Target Canada Supply Chain Failure

¶ … stock-outs, because the company realized prior to launch that it was at risk of stock-outs. There were issues in distribution, getting goods from its distribution centres to the stores, creating significant risk of stock-outs if they launched on schedule. There were other issues as well, such as stocking store shelves -- some merchandise did not fit onto the existing shelves. Items were not being processed quickly enough at the distribution centre, either.

There were data entry problems as well that prevented goods from getting to the shelves, and stockouts became a running theme at the stores. Another issue was ordering. The company had actually over-ordered on goods, which ended up sitting in distribution centres. They had used a system for forecasting that depended on historical data, and there was no such data for the launch. They should have used other methods of forecasting initially, and phased in the historical data approach when they had data with which to work.

They literally assumed that they would double Zellers' sales, as a blanket assumption, not having anything with which to back up that assumption. So forecasting was a disaster, the company overordered and then could not get the goods onto the store shelves. Without proper data, and working with worthless forecasts, re-order points were difficult to determine. The process ended being done manually, which was time-consuming and prone to error. This only compounded the stockout issue, and the problems with order quantities.

There was basically nothing that went right in the company's supply chain. 2 There were several critical problems with computer systems. The company assumed that it was easier to work with SAP than it was to adapt the system it was using in the United States. There were a few changes that needed to be made, in particular working with Canadian dollars and French characters, but was that enough to force them to build an entirely new system? Probably not, because having a new system created substantial risk.

People not only had to learn the system from scratch, but nobody on the U.S. side would know anything about how to use it. When things went wrong, there was nobody who could help. So the decision to use a new system rather than take a little bit of extra time to adapt the existing American system was a key error in decision-making. There were also issues with the inventory management system.

It was designed to assist the company with merchandising at the store level, but required accurate information with respect to product dimensions and other attributes. The company knows full well that the attributes are often misreported by vendors. However, it did not allow enough time to enter the information once, let alone to ensure that the information was accurate, nor did it prioritize this in training.

There were no safeguards if information entered was wrong Even simple things like writing a line of code to translate imperial to metric measures was not used. This left Target with an MIS that was literally garbage in, garbage out. Without accurate data, nothing the MIS could tell managers was of any value. The company made errors with its point of sale system as well. It chose Retalix, which was not an industry standard. This created problems where Target people did not know how to work with it,.