Zara Fashion : Marketing Strategy and M.I.S.Presentation Transcript
ZARA: Fast Fashion Case Study M anagement I nformation S ystems January 26, 2010 Presented By: Group- 1
Agenda About Company Information Systems Analysis & Conclusion
About the Company
Zara, the most profitable brand of Inditex SA
the Spanish clothing retail group, opened its first store in 1975 in La Coruña, Spain
operations into 45 countries with 531 stores located in the most important shopping districts of more than 400 cities in Europe, the Americas, Asia and Africa.
Zara has remained focused on its core fashion philosophy that creativity and quality design together with a rapid response to market demands will yield profitable results
ZARA- Goals These goals helped to formulate a unique value proposition: to combine moderate prices with the ability to offer new clothing styles faster than its competitors.
ZARA- Business Model
Zara’s business model can be broken down into three basic components:
Concept: To maintain design, production, and distribution processes that will enable Zara to respond quickly to shifts in consumer demands.
Capabilities: It maintains tight control over their production processes keeping design and manufacturing in-house or with some strategic partnerships located nearby . They have strategic agreements with local manufacturers that ensure timely delivery and service. Thus, maintaining the flexibility necessary to design and produce over 12000 new items annually.
Value drivers : for Zara are both tangible and intangible in the benefits that are returned to all stakeholders.
Tangibly Inditex, the parent company of Zara, has 11.02% net margin on operations.
Intangibly, customer loyalty and brand recognition have provided significant value to Zara.
Information Technology @Zara DBMS A DBMS is a set of software programs that controls the organization, storage, management, and retrieval of data in a database. E.g MySQL , Oracle ERP ERP software applications to improve the performance of organizations' resource planning, management control and operational control. e.g SAP ,people soft Centralised server managing and controlling of data and command from single point e.g Napster RFID Radio-frequency identification (RFID) is a technology that uses communication via radio waves to exchange data between a reader and an electronic tag attached to an object, for the purpose of identification and tracking. E.g Barcode detector
Information Technology @Zara
The blend of technology Strategy enabled Zara to break all the rules in the fashion industry
Zara’s store managers leads the intelligence gathering efforts that ultimately determines what ends up on each stores rack.
ZARA uses PDA’s (personal digital assistant) to gather customer input
PDA’s are also linked to stores POS system, showing how garments ranked by Sales
Zara’s Staff regularly take feedback from customers on what they they would like to see more of.e.g colour design etc
IS practical Implementation , showing its potential for supporting enterprise growth
The company can design a new product and have finished goods in its stores in four to five weeks
It can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences.
Zara’s capacity to adopt to new trends, understanding differences between markets was highly relied on ‘High frequency Information Systems’.
Sources of Information
Highly Automated and Capital Intensive factories
Developed J.I.T system incorporation with Toyota
Reduced Cost – Transportation and production
Material Requirement and Planning
Fully Automated Order Application
Sources of Information
Internal - 20 owned factories near Spain
External – HK and Barcelona
Transportation and Logistics
Route and schedule optimization
Queue Management Systems for turnaround and waiting period of the ships at the docks
Air Travel (Main Costs) – Optimize routes to minimize cost and travel time
Sources of Information
Centralised Distribution System
Mobile Tracking Systems
Distribution center in La Coruna Factories in Arteixo
Zara’s inventory model
Zara’s Business System through the Value Chain Forward Vertical Integration – Reduces Bullwhip effect Backward Vertical Integration – Reduces Cost and Improves Quality
Sources of Information
store manager’s decision influence on the replenishment of garments
there is a heavy reliance on historical information from the store manager
Promoting Quick response
Coordination between retailing and manufacturing
Sales and trend forecasting
Marketing Strategies for different markets
The aggregated demand is ascertained and the supply is allocated according to past performance of the various garments at the stores
Potential for supporting enterprise growth
Enterprise growth Correct prediction of Buying Behaviour and trend analysis Market research on university campuses, discos, mall etc. Feedback from stores Sales report Helps in taking quick decisions Regional managers analyse the collected feedback. Analysis used by designers to introduce new product line and modify existing ones Designers decide with commercial teams on fabric, cut, price of new garments. Inventory Control Distribution Constant stream of information Leads to constant input in product development process. Control early investments in raw material, direct and indirect of process and production capabilities. Communication and IT are essential in maintaining constant interface of various functions of management and production control.
Enterprise growth Cont
Reduced time and effort
Feedback – Process Improvements
Provision of training.
Research and analysis of various markets.
Acquisition of new workforce.
Recruitment of local people.
Maintain huge amount of data/ data loss
Organize and interpret from available data
Security measures against spy
Technological Up gradation
Hire skilled employees.
Acquire reliable storage devices which is a critical for the company.
18 months technology upgrade
Compatibility between hardware and software.
Cost of equipment and technology
Geographic and natural constraints
Sharing information where there is sophisticated technology.
Working under legal boundaries.
Procedure Change with technology.
Data collection procedure in different markets.
Sales & Trends forecasting in new markets
Applying large number of POS in the supply chain.
Formation of Local Teams to analyze the market for forecasting.
Key Success Factors for Zara
Business is built on quick response
Production responds to trends.
Deliveries are twice weekly, unlike most of the competitors weekly schedule.
Ready raw material base
Multi-functional quick decision making
Vertical integration to ensure control over supply chain, and proximity
Cost Control, despite flexibility
Technology and Infrastructure
www.3isite.com/articles/ImagesFashion_ Zara _Part_I.pdf
www.3isite.com/articles/ImagesFashion_ Zara _Part_II.pdf