Zara - Case Study

MTI14-AE - Arquitectura Empresarial

Jos Luis Godoy

Eduardo Romero
Fernando San Martn
Eduardo Ahumada

1.(a) Zara Business

Model

1.(b) Key Differences

Zara doesn't spend a lot of money on publicity and
advertising (0,4% V/S 4%)
Most of the investment of Zara is focused on their
stores.
Zara customers are young people, looking for new
fashion styles (almost unpredictable), then its
production cycle takes 3 weeks, other need 6 months
for design and 3 for production.
11,000 New items versus 2,400
Production is Just in time, no stocks
Stores choose their items, they know their customers
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1.(c) Weaknesses?

Customers cant use the web to purchase items.

Centralized Distribution (Spain).
Stocks dont fit 100% of the estimated demand.
IT dependence, POS system is based on an old
technology

1. (d) Scalability
Zara model is scalable they open almost one
store every day.
They are capable to replicate their stores and
plug it in the same Logistic Chain without IT
support.

2. What information does Zara

need to run its business model?
From the demand

They need
information about
what is hot in
fashion and new
tendencies before
they become
popular (to
anticipate
competitors by
reducing the time to
market).

From the offer

A critical point in the

information flow is
the communication
between the store
and the
commercials,
basically they need
the offer for every
store and the order
back based in the
manager requests.

3 Zara Operating Model

Replication of Core Process
Orders
Deliveries
Design and manufacturing

Different data, stores dont coordinate between

them

4 Zara Operating Model

5. Zara EA maturity
stage?

5. Zara EA maturity
stage?
Standardized
Technology
Architecture

Providing
IT
efficiencies through
technology
standardization
and, in most cases,
increased
centralization
of
technology
management.

Why?

They shared
common
infrastructure.
They have the
same technology
on all the stores
(PDAs,POS, etc).
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6. Zaras present and potential

weaknesses in regards to its IT
infrastructure and IT strategy
Present
Systems doesnt fit all the needs from stores
Some core process are complex due IT legacy
systems

Potential

POS arent provider doesnt assure a future stock

DOS is not supported by Microsoft
Legacy Systems cant evolve
There is not a corporate telecommunications
network.

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7. POS/IT upgrade
decisions
POS upgrade

YES to Upgrade without modify core process

( maturity )
The POS are made by IBM ( picture
attached), so the risk is not the obsolescence
for supply, is for dependency for IBM for
restrictive prices for legacy products.
Some countries validate the POS standards
( Chile, SII 2004 regulations), that probably
not accomplish.
LAN deploy
Estimated startup
project costs (according to
Not
necessary,
just wireless
most
Anexo
12) for 1300
offices: options
17-18 is
Millions
easy
maintenance,
considering new PDA
(0.8%for
Costs
2002).
devices are coming.

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7. POS/IT upgrade
Employee
access to
decisions
inventory

Some Retail industries adopts as standard in

applications, without create access or profile
schemas. The advantage is for the client for
not loss of sale opportunity and choice
another Retail store.
Not include as POS process, for avoid latency
in people attendant, only like as separate
module.
The interface must be basically, search by
SKU and product name, showing quantity in
local stock, not anymore info,
because
delaying the Cash line with more questions,
and Zara dont deliver 100% of CD requests

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7. POS/IT upgrade
Employee
access to remote
decisions
inventory

Option possibly if you has a online access.

Overhead of data requests and confiability of
real remote inventory (i.e loss of product)
Useful if you have near stores in the same
city.

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