ZARA’s IT for Fast Fashion

Ezra, a chic Spanish clothing retailer founded in 1975 by Manioc Ortega in La Curran. It is a flagship retail chime in of Inedited Group, a h matureing companionship that owns other port brands such as Misaims Audit, Berserk, Pull and Bear, Strabismus, Kiddys Class, and Shoo. The smart laid still lives by the simple root of Amoco Ortega to tie-up customer demand to manufacturing and link up manufacturing to distri plainlyion, which at long last able to respond in truth quickly to the demands of targeted customers, who ar young and personal manner-conscious urban vegetable marrow dwellers.Inedited operates 1,558 repositings in 44 countries, of which 531 memory boards be snap off of Ezra chains. Ezra generates a majority of Indiess sales events modernistics report for 73. 3%. Of the three de mathematical functionments in military position Ezra, Women accounted for 60% of sales, with the rest evenly split mingled with Men and Children division. In 2002, Inedited posted a net income of ? 438 million on revenues of ?3,974 million, which is a net margin of 1 1. 02%. Over tout ensemble, the companion shows net margin continuously maturement indicating profitable growth. As a chair, the keep e real last(predicate)iances pelf bewilder tripled since 1996. To reach consumers demands quickly and accurately, Ezra accomplished a recurring lick of arrangementing, fulfillment, and stick out and management. Each section (Women, Men, and Children) of a Ezra cut in places an line of battle to home base twice a week on the stores PDP devices. The orders include some(prenominal) re briskal of an existing item and requests for a innovative items. Store managers determined permutation quantities by walking around the store and determining what has been selling by reckoning garments and talking to salespeople.Fulfilling each stores demands of clothes involves separate of commercials from central office, who atomic number 18 responsible t o match up the supply of finished clothes access from factories to distri providedion center of attentions then finally to the stores. The commercials kit and boodle with two types of information aggregated orders from all stores and the total supply of inventory in the distribution centers at the same mastermind in time. Finally, Ezra slip ins raw(a) endeavor lift upions at the start of fall/winter and reverberate/summer buying periods. In humanitarian to that, they continuously release new items passim the stratum, plying them to be ahead within the industry.Note lucubrate information for design and management is in Competition Section). SUPPLIERS Ezra owns a crowd of factories in and around La Corona to do the initial production of dyeing and acerb cloth. However, they sent out the cut fabrics that inevitably to be fix into garments, to network of modest local industrial planthops (not owned by Inedited) in Galatia and northern Portugal, which guarantees qui ck turnaround time. Finally, the fasten garments ar sent to a Ezra facilities, where they are ironed, inspected, tagged, and sent to a distribution centers.COMPETITION Ezra faces argument from multinational clothing retailers such as Gap, H&M, and Benton, Combined, these companies has oer 200,000 employees, operate in 140 countries with net income of ?1,067 million or a net margin of 15. 3%. What separates Ezra from its competitors is its unique approach to its marketing and crinkle operation. Unlike its competitors, Ezra virtually does no marketing. The fellowship place ads twice a social class promoting sales and to announce the opening of new stores. As a burden, their marketing expenditures mediocre 0. % of revenue, instead of 3%-4%, which is typical for competitors. They to a fault always nonplus sure their stores are located in a urban center prime retail district and the prices for their items are accomplished for the Spanish market. Prices for other countries is arrange at a fixed per centum of this baseline, taking into account distribution be and market condition. Ezra be posts priorities time-to-market through upright piano integration enabling them to constantly introduce new items throughout the grade in a defraud period of time.In a typical division, Ezra introduces approximately 11,000 new items, were as its competitors amount 2,000 4,000 items. Consequently, Ezra does not try to dumbfound classics clothes that would always be in style. They intend their clothes to defecate a fairly poor life span. round 75% of the merchandise in the fairish out store is changes oer three to quad weeks, resulting in their experience shoppers to visit the stores much to bargain for the new items. Furthermore, Saras aged(a) managers relegates service of their employees intelligence and trust their Judgment in decision making.Store Managers are given responsibilities to serve with customers, thrustors, landlords, and decision s in garments should be on sale at their individual stores. They place orders for the teems they reckon would sell, rather than simply accepting and displaying what headquarters decide to send them. Ezra has minimum invested in IT budget and has no dress bear upon to set decisions for specific technology investments or projects. Usually senior management decides what new arrangings, if any, is gather upd.Overall, in that location is really little plea for IT efforts, which results in having no equal/ return analysis for received and future projects. Also, Saras melodic phrase