The Case for Participating in Decisions about Information Systems

Strategic Use of
Information Resources
Zara , a global retail and apparel manufacturer based in Arteixo, Spain, needed a dynamic business
model to keep up with the ever‐changing demands of its customers and industry. At the heart of its
model was a set of business processes and an information system that linked demand to manufacturing and manufacturing to distribution. The strategy at Zara stores was simply to have a continuous
fl ow of new products that were typically in limited supply. As a result, regular customers visited
their stores often—an average of 17 times a year whereas many retail stores averaged only four
times a year. When customers saw something they liked, they bought it on the spot because they
knew it would probably be gone the next time they visited the store. The result was a very loyal and
satisfi ed customer base and a wildly profi table business model.
How did Zara do it? It was possible in part because the company aligned its information system
strategy with its business strategy. Its corporate Web site gave some insight:
Zara ’ s approach to design is closely linked to our customers. A non‐stop fl ow of information from
stores conveys shoppers ’ desires and demands, inspiring our 200‐person strong creative team. 1
The entire process from factory to shop fl oor is coordinated from Zara ’ s headquarters by using
information systems. The point‐of‐sale (POS) system on the shop fl oor records the information from
each sale, and the information is transmitted to headquarters at the end of each business day. Using
a handheld device, the Zara shop managers also report daily to the designers at headquarters to let
them know what has sold and what the customers wanted but couldn ’ t fi nd. The information is used
to determine which product lines and colors should be kept and which should be altered or dropped.
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Copyright © 2016 John Wiley & Sons, Inc.
34 Strategic Use of Information Resources
The designers communicate directly with the production staff to plan for the incredible number of designs—more
than 30,000—that will be manufactured every year.2
The shop managers have the option to order new designs twice a week using handheld computers. Before ordering, they can use these devices to check out the new designs. Once an order is received at the manufacturing plant at
headquarters, a large computer‐controlled piece of equipment calculates how to position patterns to minimize scrap
and cut up to 100 layers of fabric at a time. The cut fabric is then sent from Zara factories to external workshops for
sewing. The completed products are sent to distribution centers where miles of automated conveyor belts are used
to sort the garments and recombine them into shipments for each store. Zara’s Information Systems (IS) department
wrote the applications controlling the conveyors, often in collaboration with vendors of the conveyor equipment.
As the Zara example illustrates, innovative use of a firm’s information resources can provide it substantial
and sustainable advantages over competitors. Every business depends on IS, making its use a necessary resource
every manager must consider. IS also can create a strategic advantage for firms who bring creativity, vision, and
innovation to their IS use. The Zara case is an example. This chapter uses the business strategy foundation from
Chapter 1 to help general managers visualize how to use information resources for competitive advantage. This
chapter highlights the difference between simply using IS and using IS strategically. It also explores the use of
information resources to support the strategic goals of an organization.
The material in this chapter can enable a general manager to understand the linkages between business strategy
and information strategy on the Information Systems Strategy Triangle. General managers want to find answers to
questions such as: Does using information resources provide a sustainable and defendable competitive advantage?
What tools are available to help shape strategic use of information? What are the risks of using information resources
to gain strategic advantage?