Enterprise Systems: A Critical Review

This assignment requires a critical review of the literature surrounding enterprise systems. It necessitates an exploration of various aspects, including the historical development of enterprise systems, their influence on organizations, factors influencing successful implementation, challenges faced during adoption, and emerging trends shaping the future of enterprise systems.

ENTERPRISE
SYSTEM

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
1. Subject of company and problems or opportunity faced by organisation...............................1
2. Nature of enterprise system that is adopted by Zara and the process by which it was selected
and implemented..........................................................................................................................3
3. Difficulties faced by Zara in implementing system.................................................................5
4. Success of adoption of enterprise system and metrics used....................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Enterprise system (ES) are the large scale application software packages that support
entire process of system, flow of information and reporting and data analytics in complex
organisation (Enterprise System, 2018). There are many types of enterprise application like
automated billing system, payment processing, email marketing system, customer relationship
management (CRM), enterprise resource planning (ERP) and many others (Seddon, Calvert and
Yang, 2010). Enterprise system is very important for organisations as it help management to
improve their functions in an organisation by in integration. In this present report, the case study
of Zara of Spain is being chosen for assessment. It is the largest retail company which deals with
various accessories but Zara is famous for its clothing brand in Spain, which was founded in
1975 by Amancio Orterga and Rosalia Mera. This present report will explain the problems or
opportunity that company has faced. Addition to this, problems and issues faced by organisation
in adopting the system that facilitates implementation will also be included in this assignment.
MAIN BODY
1. Subject of company and problems or opportunity faced by organisation.
Enterprise system includes (ERP) enterprise resource planning. Customer relationship
management (CRM), supply chain management (SCM) and many other enterprise level system
that are very important to all dynamic and global organisation. In order to achieve success, it is
very important to use the best enterprise system. Zara is a retail fashion industry. It is a special
industry as compare to others. Zara also faces many difficulties when they are adopting old
methods of system and processes. At present, it has 2200 stores. The main brand of Inditex is
Zara Group, which is the world largest apparel retailer. There are 2017 managers are employed
in company and they are providing up to 20 clothing collection in a year. The revenue of
company was US$ 9 billion in 2016. Zara has contributed $8.51 billion to Inditex which put
company ahead of H&M (Bi, Da Xu and Wang, 2014).
Zara is a one of the brand that is very big retail company in Spain. It is the famous
company in Spain dealing in clothing products and other accessories. The key owner of Zara is
Amancio Ortega, Rosalia Mera in 1975. Company is giving its services since 43 years. Its
headquarters is located in Arteixo, Spain.
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The product in which company is dealing is highly perishable products like they cannot
store there goods for long time and it is only due to current trends and fashion and it is very
biggest concern of company. In the today's era, consumerism is growing very fast as they have
so many options to select among any product which they like. It is not only enough to sell their
products online from e-commerce or mobile commerce. The demand of consumers changes as
they often demand apparels what they see on media. However, Zara has won the market by their
formula on which it is based on current fashion by lead time will be short, quantities is very low
and styles are more (Saraf and et.al., 2013). This formula contributes 80 percent of high sales.
Still, company is facing the pressure of changing fashions, which is very big concern for Zara
and they are facing this problem due to unplanned production and selling.
Addition to this, the products in which they deal is susceptible to fashion. It is very big
challenge where the planning of company is not working. The margin of sales is meaningless if
the products is not able to send as it is planned. Issue of seasonality is very volatile which in turn
creates a ramp up inventories and then deplete them in a time sensitive manner. Seasonality is
also a very big challenge which Zara is facing like at time of winter, if warm clothes does not
reach at right time at right place than it is waste and meaningless. Apart from that, at the time of
Christmas and before 2 months of Christmas, the sales of Zara increases to more than half. Thus,
it is very essential that company work more on seasons. Other than that, company is facing issues
in flow of information like retailers are not getting appropriate information which in result leads
to delay in reaching of products to end users in right time.
On the other hand, the shipping timing of Zara is also very high as it is not possible to
maintain the stock turnover of company. Shipping of products take large time which delayed the
products to reach its right destination. If in the distribution of products is not proper or it takes
time than it is not possible that company can develop more as it is very essential that product
should be reach on time at right destination (Dorantes and et.al., 2013). In order to achieve the
best results, it is very important for Zara to adopt new and technical system of distribution so that
shipping cost will be control to the great extent. Addition to this, Zara is also facing issues in
investing high amount of money in development of design and company is only getting
$200,000-$300,000 of retail sales which is very low figure compare to other retail industries.
This is not cost efficient. This is also one of the biggest problem that company is facing. All
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these problems that company is facing will decreases the sales margin that is expected by
company.
2. Nature of enterprise system that is adopted by Zara and the process by which it was selected
and implemented.