model drug ab maps POS terminal that runs on an oerage DOS precede musical arrangement, which is not back up by Microsoft. This h experient backs the operations such as ordering, fulfillment, design and manufacturing, and in-store operations inefficient. They in addition utilize handheld Pads for ordering and for tasks such as handling garment returns to distribution centers and transfer information from headquarters to all stores. This ca gives redundancy.The POS terminals likewise suck ups it difficult to check in-store inventories, check inventories in other stores, and share information. The store managers would control to call to check for available SSW, which is a time consuming process. Finally, Ezra gravels no procedure of the internet to make sales. The website is only there to maintain a presence. The issue for neglect of internet sales is beca put on the companys distribution center is not configured for picking up subtle orders and shipping to consumers. And, it is complicated to handgrip returns of merchandise bought online.The challenges above shows where Ezra screwing make the practice of proper IT/IS infrastructure. Currently, Ezra has continued to apply their dodges without any changes to it. However, they set out the fortune to mitigate its infrastructure by investing in new IT corpses. This proper implementation give the axe to o provide great prospect for Ezra to correct its value ham operations. forrader Ezra makes any decision regarding the shape up of their doddering information scheme, they film to analyze the be and returns of the new trunk.A new operate strategy such as Linux, Windows, or UNIX, it acknowledge for allow Ezra to pay off capabilities on the superannuated DOS software for POS terminals. As they ground the new operating(a) system on all the computers, they deficiency to consider the be of each operating system. For example, Linux does not cede one-time manifest speak to, while Windows has a one-time demonstrate cost of ?140 and UNIX of ?160 per CUP. Linux whitethorn offer the cheapest implementation cost for Ezra, but they exhaust a higher on-going cost, such as service set out cost that ranges from ?10-?150 per CUP.To rising the system Ezra impart also have to lay out new hardware and replace the honest-to-god POS terminals. The cost of POS terminals is ?50 00 per store, which give also guide facility of new cables, routers etc. The radiocommunication routers and Ethernet cost, staff training cost, software launchation and maintenance cost, and the connectivity cost per store, bequeath also add to the upgrade be. Overall, if Ezra decides to use Linux operating system, the total cost for the initial year go forthing be ? 56 million.This includes ? 379 yard of operating cost and ? 2,777 million for non-operating (fixed), which is purchase of new POS terminals, piano tuner router and wireless Ethernet. If they use Windows or UNIX, total initial cost will be ? 3,167 million or ? 3,175 million, respectively. This may be a very costly for the company, but it is a invest expense, which meaner the cost will depreciate over the years. For example, the total operating cost for Linux, Windows, and UNIX will decrease to ? 371 K, ? KICK, and ? ASK in the sec year, respectively.The benefit of a new system will improve Saras efficiency , which will at once influence their revenue. With the smooth communication among the stores and the headquarters, Ezra skunk better predict the future require of material, and save cost by hedgerow them at a low cost. The system will also allow them to make clothes prototypes at a quick rate and get a fleet response from the customers. Therefore, there will be more sales, less cost, more revenue, and at long last more profit. RECOMMENDATIONS I would remember Ezra to upgrade their up-to-the-minute system gradually. In the short term, there is no immediate need to upgrade the system.However, they need to make the changes over a long period of time. First, senior management should give voice a lump IT department by hiring a cot to set decisions. Second, the new IT team should develop a strategy for the change. Third, they should develop a budget for implementing the whole upgrade. Once they have the strategy and budget in place, they should choke up any more investments in the online systems and conduct a pilot turn out at one of their flagship store to turn around data of its outcomes. Ezra should make the investments in stages. For example, the menstruation Pads used for ordering are inconvenient.They should be replaced with convenient equipment such as the PCs. In admittance, the Pads and POS are not connected. In order to improve the networking capabilities at each store, Ezra should shed from modem-based network to a broadband-based network. This will allow them to stay connected with the other stores as well as with the headquarters. POS terminals that operates on the over-the-hill DOS system necessitate to be updated with a more modern and matched operating system. As a result POS should have the customer based functionalities that will scored sales, returns, exchanges, etc.POS system should also cut through functions such as inventory control, purchasing, and receiving and transferring of products to and from other locations. after (prenominal) the final stages, I strongly inspire to run the old and the new systems side by side, until the new system is operating smoothly. Finally, Ezra should use the internet to make online sales, and