Table of Contents
Executive Summary 2 Issue Identification 3 Root Cause Analysis 5 Value chain Model 6 Cost Analysis 8 Alternatives 10 Decision Criteria 10 Alternatives 11 Alternatives Evaluation 13 Recommendations 13 Implementation 15 Monitor and Control 16 Appendix A 17
Zara is a retail store of the Inditex group that started in 1975 and has now grown to 531 stores. Zara’s strategic business model focuses on product variety, speed to market, and store locations. The main business idea behind their model is to link customer demand to manufacturing and manufacturing to distribution which they have accomplished through vertical integration.
Zara is currently facing the decision to
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Short Term Concerns 1. Current ordering structure requires several people to use handheld devices and physically walk around the store to determine what needs to be replenished. Store Managers are not currently able to look up inventory balances to determine these replenishment quantities by using an in-store computer since the DOS system does not offer this capability. Inventory management is manual 2. POS systems are not connected to the distribution centres for submitting their replenishment of stock. 3. Viewing newly available garments is done on handheld devices that need to be connected to a dial up modem to transfer information from head office. 4. Sales and other data cannot be sent straight to Zara’s headquarters with the DOS system. Daily sales totals from each sales terminal need to be transferred onto a floppy disk which is then transferred to the head office via dial-up connection. 5. The current operating system is working for Zara and has proven to be stable effective, easy to roll out and maintain over time. It requires little IT support to open new stores and IT support is directed to the IT department who is familiar with current software.
Long Run Concerns 1. Theoretical inventory is not 100% accurate if shipments and sales are not recorded perfectly. This data is used to help make allocations of shipments to stores.
1. If the DOS system becomes incompatible with POS systems and terminals Zara would not be able