Zara Reflection

To: Fellow C levels

Date:7/7/14

 

As a follow-up to Tuesday night's presentation by the consulting team and further discussion afterwards, I feel that an upgrade of Zara's DOS based system will definitely be something that should be implemented in the future. Initially, I was uncertain about upgrading the system, because, one it is nerve-racking and two, the fear of the unknown or what-if. It is the human condition to be cautious of the unknown and “it isn’t broken, why fix it?” mentality is always the first reaction. However, I don't feel that the implementation is absolutely imminent. I do fear that we will lose the ability to have our terminals run on DOS in the future but I believe we should begin with new upgraded terminals for any new stores going forward combined with a very slow implementation at existing stores. What we are doing is working and working well, the risk of a complete renovate and related "down time" in the event of any errors in implementation would be too high.

I have concluded earlier that I agree with their recommendation to upgrade our existing DOS system with new POS / OS system.  Ultimately, this solution was preferable to the alternatives as it aligns the business model of meeting customer demand with robust manufacturing and distribution. Though the existing model is very much fine and helps to be a differentiator in the market, the added benefits of inventory management and retail transaction interface which comes with new POS / OS system will help in further advancement of the company.

Zara’s quick turnover and business model are unique from any other. To be able to influence the clothing trends and react as trends start and finish is a “first to market” technique. Their technology handling of their inventory, slow communication between the company and inability to become efficient is a problem that can eventually cause Zara to decline in performance. With all the information, all I can recommend is to change the entire OS system for Zara, which would allow for maximizing inventory, communicating globally and being able to perform important key operations quicker. The implementation of POS/OS system will eliminate the time spent on non-value added activities which will again help is in better planning and forecasting. Moreover the overall structure of the company will transformed to lean. The store manager would be able to make decisions based on popular trends they see. The new POS/OS system would also have more information to pinpoint what is selling in more quantities and what it not, having that knowledge would decrease the inefficiencies and promote lean culture which assist in maintain our differentiator image.

Overall, my recommendation to the rest of the Board would be to start a slow change over beginning with any new store openings. This will be a good way for us to monitor the new system and really be able to compare and contrast the two operating environments.

Regards,

Shivangi Gosai