Recommendation - ZARA POS

To:       ZARA CEO and Executives

From:  Jennifer Mackson

Date:   June 20, 2016

RE:     POS System

ZARA is considering whether to keep the current POS system that runs on DOS or upgrade to a new POS system.

ZARA currently utilizes DOS.  It is user friendly, easy to maintain, allows easy setup of POS terminals in the event of technical issues and malfunctions, is customizable, and does not require IT support outside of what is already established.  This helps to also keep the IT costs low.  The decentralized system allows us to gather information from 500+ stores regarding what customers want or what the latest trend is, relay that information to the manufacturers and distributers and have the items on the floor in stores in a matter of weeks – a key characteristic that makes us a leader in fast fashion.

However, there are disadvantages to keeping the current system.  The major one is that DOS is no longer supported by Microsoft.  Even though the vendor has assured ZARA that it will not make any drastic changes, there is no guarantee of continued support.  Also, the current system is vulnerable to human error and continuing to utilize DOS could result in a loss of €2M in revenue.

The consulting company, Accenture, recommends that we upgrade to Windows OS.  Since DOS was once supported by Microsoft, Accenture recommends that ZARA maintain the supplier relationship and upgrade to Windows OS.  It is believed that since DOS and Windows are Microsoft programs, the new POS will not be difficult to learn and will require minimal training.  It is further believed that Windows OS will increase efficiency, speed and inventory management which will help support and maintain ZARA’s position as a leader in fast fashion by providing more detailed information concerning inventory.  The current system does not provide detailed information such as how many items of a particular size should be distributed to each store.  For example, when a particular top is being distributed, one store might need more of one size than another store.  The Windows OS system is able to provide that information because it allows stores to communicate with each other.  The company’s core strength that makes it a leader in fast fashion is its ability to manufacture and distribute apparel in a very short amount of time.  With that being said, Accenture has assured us that the speed of manufacturing and distribution will not be affected, ZARA will just have more detailed information available. 

Another advantage of Windows OS is that it will allow ZARA to continue to use PDAs for ordering, and transmitting information.  In addition, with Windows OS, information will not only be transmitted between headquarters to stores but also between stores. 

Implementation of Windows OS for 550 stores will take approximately five years:  hardware costs per store are €429,000, connectivity costs will be €132,000, programming costs €1,125,000 and training €1,100,000.  Total implementation costs over the course of five years will be €1,114,000.

The new system will not be rolled out at one time.  ZARA will be able to continue to use DOS and the installation will occur after hours.  In addition, Accenture recommends a soft launch to ensure that the new system will work.   

There a few things to take into consideration for implementation of a new POS.  First and foremost, implementation will be expensive and take 5 years.  In addition, in the event that the new system does not work, there is no contingency plan.  The amount of lost revenue in the event of this or a delay in rollout was not outlined or stated.  With the current system, the software needed is on two floppy disks that are uploaded to a terminal and the software does the rest.  This same procedure is also utilized when a terminal is down. 

While Microsoft OS will enable ZARA to provide more detailed information concerning inventory and provide opportunity for expansion, the company’s main focus is speed specifically in manufacturing and distribution.  DOS still allows us to do that.  Further, the size of lost opportunity of not having this detailed information is unknown.

The current system is working well for ZARA.  It provides and supports the capabilities necessary and important to ZARA to continue to manufacture and distribute apparel quickly and in a short amount of time.  An upgrade to a Windows OS would provide more detailed information concerning inventory but that is not the company focus at this time and neither is growth and installation is costly – money and time-wise.  For the reasons stated, I recommend that ZARA continue to use the current DOS system.