Zara is facing so many issues in its traditional processing system. Traditional processing
and operational system of Zara is not up to the mark which in turn delayed in distributing the
products to end users. Thus, company has planned to adopt new system and processes so that all
the issues and problems will be remove. Enterprise system include many types of application that
will make easy and simple operation and remove all obstacles (Salleh, Teoh and Chan, 2012). By
implementing new enterprise system, Zara can improves its efficiency and reduces the cost of
operation. It improves the effectiveness, provides better service of customer and also increases
the control and governance of activities. The enterprise system that is adopted by Zara is
Enterprise Operating System. It is proposal that helps in developing an enterprise operating
system for real time monitoring as well as effective control of entire operation of company. With
the help of this system company get support in the process of business, flow of information,
reporting as well as analysis of data in big organisation. The operation of Zara is not small, it has
very wide operation. The operation of Zara is not small, it has very wide operation. Zara is a big
fashion company and communication and information is the backbone of the supply chain of
Zara. The fast response in market of Zara is only due to its best system of information and
communication technology. With the help of this technology or system, it is not possible that
product is able to reach its right destination at right time. The reason behind a high speed from
table of design to shelf of the store are enabled only through the improvement in some areas of
company like gathering of information on the needs of customer, product standardization,
inventory management of Zara and at last, management of distribution. In all these areas,
company need effective and efficient management of system so that Zara can remove it's all
difficulties that were faced by them when they are adopting traditional process or system within
its operation and system (Guo and et.al., 2012). There are four areas where company has
changeds the system of enterprise which are as follows-
Regular assembling of information on the needs of customer- It is very important that
before designing of clothes for customer. Zara used to computers to record the sales of company
and comments of customers. All these information that are collected on computer is used by the
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designers of company in preparing new products. The database of company are checked by the
designer of its dispatches and daily sales numbers so that it become easy for them to create a new
line of information as well as make changes in old one. Therefore, designers of company have
real time information when planning with the commercialized team on the cut, price and fabric
of garments. With the help of the new system, Zara can early spot trends. Addition to this, the
stock is adjusted as per the time (Subramaniam, Nandhakumar and Baptista, 2013). This system
is very effective for company as it is growing day by day with high speed.
Standardization in the information of products- As above discussed that company is
facing the issue in flow of information to retailers which makes delay in reaching the product of
company to right time at right direction. Incomplete and different specifications as well as
availability varied information of product ads up many weeks. Even so, Zara stored the product's
information with some explanation allowing it to prepared designs very fast and in very correct
manner by clear cut instructions of manufacturing. With the help of this system, company is able
to reach to its best level.
Inventory and Product management System- This is also one of the biggest area where
company needs to have management of products and stock. The system that company is able to
use the best system for organisation as it helps to manage thousands of fabric and specifications
of team and design as well as physical inventory which gives Zara's team the capability to design
clothes with available stocks instead of waiting for next order to arrive (Kim, 2011). This is the
best system as it reduces the issues of wastage of products and raw materials.
Distribution management System- This is also the one of the best and effective system as
it helps company in betterment of all areas. Distribution is the area which affect all the other
areas of company as entire profit, sales and all other things are depended on the distribution
system Zara is adopting. This system of company will help organisation in adopting the best
outcome as it will bring the best information in and around the area of 200 kilometres of area.
With the help of this system, the product of company is able to distribute its products at right
destination at right time. Zara is using a system which is able to track the movement of products
from manufacturing plants to the 400 plus chutes that make sure that delivery is at right place.
The above system that are very effective for company's operation and management as it is
very helpful for company to make the best outcomes. The profit of company is also increasing
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with the high rate and it is only because of effective and modern system of organisation. There
are many advantages of these systems which are as follows-
Competition- It is fact that this system of enterprise needs huge investment but it is very
effective to compete in this global world. In order to compete with other organisation, this is the
best way to accomplish with other organisation (Bhattacharya, Seddon and Scheepers, 2010).
It minimizes the cost- These systems also help Zara to reduce its cost that are involved in
process of transaction processing, software, IT and hardware support employees in a specific
manner.
It improves the efficiency and quality- These systems also helps in improving the
efficiency as well as quality of customer service of Zara. Addition to this, the production and
distribution system of company is also improved with the use of these systems.
Structure of company becomes more uniform- With the help of these systems, the entire
system of structure of Zara become more uniform. The entire structure will demonstrate a good
image among the customers and in the market (Wang and et.al,. 2013).
These are all the reason why Zara has adopted these systems of organisation.
