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allows the POS system to integrate with the rest of the systems in the supply chain and improve the flowof information in the supply chain. Technology advances at such a rapid pace that Zara’s POS maybecome outdated in the near future and lack support from vendors. The rise of big data, having a newerPOS system may allow Zara to perform additional analytic functions which can help it to improveresponsiveness to demand. yes5.2. Adaptability and Agility: Opening a DC in AsiaZara should take advantage of the booming e-commerce industry by introducing online platformsin the Southeast Asian countries like Indonesia, Singapore, Malaysia, Thailand, and the Philippines.Despite Zara’s notable brand presence in the Asian market, with about 128 stores, there is still a lack ofonline platforms in Asia. The growth of the Southeast Asian markets is not only limited to e-commerce,but it can also be observed in traditional shop sales (refer to section 4.2.). Hence, there is a large overallmarket potential. In order to serve the growing demand of the Southeast Asian market, we recommend Zara tobuild a new major distribution center in this region which partly serves to replace the current DCs inSpain. With the largest number of stores of 46 and the largest population size, Indonesia is the keySoutheast Asian market. With cheap labour and land, as well as its central location, Indonesia is theoptimal spot for a DC. This DC would help Zara and its supply chain to adapt to the growing overallmarket illustrated in the previous paragraph. Even though building a new DC and integrating it into thesupply chain requires a very large investment, we believe that the advantages of an additional DC outside16
Spain will outweigh the cost, due to the huge potential of the Southeast Asian market. Very good and fullyagree. However, as this is a rather obvious problem, we need to fully understand why this was not done inthe first place.Additionally, the advantages are not limited to meeting the potential demand. The introduction ofa new DC will increase the efficiency of the supply chain network. Products produced and sold in Asiaand the Pacific region do not have to be shipped back and forth to Spain anymore which cutstransportation costs and lead time. Shorter routes also allows Zara to test and implement alternativeenergy sources into their transportation network. This will help Zara in overcoming the transportationchallenges, which are mainly caused by the future shortage of fossil fuels (refer to section 4.1.). On top of that, having an additional distribution center in Asia helps to improve the agility ofZara’s supply chain. This reduces the overall lead time mainly in the Asian market, which increasesresponsiveness to demand changes due changes fashion trends for instance. Should the introduction of adistribution center in Asia be successful, it could serve as a model for future expansion in other regions ofthe world such as the Americas. Yes. Again, why didn’t they do thisfor the big market in North Americain the first place. Kind of silly to ship from Asia to Europe, then to North America.