Broken supply chain links doomed retail giant's expansion into Canada market.
There are many reasons behind the spectacular $6 billion flameout of Target Corp's attempt to enter the Canadian retail space: substandard locations, a too-aggressive rollout - 124 stores in 10 months - when the stores of the Zellers chain fell into their laps, and failure to differentiate themselves from the true rock-bottom discounters, forcing them to price their goods at unprofitable levels. Canadian customers who had visited Target stores "south of the border" in the U.S. found the experience did not match their expectations.
But one key problem for Target was a supply chain that did not supply.
A combination of incompatible technology and systems, inexperienced hires and poor training all contributed to supply chain woes. That left stores poorly stocked and selection limited, disappointing shoppers who had eagerly anticipated Target's arrival in a market where the discount space was long dominated by Wal-Mart Stores Inc.
Glitches in inbound delivery data and systems, such as doubled up units of measurement, hindered the ability of Target's operations staff to manage stock intake and organize outbound deliveries to stores. Barcodes on many items did not match what was in the computer system, causing empty store shelves and massive warehouse logjams, while store backrooms were stacked from "floor to rafters," making it difficult to locate products to put on shelves.
After less than two years, Target is closing all its stores and exiting the Canadian market. For any business, supply chain failures can spell disaster. When is the last time you gave yours a close look, to be sure your operations are "on target?"