3. Difficulties faced by Zara in implementing system
Zara being the leader in retail and fashion sector is having or implementing various types
of difficulties (Chellappa, Sambamurthy and Saraf, 2010). As they are introducing new fashion
and innovation on regular bases with this, Zara is keeping customers coming back to back again
for checking the latest styles. But this certainly is one of the problem for company involving
higher amount or cost in developing the product for customers. The cost of design and product
development in Zara is very high as they are investing lot of money in innovation and
development of their products. The company is very quickly responding to its share in market
with the higher speed from the store which is based on the 4 critical information related areas
like that of information on customer need, standardisation of product information, product and
inventory management and distribution management approach.
Constant collection information on customer need- This is the most important factor or
approach which is been used that will be including collection of data related to customers need.
This will be included within design, manufacturing and distribution function of collection of all
type of data and information based on needs and demands of customer (Trinh-Phuong, Molla and
Peszynski, 2012). The problem for company is that their designers are checking database in way
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of dispatching daily amount of sales. If the designers are not been having real time information
then they will not be able to collect the relevant data related to product. They will have to decide
with commercial team for cut and fabric to be used. So it they are not been able to identify the
future or current trends of market, then they could not be able to adjust be stock according to the
time frame given.
Standardization of product information- All the information based on products needs to
be correct and specifying all design and approval process (Panetto, Jardim-Goncalves and
Mezgár, 2016). If the data which company wants is not been provided to them on time then it
could be considered to, as difficulty for company (Information Systems and Information
Technology at Zara, 2018). Then it is required that they are manufacturing the product based on
the information and storing the information on accurate and quick bases.
Product and inventory management- Under this system, company need to properly
maintain its inventories which are managing fabric and trimming the specification and design
specification as well. The material and inventory which company is having must be complete
scope or stocks should be available. They should be looking and checking up for which raw
material is having short of stocks so that they could be arranging all the stocks before it is
coming on to the finishing line (Kataev, Emelyanenko and Emelyanenko, 2013). They must not
be waiting for the end time which could be very much difficult for company to get prepared
stock is finishing.
Distribution management approach- This is includes to be as the last approach of Zara
which they are distributing function which does not have much of interference of human. So this
approach needs to be correctly implemented for which company need to do huge investments
while they are implementing the approach.
4. Success of adoption of enterprise system and metrics used
Enterprise system is the process or application which is supporting the flow of
information, reporting and analytical data of complex organisation. This will be very proper
system as it will includes all type of information which is related to Zara in way of facilities of
improvement of various functions in enterprise. It will be involving the data warehousing and
business intelligence system of Zara, in which, they are integrating the use of all sort of
information (Alballaa and Al-Mudimigh, 2011). Like in distributionng management approach
will not be having human intervention at all so all the work is done based on digital
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transformation bases. So this is one of the success factor for the enterprise system which is been
implemented within Zara. Other than this, gathering of critical data and information of market
and products so that innovation and creativity could be done on effective bases is also one of the
factor of success. This will be helping the company to gain information which is accurate and
correct so that product development of Zara is good.
Zara is contributing in around 80% of the total sales of Inditex as it is concentrated on 3
of the most important factor which is based on its fresh fashion like that of short lead time, lower
quantities and more styles (Moisescu, Stanescu and Serbanescu, 2012). These 3 factors are the
most important features of success of enterprise system which will be dealing to takeing lesseor
time in manufacturing and adding up more number of styles that is helping Zara to deal with the
situation of earning higher profits more effectively. As no time is been wasted in Zara for the
sorting of merchandise as human sorting is not implemented so optical reading device is been
used for this.
CONCLUSION
From the report on case study of Zara it is concluded that, it is performing very good in
market but its approach of changing the latest styles every week will be creating huge investment
in cost. So this must not be implemented within system rather they should be using more of
Enterprise system to lower down their burden of low margin of profits. The wages of company is
high as compared to that of Asia and Africa as it is having its factories in Europe more than
these two continents. The inventory and product management system of Zara must be considered
to, as very important for company so that they could track which stock is running out and what
they need to order. Investing such huge amount in the research and development part of product
should be controlled by firm as they are not getting that much revenue and not meeting the
breakeven point as well.
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REFERENCES
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Chung, S., Lee, K.Y. and Kim, K., 2014. Job performance through mobile enterprise systems:
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extraction from process interoperability in future internet enterprise systems. IFAC
Proceedings Volumes, 45(6), pp.1458-1463.
Panetto, H., Jardim-Goncalves, R.. and Mezgár, I., 2016. New perspectives for the future
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Salleh, S.M., Teoh, S.Y. and Chan, C., 2012, July. Cloud Enterprise Systems: A Review Of
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Online:
Enterprise System. 2018. [Online]. Accessed through:
<https://www.managementstudyhq.com/enterprise-systems.html >.
Information Systems and Information Technology at Zara. [Online]. Accessed through:
<http://adataanalyst.com/information-systems-management/case-study-information-
systems-information-technology-zara/>.
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