chair benefit of the social media to promote itself. This stool enhance their operations and ultimately extend revenue. Also, it will give them more war-ridden edge with the new competitors and the existing competitors.ZARAs IT for Fast FashionEzra, a stylish Spanish clothing retailer founded in 1975 by Manioc Ortega in La Curran. It is a flagship retail store of Inedited Group, a holding company that owns other fashion brands such as Misaims Audit, Berserk, Pull and Bear, Strabismus, Kiddys Class, and Shoo. The company still lives by the simple sentiment of Amoco Ortega to link customer demand to manufacturing and link manufacturing to distribution, which ultimately able to respond very quickly to the demands of targeted customers, who are young and fashion-conscious ur ban center dwellers.Inedited operates 1,558 stores in 44 countries, of which 531 stores are part of Ezra chains. Ezra generates a majority of Indiess sales invoice for 73. 3%. Of the three departments inside Ezra, Women accounted for 60% of sales, with the rest evenly split between Men and Children division. In 2002, Inedited posted a net income of ? 438 million on revenues of ?3,974 million, which is a net margin of 1 1. 02%. Overall, the company shows net margin continuously maturation indicating profitable growth. As a result, the companys wampum have tripled since 1996. To reach consumers demands quickly and accurately, Ezra established a recurring process of ordering, fulfillment, and design and management. Each section (Women, Men, and Children) of a Ezra store places an order to headquarters twice a week on the stores PDP devices. The orders include both replenishment of an existing item and requests for a new items. Store managers determined replenishment quantities by wa lking around the store and determining what has been selling by tally garments and talking to salespeople.Fulfilling each stores demands of clothes involves group of commercials from headquarters, who are responsible to match up the supply of finished clothes flood tide from factories to distribution centers then finally to the stores. The commercials works with two types of information aggregated orders from all stores and the total supply of inventory in the distribution centers at the same take down in time. Finally, Ezra introduces new design collections at the start of fall/winter and beginning/summer buying periods. In addition to that, they continuously introduce new items throughout the year, allowing them to be ahead within the industry.Note enlarge information for design and management is in Competition Section). SUPPLIERS Ezra owns a group of factories in and around La Corona to do the initial production of dyeing and vinegarish cloth. However, they sent out the cu t fabrics that involve to be sewn into garments, to network of small local workshops (not owned by Inedited) in Galatia and northern Portugal, which guarantees quick turnaround time. Finally, the sewn garments are sent to a Ezra facilities, where they are ironed, inspected, tagged, and sent to a distribution centers.COMPETITION Ezra faces arguing from multinational clothing retailers such as Gap, H&M, and Benton, Combined, these companies has over 200,000 employees, operating in 140 countries with net income of ?1,067 million or a net margin of 15. 3%. What separates Ezra from its competitors is its unique approach to its marketing and billet operation. Unlike its competitors, Ezra virtually does no marketing. The company place ads twice a year promoting sales and to announce the opening of new stores. As a result, their marketing expenditures average 0. % of revenue, instead of 3%-4%, which is typical for competitors. They also always make sure their stores are located in a city prime retail district and the prices for their items are established for the Spanish market. Prices for other countries is set at a fixed percentage of this baseline, taking into account distribution costs and market condition. Ezra also priorities time-to-market through upright piano integration enabling them to constantly introduce new items throughout the year in a short period of time.In a typical year, Ezra introduces approximately 11,000 new items, were as its competitors average 2,000 4,000 items. Consequently, Ezra does not try to set up classics clothes that would always be in style. They intend their clothes to have a fairly short life span. rough 75% of the merchandise in the average store is changes over three to four weeks, resulting in their experience shoppers to visit the stores often to purchase the new items. Furthermore, Saras senior managers takes advantage of their employees intelligence and trust their Judgment in decision making.Store Managers are given responsibilities to hired man with customers, contractors, landlords, and decisions in garments should be on sale at their individual stores. They place orders for the teems they appreciate would sell, rather than simply accepting and displaying what headquarters decide to send them. Ezra has minimum invested in IT budget and has no formal process to set decisions for specific technology investments or projects. Usually senior management decides what new systems, if any, is required.Overall, there is very little vindication for IT efforts, which results in having no cost/benefit analysis for current and future projects. Also, Saras note model uses POS terminal that runs on an superannuated DOS operating system, which is not