1. Zara

2. Our Team Group H Ang Ruixian U096845Y Chia Joo Leng Jasmine U097028B
Nah Zheng Xiang Philson
A M
Tan Hong Chuan Julian
A A
Tan Jian Yue
A J
Wong Chih Yong
A E

3. Presentation Agenda
Introduction Competitors Updates Challenges Recommendations

4. Introduction

5. About Zara Founded by Amancio Ortega
In 1975, the first Zara  store was  opened  in  La  Coruna, Spain
Inditex  was  formed  as  the  holding  company  atop  of Zara, other  retail  chains  &  a  network  of  internally
owned  suppliers (1985)
Zara  was  founded  by  Amancio  Ortega,  who  saw  the  need  for  retailing  and  manufacturing  to  work 
closely  in  the  clothing  industry  where  consumer  demands  are  hard  to  predict. 

6. About Zara Focused on opening stores in prime city locations
Rapid response to market demands
Offer new clothing styles faster than its competitors 
Inditex has become one of the world's largest clothes makers in the fast fashion industry
1,671 branches in 78 countries worldwide
Shortest lead time of 21 days

7. Zara’s Supply Chain 1. Design 2. Production 3. Distribution 4. Retail
Consists of 4 Phases:
Let’s take a look at the Zara’s supply chain which enables it to respond quickly to market demand
First, designers converse with store managers on a daily basis to gain latest insights on fashion trends.
The designers will select the cloth along with the quantity to be produced and send them to the factory.
After the production of the apparels are completed, it is sent to the distribution centers for shipment where
automated conveyor belts facilitated the ongoing task of receiving bulk quantities of each garment from factories
then recombining these garments into shipments to Zara’s international store locations.
This streamlined process allows Zara to design, produce, and distribute new looks in three months
Maintains control over its product design, manufacturing, distribution & retailing operations

8. Competition

9. Competitor Closest competitor Hennes and Maurtiz (H&M)
Founded on 1947, Sweden
Innovating around design and distribution
Supply Chain Phases
Design, Production, Distribution and Retail

10. H&M’s Supply Chain Production Phase Outsource production process
60% in Asia, 40% in Europe
Low production cost to maximize profit at Asia
Implications to Zara
No production outsourcing
Higher overall production cost

11. H&M’s Supply Chain Distribution Phase Implications to Zara
Distribution center(DC) located at every country
Daily replenishment to increase stock turnover rate
Able to meet customer’s demand on time
Implications to Zara
2 Large DCs located in Spain
Slower replenishment rate
Unable to meet customer’s demand on time

12. H&M’s Supply Chain Retail Phase Implication to Zara
40% lower product selling cost compared to most competitors
Implication to Zara
Higher product cost due to higher production cost

13. Competitors Challenges Zara faced against H&M Higher production cost
Slower replenishment rate
Slower at meeting customer demand

14. Updates on Zara’s SCM

15. Updates on Zara’s SCM Retailer’s Work Process
Distribution Network and Centre
Inventory Management

16. Retailer’s Work Process
Shifted to third party logistics providers
Shifted to factories
Enhancements made to PDA

17. Distribution Network and Centre
Consolidated transportation across Zara’s different brands
DCs are equipped to handle small scale customer orders

18. Inventory Management
Implemented sophisticated inventory allocation model

19. Challenges Faced

20. Challenges Limitation of company wide interconnectivity
Obsolescence and Limitation of Technologies used

21. Challenge 1
Cannot determine order requirements accurately
No comprehensive overview of the overall inventory and sales information
POS Terminals used in store were not interconnected via any in-store network
Slow transmission of data
Inaccurate data
Sales tallied and audits done manually
POS terminals/PDAs could not share information
Inefficient store operations
Inaccurate stock information
Unhappy customers
Telephone to check whether a nearby store had a particular item
Discrepancies between orders and sales data
More time and energy spent on administrative work

22. DOS outdated, no longer supported
Challenge 2
Any upgrades for existing machines rendered DOS-incompatible
No guarantee from vendor
Core operations at risk
DOS outdated, no longer supported
Zara disadvantage
Store managers need more functions
Business continuity at risk
Limited capabilities
Unable to find vendor to supply or service hardware
Hard to find developers for outdated platform
PDA becoming obsolete

23. Mobile Enterprise Applications

24. Our Recommendation Run complete OS software Gradually Replace PDAs
Useful functions for SCM execution
Gradually Replace PDAs
The idea behind our recommendation is that smartphones and tablet devices are smart and capable of running complete operating system software. Some apps provide functions such as control, tracking and messaging that can be very useful for supply chain management execution.
Therefore, we would suggest to gradually replace Zara’s existing PDAs with smartphones and tablets,  in order to support and optimize their operations.

