 1975

In the process of speed and decision making Ortega and Castellano wanted to share their beliefs about the company. They wanted that Zara needs to respond quickly to the changing fashion trends, which were very hard to predict and hard to influence. It needs to target the young, fashion-conscious city dwellers. Deliver the style which are hot and classy. Take the advantage of disintegrated decision making. Just in time technique used to control the inventory cost.

Marketing, Merchandising, and Advertising

Zara believes that its customers and stores are the

form of marketing rather than advertising. No Advertising Marketing Strategy . Cost advantage over competitors . Highly efficient distribution system.

Inditex: 1558 stores in 45 countries 550 ZARA chain stores. ZARA: 73.3% of the groups sales. Women: 60% of sales. Net income of 502 million USD on revenue

of 4,554 USD. Ample space of growth in Italy and western European infrastructure could be largely supported with its current infrastructures.

 Cycle process: Ordering, Fulfillment, and design

and manufacturing. Store managers could not look up their inventory, canvassing was only way to learn about stock levels.

 There are another group of commercials who used to do the fulfillment

(Shipping)

process to match the demand with supply.

It used to be done in two ways.

By taking the total orders from all the stores By placing the order the store

These process were done at the stock keeping unit (SKU)

The supply of the orders was decided by the commercials. Commercials could also ship the products that were not ordered.

Products were delivered as soon as possible and were put into the sales

immediately.
There was no Back room.

DC in La Coruna was active all the days of the week.

 Zara used to bring new items continuously as compared to its

competitors
Their focus was on, manufacturing and distributing in short time

period.
Effective use of network to provide new products.
But, They didnt have the long range sales forecast. They next production of the garments was depended on the

Stores orders.
Zaras focus was on customer demand rather than its long term

sales.

 Satisfies its need for speed & decentralized Dm

Preferred writing applications themselves

Developed apps internally for ordering ,fulfillment &

manufacturing . Divided into 3 parts i.e. store solutions ,logistics support & administrative services

 Not compatible with upgraded POS hardware

Outdated & less added functions.

Non provision of the synchronized device platforms. More decentralized mechanism & inconvenient.

Non practical theoretical inventory mechanism.

Manual order making & monitoring mechanisms.

 Their DCs relied on a great deal of automation and

computerization Use automated conveyer belts which facilitate the ongoing various tasks (picture as follows).

 Would up gradation put at risk the robust and scalable

infrastructures? What if vendor for POS changed the machines and ZARA are no more able to use DOS? Is it the right time to go for change in operating system of ZARAs POS?

 Current POS system is written by Sanchez which puts the

business continuity at high risk depending on Sanchezs knowledge. ZARA should prepare for online and digital sales: ecommerce is an essential part of todays business. Up gradation will enable them to use accounting software of different countries. Cost of adopting the new system will be quickly offset by benefit of getting work done more efficiently and accurately. Store managers will get to know about their current positions of the inventory and it will be easier for inter-store transfers replacing telephones. Emailing, spreadsheets and other kinds of communicating and transmitting data features can be used if they up grade the OS.

THANK YOU