Successful Entrepreneurs

IT, Fashion Industry, and Zara

Written by Richard San Juan for Gaebler Ventures

Computers have become an integral aspect of almost all the companies in a wide variety of industries. One industry is the fashion industry. Zara had a lot of success with its organization of its information technology.

Fashion trends among consumers often change in the blink of an eye.

Companies that hope to be successful in the fashion industry must know when to take advantage of fashion trends and sell as much of their inventory before the trend fades out.

Zara recognizes this fact about the apparel industry and stresses about the need to react rather than predict. In following through on this philosophy, Zara developed a business model where speed and decentralized decision-making was essential.

This business practice, in turn, led to shorter lead times and introduction of more fashion styles. The implementation of the information and communications technology helped augment the business processes at Zara.

Powered by IT

The IT infrastructure that is at the heart of Zara's business enables the garments to be shipped quickly from the distribution centers to the stores.

Collecting vital information, such as daily sales numbers, allow designers to approximate what types of fashions are selling well. Thus, the designers have real-time information available when deciding which type of fabric, cut, and colors to use when designing new clothes or modifying existing ones.

This IT advantage has shortened the time it takes to go from design conception to the time of arrival at the distribution centers and finally to the stores to be placed on racks. The progressive IT thinking has also benefited the area of product information and inventory management. It has allowed Zara to manage thousands of fabric and trim specifications, design specifications, and their physical inventory. Information from headquarters to the stores is easily transmitted through the PDAs.

However, technology in Zara has been particularly most effective in supporting its expansion of stores. Information technology has basically been able to revolutionize the process of opening a store by transforming it to simply a "plug and go" system that any store manager can perform.

The one drawback of information technology is that it often requires updates and of course that adds to the cost. While information technology has been thoroughly incorporated into Zara's business, it would be a mistake to not pursue an upgrade to the IT system in place.

Having a system that is incompatible because it has not been upgraded with future software applications could lead to operational and security problems in the future.

On the other hand, a critic may ask "Why fix it if it isn't broken?"

With an upgrade of the entire technical network in all the stores, an extensive IT department and budget would need to be formed to deal with the long implementation schedule and the related costs. Integration of the new systems into their present business practices and processes could prove to be disastrous.

Maintaining updated systems is clearly advantageous, but the potential pitfalls might be too significant to ignore. However, to alleviate those fears, perhaps rolling out the upgraded systems at a test site will help Zara's executives forecast what type of problems that may arise.

If after a specified time period productivity and customer satisfaction is increased, a company-wide implementation can be considered. In the end, it is up to the entrepreneur's judgment in how to use the growing importance of information technology in its company.

Richard San Juan is currently pursuing an MBA degree with an emphasis in Finance from DePaul University in Chicago. He is particularly interested in writing about business news and strategies.

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