1. How would you advise Salgado to proceed on the issue of upgrading Zara’s POS systems?

It would be in Zara’s interest to upgrade its current Point of Sale system for several reasons. Despite Zara’s IT supplier stating that they plan to continue support for the DOS system that Zara uses, it should be a red flag that the vendor is unwilling to sign any contracts stating such. The fact that Zara is the only customer on the old system should be motivation enough for Zara to upgrade its system. The system will eventually need to be upgraded anyway, and the longer that Zara’s executives wait, the higher the risk of loss as a result of trying to quickly upgrade the unsupported system in the case that the vendor discontinues DOS support. As we assess the current system compared to the future benefits of an updated POS system, it is easy to see that the current version has become decrepit and out-dated. The current system offers the benefits of a low operating cost, stability, and easy installation for new setups. After a relatively short learning curve, a new system would offer those same benefits. Most of the benefits of the current system are just a result of managers being familiar with the system. Given the time to learn a new system, installation would be just as easy, and stability comes with improvement, the same way the current system came to be stable. We shall see in further analysis that the low operating cost of the current POS system is overshadowed by the cost and time that employees have to take to work around the current system as well. Although the cost of a new system would initially be quite substantial, that initial expense would more than pay itself off in the long run. The POS system needs to be updated to also include the ability to look up in-store inventory balances through an in-store network. Using the current system, it is difficult to assess what is on hand without doing a physical count, which takes employees time that could be better spent helping customers and other day to day activities. Being able to look up current store inventories would allow employees to better serve customers, and save time when looking for items in different colors or sizes. This ability would also be helpful for store managers in ordering new styles that sold quickly, or to be able to efficiently judge which styles were unpopular and did not sell because those items would still be plentiful in the store. Another essential upgrade that is needed is the ability to look up inventories in other stores. The current operating system does not allow this feature. As a result, employees and managers must manually call other stores by telephone to ask if they have a particular style in stock. This is not only time consuming, but it detracts from customers’ in-store experiences. If employees are able to look up the inventory in other stores, while continuing uninterrupted face-to-face conversation with that customer, it is much more likely that they will make the sale. Many employees would find the task of calling from store to store searching for a particular requested item too daunting, and more likely, would simply tell the customer the product was unavailable rather than search for it. This often results in a lost sale. Having an integrated inventory system would also help executives at higher levels to make more accurate and informed decisions. Much of the inaccuracy of the current system of manually keeping track of “theoretical inventory” would quickly and easily be avoided. This would help ‘commercials’ to better assess what garments may be needed, and where. Commercials could then better distribute shipments, not evenly, but based on which stores were in more need in relation to their current stock. Commercials also sent items that were not ordered by the stores in an effort to assess demand and minimize stock. The commercials would be able to more effectively allocate these products based on stores with lower current stock.