· Problem/Issue Statement
The problem with Zara is that DOS is proving to be inefficient for the ever expanding system of Zara. The main concern is that DOS is obsolete; even Microsoft does not support the system now.
• What is the distinction between the problems and the symptoms?
The existing DOS operated POS terminals are working absolutely fine for Zara with a lacuna that it is inefficient in communicating to the individual terminals for inventory management having access only to the headquarter which operates the Zara terminals as a single point of contact. The symptom for the problem is that this single-window contact provided by DOS operated POS terminals causes inefficiency in the system and waste of time and increase the lead time for the inventory to reach the required store since all the decisions needs prior approval from the headquarter. Thus the problem becomes clear that DOS is proving to be incapable of communicating with the individual terminals and inventory management is getting affected.
• What is the scope of the problem?
The scope of the problem is spread throughout the organization since the problem of lack of communication between the POS terminals is affecting the inventory management system. This increases the time for decision making since every decision has to be approved from headquarter.
• What is the context of the problem?
Although Zara has always strived to adopt the latest and fast run devices for its efficient and timely operations, the main strategy behind making this capital investment is that there is no absolute need of up-gradation at this point of time. However, with respect to functionality and communication, DOS is an obsolete technology posing a lag in the inventory management system.
• What are the decision criteria?
Zara needs a cost-benefit analysis in order to make a rational decision. The dilemma of continuing its existing DOS operated system or upgrade to multi-functional software needs to be analyzed on the basis of cost of equipment, switching costs, training costs and benefits of reduced lead time, proper inventory management, inter-terminal communication. The decision has to be based on several other factors such as compliance requirement, short-term and long term cost and benefits and its overall effect on the business operations and profits.
List of Plausible Alternative Courses of Action
Zara has several alternative courses of action to tackle this dilemma.
· The first alternative is to continue with its existing DOS operated POS terminals which as of now are working fine. DOS provides sufficient support for a centralized inventory management system of Zara. However, this increases the lead time and more time for decision making for inventory exchange among local stores.
· The second option is to upgrade the DOS system to make its inventory management decentralized and improve on its efficiency and time for operation. This will also simplify the operations, reduce time requirement and also improve on better utilization of IT resources. It will also result into substantial savings due to reduced micro-management and independent management of stores of their inventories. This would prove to be more productive for the store managers for resolving their store-specific problems.
· One more option with Zara is to upgrade the complete system with a new system which will offer one-stop solution. It might provide with a host of functionalities for the better operation of existing system and remove the lacunas in the system.
All the above mentioned alternatives will provide the necessary inter-terminal communication. So instead of directing the inventory requirement to the head office, the individual stores can exchange the inventory as per their requirement and also order the necessary inventory from the warehouse quickly. This will reduce the lead time and better fulfill the customer demand. The upgradation with multi-functionality system will also resolve the problem of obsolete hard-ware requirement. The upgradation will completely remove the existing lacunas and will also come in line with the latest technology used by majority of businesses. Hence, the problem of hard-ware parts will be out of question. Also the compliance of regulations for the IT governance will be met more stringently.
Evaluation of Alternatives
• Through what theoretical concepts should one evaluation of the alternatives?
We should evaluate the alternatives based on the theoretical concepts of practical implementation of latest software for the Zara system. We should also look at the switching costs and the time required for the complete adoption of the new software. We will also have to find the feasibility of the new system with regards to complying with the federal regulations. It has to best fit in the COBIT or ITIL framework in order to make IT as a standard framework.
• How does the evaluation relate to the decision criteria developed?
The evaluation should consider each and every aspect of the decision criteria developed like cost-effectiveness, compliance with the standard framework, short-term and long-term issues, etc.
• How imaginative can/should the evaluation be?
The evaluation should be based on facts and figures and not on mere intuitions.
Recommendation
• What is a quality recommendation?
After the evaluation of alternatives on the grounds of theoretical concepts, I would consider complete upgradation of system with a new software be the quality recommendation. This will not only resolve the short-comings in the existing system but will also provide a complete host of functions for efficient operation and reduce the time. I will also result into cost savings through better inventory management.
• What is a logical recommendation?
A logical recommendation would be to continue with the existing DOS operated POS terminal system since it is working fine with the centralized inventory management system. Every decision passes from the headquarter office and is solely managed as a one-point contact. Thus the management is kept informed of each and every decision as a micro-management. This enables the management to make rational decisions based on complete company scenario. Moreover, it can also formulate strategies or govern the company as the circumstances changes. It will be prepared for change management, risk management and other specific strategies.
Presentation
• If I were presenting, how would I sum up the case?
If I were presenting, I would sum up the case with the cost-benefit analysis of the alternatives.
• What key visual aids would I present?
I would use flowchart of how the Zara system works. This would give a structured and organized framework of the existing IT network and it would be easy to find where the loop holes exist.
• How would I “sell” the recommendation?
I would bring up some real scenario figures of costs and benefits which might represent a company like Zara by comparing it with a similar sized apparel industry and more or less similar structure. This would prove helpful in making a rational decision that works the best for the company.
• What other delivery considerations should I keep in mind?
I would keep in mind that the Zara system is unique and we have to develop a customized solution for the company IT in order to transform it from cost-center to profit-center IT system.
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