Target Supply Chain Case Study

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Key Points Targeting supply chain has been experiencing a series of poor decisions for the last few years. These decisions have significantly affected its customers and the service delivery of the supply chain. Recently, the company has been receiving bad reports from the press regarding their stock-out levels. Customers consider this trend as unacceptable and threaten to shift to other chain suppliers such as Home Depot and Wal-Mart (Brandenburg, Govindan, Sarkis & Seuring, 2014). However, this challenge can be solved by reducing the number of varieties and brands sold by the supplier on its shelves. The CEO of this supply chain believes that this decision will increase the efficiency of the company by focusing on the priority products and…show more content…
The management has taken a financial decision whereby it has planned to use five billion dollars to upgrade its distribution system to suit its needs. The new network will involve improvement of the network and technology infrastructure to suit its current market needs. For instance, these changes will help in reducing stock deficits while facilitating its online growth. The management is also faced with the need to shrink the number of products on its shelves. This decision will not only allow Target's management to focus on priority products but also result in less inventory and improved handling of these…show more content…
Stock-out incurs a cost that is associated with the loss of opportunities as a result of the stock exhaustion. In target supply chain, defective replenishment of shelf is among the common causes of stock-out. This challenge has proven to be very costly for the organization. It has caused uproar from the customers as reported in the press since customers are forced to forego their usual supply to other organizations. In worst case scenarios, frustrated customers can switch their loyalties to other brands after a series of frustrations. Lastly, poor management of products while in the warehouse has also disorganized stock management among its stores. In conclusion, it is evident that stock-out is the main problem affecting Target supply chain despite its history of success in the retail market. This organization can solve these stock problems by implementing effective inventory management from the warehouse to the stores. Regular inventory audit should be carried out to ensure that the frequency of stock-outs across all stores is well managed. Target should also carry out the economic order quantity of the organization to reduce the level of stock-out, holding and carrying cost of the

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