Zara case
1a) How would you advise Salgado to proceed on the issue of upgrading the POS terminals? I would advise Salgado to upgrade the POS terminals. However, I would advise him not to buy off the shelf terminals – he would need to find a POS terminal manufacturer that was willing to make custom terminals for the entire chain that are 1) able to be installed by store personnel, 2) could still use the POS application, 3) had network capability (to automatically download sales data to POS controller), 4) be proven to not fail – the equivalent of military small arms testing, and 5) have minimal or no moving parts. I would also advise him that the manufacturer would have to enter into a conditional contract where sufficient new POS terminals could be installed the same day (logistics for Zara is easy) in one market/district and tested for an extended period of time. If at the end of the test the results were favorable, then the entire chain would be switched over to the new POS terminals in what would have to be record time to prevent a lengthy transition period.
1b) Should he upgrade to a modern operating system or rewrite the POS application to include additional functionality? He should rewrite the POS application to include additional functionality. The original POS application has proven its reliability and ease of use. There is no justification to deviate completely from the apparent “gold” standard. The manufacturer of the new POS terminals would have to cater directly to the POS application. A modern operating system would just over-complicate everything because of all of the necessary add-ons, ease of ruination by user error, and the inability to write/modify the operating system to fit Zara’s very specific needs.
2) How is the in-store process impacted by your action recommendation? The pilot market/district would be the first to be impacted. All of the stores in the selected market would receive their terminals on the same day; again, Zara has amazing logistics. Once stores were notified to perform the self-install of the new terminals, they would do so at the end of the business day once the end-of-day reporting is completed. This would allow a window of time while the stores were closed overnight so that if there were any issues they could all be resolved by the time the stores open the next day. The new terminals would be installed by the store personnel, self-training should be used since the new terminals would have the roughly all the same functions, and store personnel would provide daily feedback during the pilot period. If the pilot market proves to be a success, then all of the stores would be sent the terminals and follow the same steps as the pilot market.
3a) Are these approaches applicable and appropriate anywhere? No, these approaches are not applicable and appropriate anywhere. A roll out of this magnitude of new POS terminals requires vast sums of money, especially since all of the terminals would have to meet Zara’s very specific criteria for reliability and POS applications. If a company were not willing to make to the required, or could not make the required, up-front investment in upgrading the terminals, it would be better to not change or upgrade.
3b) In what type of organizations would they work? These approaches would work for companies that have plenty of time and assets to make the transition work, as well as to be able to transition to a POS terminal that they want and not just to one that is off the shelf because it is “the new model”.
3c) If not, where would they not work well? These approaches would not work well for companies that would not be able to develop their own POS application or have sufficient assets to commission customized terminals. In this case, these companies should buy off-the-shelf registers that use a know operating system. Not everyone can go from start-up to Zara in a matter of years. Other areas may require more attention than the terminals. After all, Zara’s success is it’s catering to its customers and its rapid implementation of new items (supply chain), not its POS terminals. Focusing on building the business and not how new or technologically advanced the terminals will make the difference.