Reflection Report - Zara: IT for fast Fashion

Memorandum

To: Xan Salgado Badas, Bruno Sanchez Ocampo

From: Nikita Patel

Date: July 7, 2014

Subject: Re: Reflective Analysis – Zara: IT for fast Fashion 

This memorandum is with regard to the meeting held last Tuesday with ‘BCH Consulting Group’. I believe the consulting team provided a considerate approach with regard to shifting from DOS to a new OS at our POS terminals in all of the 531 Zara locations. The suggested course of action can be utilized in arriving at our final decision to the ongoing issue of our technology becoming outdated & answers the continuous debate that the management has whether we should keep DOS since it works fine for our company.

After careful analysis of the preparatory notes we had prior to the consultant meeting along with the presentation & data provided by consultants, I believe that since Microsoft no longer supports DOS and we fear that our vendor might upgrade/ change the software in future thereby leaving us in a situation where we would have to make some quick decisions regarding whether to go to another DOS vendor that could be used on the POS terminal, or rather we should plan to change the operating system for our business. I see that the consultants discussed most of the benefits of shifting from DOS to Windows OS which leads me to consider my initial judgment of moving forward to implement one of the latest OS into our system.

The consultants provided some evidence that we are performing inefficiently by not having an OS that allows the store managers to have 100% accurate inventory and what the inventory is at our local locations. Though we are looking for 93%-95% accuracy in the inventory level, if we can get 100% accuracy with the new OS, we should take it into consideration from a future perspective. For example - If a customer in one of our stores asks for a new item but it is not in stock at the store, then the store manager has to make several phone calls to other stores while the customer is waiting for a response. In today’s age, where users want quick information, and where the technology changes rapidly we should go ahead with the consultant’s suggested solution to the problem & invest for our POS terminals operating with a new OS.

 

The consulting team provided some financial evidence that an investment in utilizing a new OS would be right for us. We would spend an estimated €233,000 in initial costs to get the tech project running but we have not considered the lifelong costs associated with the two options; invest in new technology or keep DOS. By keeping DOS, we would not need to spend any additional euros to keep business running, but there will come a time when we have to make a switch to new technology and we would spend the money by all means, maybe a little more than we have to pay now. Investing in new technology will in theory make us more money in the long run because we would be using less man-hours due to us cutting out some business inefficiencies as stated in the example in above paragragh. Also as mentioned by the consultants, reports would be run more often to create optimal plans to begin production, stores would be able to check up SKUs from other stores, as well as have a faster system with more functionality.

I suggest that we attempt to use the new technology in 10 stores so we have the flow process to conduct a metric comparison. After a certain period of say 1 year, if we find that inefficiencies are lower and revenue grown as per the target we should make the € 259,320 investment for the enhanced system. I believe that since Inditex’s net income has grown over 28% from 2001 to 2002, and the investment would be affordable and lucrative in future. I also want us to consider that even though we do expect revenue growth from the project, we will also incur higher costs due to tech maintenance, training to meet our needs. Also by conducting a test run, we can understand the security concerns that we currently have. However I believe the anti-virus software's available in the market will solve our concern.

Due to the above facts in making our business process flow more efficient, I believe it is worth taking the risk to invest in the implementation of Windows OS for the POS terminals as it seems to be an ideal alternative that addresses the problem and the symptoms we face currently. Once the store managers are well versed with the new OS system, the entire process will be more efficient and effective. If you have any further questions, please do not hesitate to contact me this week at the earliest.