25. Benefits Timeliness and Correctness Employee Responsiveness
Instant access and updates
Improve cycle time & efficiency
Employee Responsiveness 
Better “reachability”
Scalibility & Updates 
More functionalities
Mobile Enterprise Applications can bring about many unique advantages to Zara’s supply chain.
First, Improved Timeliness and Correctness of Date.
Employees are able to capture and enter data instantly regardless of location or time. All the information is immediately made available on their respective platforms and is displayed via the company’s information systems. More importantly, all relevant partners in the SC can access it readily. This can greatly improve cycle time and efficiency of strategic business processes.
Second, Improved Employee Responsiveness
Employees with mobile devices can use them to  improve “reachability” and responsiveness. They can retrieve precise information exactly when they need it and deal with queries and complaints from customers, suppliers and partners more quickly and accurately.
Third, Better Scalability and Ease of Updates
One major advantage of apps on modern mobile operating systems is the ease of deploying updates. Zara will be able to push out added functionality much quickly. Updates for software on the mobile devices can also be easily downloaded for use in all their stores globally.

26. Challenges Addressed Obsolescence of PDA Systems Limited Connectivity
Technical support issues
Limited Connectivity 
Information Sharing
Data Discrepancy
The introduction of Mobile Enterprise App can address some of the challenges mentioned earlier.
First, the Increasing Obsolescence of PDA Systems Outdated technology like the PDA used by Zara will face technical support issues gradually as they become obsolete as compared to apps on mobile devices that are relatively easier to acquire and develop.
Second, Limited Connectivity
POS terminals and PDAs in Zara stores do not share information and can only match with updated data after they were synced. With the deployment of mobile apps to store personnel, and the connecting of the app to ZARA’s main information systems, information can easily be retrieved and displayed on the app in real time. Data entry by store personnel can also be collated real time and resolve any possible information discrepancy.

27. Feasibility Evaluation
Cost
Require customized apps
Time
Training for personnel
However, there may be possible challenges and concerns with the implementation of mobile enterprise applications.
Firstly, the implementation cost may be high as Zara’s unique business model requires customized apps. This would mean that Zara will need specialised developers to develop the app. Store and warehouse personnel will also need to be trained to adopt and utilise the new devices to their full potential, which can take time.
Overall, we feel that the benefits of mobile enterprise apps outweigh the costs involved in the long run. Furthermore, Zara can take a phased approach or run pilot projects by implementing it in a few stores at a time. This will help mitigate any possible risks, and ensure a smooth and successful implementation.

28. Upgrade POS Terminals Slide1
Next, let’s move on to our next recommendation, which is the upgrading of ZARA’s POS terminals.

29. Our Recommendation Intuit-HP Retail Solution
HP’s POS Software
Full fledged Mouse & Keyboard
Industry-proven software
Gradual replacement of DOS systems 
Phased Approach
Slide2
Our recommendation is for them to upgrade to a modern POS solution such as the intuit-hp retail solution. This solution comes with a full-fledged keyboard and mouse, and runs an industry-proven POS software made by HP. We also recommend that they gradually replace their DOS systems using a phased approach.

30. Benefits Interconnectivity between stores
Merging of data into one system
Precise measurement of stocks
Global trends and developments
Real-time information sharing
React faster to sales information
Improve decision making
Slide3
The upgrading to modern POS systems can bring about several benefits. Firstly, it facilitates interconnectivity between stores. Secondly, it enforces the merging of data into one system.
This provides precise measurements of stocks, and allows for better understanding of global trends and developments.
With real-time info sharing, it also means that Zara can react faster to sales information, and hence improve their decision making.

31. Challenges Addressed Limitations of Existing Network
Automatically collect and process data
Reduces need for calls & manual checks
Increasing obsolescence of DOS
Modern, widely supported OS
Reduce reliance on sole vendor
Future-proof their operations
Slide4
The new POS systems can also address some of ZARA’s existing challenges, such as the Limitations of Existing Networks, and the Increasing Obsolescence of DOS systems.
The new systems automatically collect and process data, reducing the need for calling and manual checking. It also runs on a modern and widely supported OS which reduces their reliance on a sole vendor, and hence helps to future-proof their operations.

32. Feasibility Evaluation
Staff adaptability to change
Need to ensure sufficient training
Empower staff to fully utilize system
Risks associated with change
Use phased implementation approach
Test stability on pilot stores
Slide5
However, there might be some concerns which Zara needs to address during implementation. Zara needs to take into account their staff’s adaptability to change, by ensuring that they have sufficient training, and that they understand the need for the upgrading.
In order to mitigate the risks involved with the change, we also suggest that they use a phased approach, and test out the stability of the system on a few pilot stores first. However in general, we still feel that it is worth the upgrade.

33. Conclusion

34. Conclusion ZARA’s competitor (H&M) ZARA’s SCM updates
The need to stay competitive
ZARA’s SCM updates
Importance of continual innovation
Challenges & Recommendations
Innovations through cutting-edge technologies
Slide6
In conclusion, we have seen the need for ZARA to stay competitive amidst strong competitors such as H&M, and we have shown you the continual innovation that they are doing. However, they are still facing new challenges every day, and we feel that they can further innovate through the use of more cutting-edge technologies.

35. Questions & Answers Slide7
Thank you for your attention, and we will now open the floor for Q & A