Question

The failure of Target in Canada has been called the greatest supply chain disaster in Canada history. Research the chain of events into her lead up to Target launching in Canada and then pulling out of the market. Utilizing all concepts learned in this program, identify and describe at least four supply supply chain management specific issues. With this knowledge, suggest supply chain management techniques or tools to overcome the challenges Target exeperienced.

Answer 1

TARGET CANADA

Target Canada Co. was the Canadian subsidiary of the Target Corporation, the eighth-largest discount retailer in the United States. Formerly headquartered in Mississauga, Ontario, the subsidiary was formed with the acquisition of Zellers store leases from the Hudson's Bay Company in January 2011. Target Canada opened its first store in March 2013, and was operating 133 locations by January 2015. Its main competition included Walmart Canada and the local Loblaws and Shoppers Drug Mart chains and Canadian Tire to some extent.

Target Canada was ultimately unsuccessful, with an overly-aggressive expansion initiative, in addition to higher prices and a limited selection of products compared to Target stores in the United States

SUPPLY CHAIN MANAGEMENT ISSUES FACED BY TARGET CANADA

When failures within the supply chain occur, certain important lessons can often be gleaned. It is important to take a step back and see what could have been done to circumnavigate or prevent these issues entirely. This is the kind of lesson that Target Canada learned when it opened its doors in February 2013 — and subsequently closed them not long after. According to Canadian Business contributor Joe Castaldo, the retailer had major issues with its outposts in the Great White North.

1. Poor planning within the supply chain and breakdowns in logistics management

2. Moving products from distribution centers to the stores themselves turned out to be a significant issue.

3. One of the biggest issues was the use, or misuse, of technology -  Worse, the technology governing inventory and sales was new to the organization; no one seemed to fully understand how it all worked,” Castaldo wrote. “The 750 employees at the Mississauga head office had worked furiously for a year to get up and running, and nerves were beginning to fray.

4. Supply chain analysts and sole contributors need to be held accountable

Target’s Supply Chain technology used an auto-replenishment system to alert vendors whenever a product ran out of stock. And the performance of the company’s analysts was measured by their ability to keep products in stock; if an analyst’s category ran low, they’d need to answer to the business’s leadership. But this simplistic measure of accountability fell prey to a loophole in the system: “by flipping the auto-replenishment switch off, the system wouldn’t report an item as out of stock, so the analyst’s numbers look good on paper.” Cut to empty store shelves.

5. Training is key

Once again: Target’s Supply Chain failures seem to stem from organizational dysfunction rather than any individual lack of skills. One aspect of this dysfunction stuck out to us in the article, and that’s that “Young staff received only a few weeks of training, according to former employees…The Canadian team lacked the institutional knowledge and time to properly mentor the new hires.” supply chain management techniques or tools to overcome the challenges Target exeperienced.

6. Data is king in supply chain

Target Canada’s Supply Chain failures came down to problems with data. The firm’s Supply Chain software was hampered by a litany of mistakes in product information (model, dimensions, weight, etc.). Problems with data led to piles of product collecting dust at the company’s Distribution Centres. And once the data was faulty, the company was playing catch-up from that point forward. They were forced to allocate critical resources to fixing data manually instead of strengthening the Supply Chain.

SUPPLY CHAIN MANAGEMENT TECHNIQUES TO OVERCOME CHALLENGES

1.  Adopt a demand-driven planning and business operating model based on real-time demand insights and demand shaping.

The right prediction and contingency planning tools will ensure a complete view and an effective response to risks such as suppliers going out of business, political upheaval, and natural calamities affecting manufacturing. Companies then can adjust pricing and promotions strategies to shape demand, move additional product quickly, drive revenue growth, or further expand margins for a high-demand product with limited market supply.

2. Build an adaptive and agile supply chain with rapid planning and integrated execution.

Once executives are able to better understand and shape demand and risk, they need to adapt their supply chains to changing market opportunities and events. Companies must deploy dynamic planning capabilities and continually fine-tune operations to ensure responsive agility to meet changing demand.

3. Optimize product designs and product management for supply, manufacturing, and sustainability to accelerate profitable innovation.

Innovation is crucial for being one step ahead of the competition. But innovation doesn’t exist in a vacuum. To be successful, products must be manufactured at the right cost, place, and time. Decisions made in the early cycles of product development can make or break the product. Designs must be optimized for supply, manufacturability, and supply chain operations. All true costs to deliver must be accurately captured and analyzed to maintain balance across the end-to-end business.

4. Embed sustainability into supply chain operations. The triple bottom line of people, profit, and planet has never been more important than it is today. Studies show that companies striving for social and environmental sustainability achieve major competitive advantages, especially with regard to production efficiency, supplier management skills, and attractiveness to employees. Substantial opportunities exist for sustainability in supply chain operations.

5. Ensure a reliable and predictable supply.

Without reliable supply to customer-facing stakeholders to meet agreed-upon service levels, a manufacturer will tend to hold inventory buffers to ensure meeting customer service levels.

6. Align your supply chain with business goals by integrating sales and operations planning with corporate business planning.

Although sales and operations planning processes provide coordination among sales, manufacturing, and distribution, there still are disconnects and gaps among finance, strategy, and operations in many companies. One way to bridge these gaps is with integrated business planning that involves people, process, and technology elements of the business. This process integrates financial strategic budgeting and forecasting systems with operations planning and allows smart trade-off decisions to be made for the business

7. Improve Operating Techniques

There are all types of companies looking for the latest high-tech supply chain management tools to make their supply chain division more effective.

8. Schedule for Success

One of the best ways to set your organization up for success when overseeing a supply chain implementation is creating and maintaining a realistic schedule. As you know, basic project management involves managing three things: scope, schedule and resources. Although all three are interrelated, in my experience poorly planned schedules tend to cause a good majority of implementation headaches.

9. Supplier Participation

Supplier participation and acceptance are absolutely critical to any collaboration project: the success of your system is directly tied to your suppliers’ willingness to use it. If you’re a big fish in a small pond, then your suppliers are typically more “willing” to participate and use your system. Small and mid-market companies don’t have that advantage, so they need to use a bit more finesse. For them, ensuring the system is easy to use and adds value for suppliers is crucial.

10. Flexible Platform

Every business has its own particular needs and requirements. A wheat distributor has different concerns than the owner of a fleet of trucks. No software tool comes out of the box perfectly designed just for you. Therefore, it's essential you pick a software tool to be customized to your business.