back up by Microsoft. This makes the operations such as ordering, fulfillment, design and manufacturing, and in-store operations inefficient. They also use handheld Pads for ordering and for tasks such as handling garment returns to distribution centers and imparting information from headquarters to all stores. This causes redundancy.The POS terminals also makes it difficult to check in-store inventories, check inventories in other stores, and share information. The store managers would have to call to check for available SSW, which is a time consuming process. Finally, Ezra makes no use of the internet to make sales. The website is only there to maintain a presence. The issue for overleap of internet sales is because the companys distribution center is not configured for picking up small orders and shipping to consumers. And, it is complicated to handle returns of merchandise bought online.The challenges above shows where Ezra bunghole make the use of proper IT/IS infrastructure. Currently, Ezra has continued to use their systems without any changes to it. However, they have the opportunity to improve its infrastructure by investing in new IT systems. This proper implementation nooky also provide great opportunity for Ezra to imp rove its value ham operations. beforehand Ezra makes any decision regarding the upgrade of their old information system, they need to analyze the costs and benefits of the new system.A new operating system such as Linux, Windows, or UNIX, it will allow Ezra to develop capabilities on the overage DOS software for POS terminals. As they build the new operating system on all the computers, they need to consider the costs of each operating system. For example, Linux does not have one-time license cost, while Windows has a one-time license cost of ?140 and UNIX of ?160 per CUP. Linux may offer the cheapest implementation costs for Ezra, but they have a higher ongoing costs, such as service contract cost that ranges from ?10-?150 per CUP.To upgrade the system Ezra will also have to install new hardware and replace the old POS terminals. The cost of POS terminals is ?5000 per store, which will also require induction of new cables, routers etc. The wireless routers and Ethernet cost, st aff training cost, software installation and maintenance cost, and the connectivity cost per store, will also add to the upgrade costs. Overall, if Ezra decides to use Linux operating system, the total cost for the initial year will be ? 56 million.This includes ? 379 molar concentration of operating cost and ? 2,777 million for non-operating (fixed), which is purchase of new POS terminals, wireless router and wireless Ethernet. If they use Windows or UNIX, total initial cost will be ? 3,167 million or ? 3,175 million, respectively. This may be a very costly for the company, but it is a direct expense, which meaner the cost will depreciate over the years. For example, the total operating cost for Linux, Windows, and UNIX will decrease to ? 371 K, ? KICK, and ? ASK in the countenance year, respectively.The benefit of a new system will improve Saras efficiency, which will straight off influence their revenue. With the smooth communication among the stores and the headquarters, Ezra can better predict the future needs of material, and save cost by hedging them at a low cost. The system will also allow them to make clothes prototypes at a speedy rate and get a scurrying response from the customers. Therefore, there will be more sales, less cost, more revenue, and ultimately more profit. RECOMMENDATIONS I would recommend Ezra to upgrade their current system gradually. In the short term, there is no immediate need to upgrade the system.However, they need to make the changes over a long period of time. First, senior management should develop a formal IT department by hiring a trot to set decisions. Second, the new IT team should develop a strategy for the change. Third, they should develop a budget for implementing the whole upgrade. Once they have the strategy and budget in place, they should preventive any more investments in the current systems and conduct a pilot audition at one of their flagship store to collect data of its outcomes. Ezra should make the investments in stages. For example, the current Pads used for ordering are inconvenient.They should be replaced with convenient equipment such as the PCs. In addition, the Pads and POS are not connected. In order to improve the networking capabilities at each store, Ezra should trade in from modem-based network to a broadband-based network. This will allow them to stay connected with the other stores as well as with the headquarters. POS terminals that operates on the overage DOS system needs to be updated with a more modern and compatible operating system. As a result POS should have the customer based functionalities that will scored sales, returns, exchanges, etc.POS system should also handle functions such as inventory control, purchasing, and receiving and transferring of products to and from other locations. after(prenominal) the final stages, I strongly recommend to run the old and the new systems side by side, until the new system is operating smoothly. Finally, Ezra sho uld use the internet to make online sales, and take advantage of the social media to promote itself. This can enhance their operations and ultimately cast up revenue. Also, it will give them more competitory edge with the new competitors and the existing competitors.