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Case Eight: How Supply Chain Management Problems Killed Target

Canada

Due Date: Saturday November 25, 2017


Course: CITM102

9-15: How much of Target Canada’s problems were technology based? Explain
your answer.

Target is a successful general merchandise retailer, with 1801 retail store


locations. In 2011, Target decided to expand, by opening up a retail stores in Canada.
Target opened its first Canadian stores in March 2013, and later filed for bankruptcy
protection and announced to close all its 133 Canadian stores. Officially, on April 12,2015
Target Canada stores closed. Technology played a major role in causing Target
Canada to closed. For example, Point of Sale (POS) was unreliable and did not process
transactions properly(Laudon, 2015, p.366). Point of Sale (POS) was not working properly,
terminals for cash payment took too long boost up or froze, items wouldn't scan, the
self checkout station gave incorrect price, or the POS system would not provide the
correct price(Laudon, 2015, p.367). The Point of sale (POS) had several bugs, but Target
Canada did not replace or improve software. Another example, the auto-
replenishment system, which is a system that keeps a track of what stores had in
stock, which wasn't working properly(Laudon, 2015, p.367). Since the auto-replenishment
system was not working properly, Target had to shut off the system at three test
stores and their employees had to manually replenish the shelves( Laudon, 2015, p.367).
Since the auto-replenishment system was turned off, it was unable to notify the
distribution centres when to ship more products when a store ran out of
products(Laudon, 2015, p.367). Therefore, products were not being restock on store
shelves. Additionally, Target’s management decided to implement new ready-made
software for ordering products from vendors, moving goods through warehouse, and
stocking shelves (Laudon, 2015, p.366). Target decided to use the software SAP,
because it had the functionality and capability to support different currencies and
language from other countries. Prior to the launch of Canadian Store, the data used
SAP software was data was full of errors, such as width entered instead of lengths,
prices and item descriptions were entered incorrectly ( Laudon, 2015, p.367). Since SAP
software caused a lot of issues, which include products weren’t fitting into shipping
containers, products unable to fit properly onto store shelves, and warehouse unable
to communicate with SAP (Laudon, 2015, p.367). Therefore, in order for SAP to function
properly and ensure products move from warehouse to store properly, it requires
correct data. This is how much of Target Canada’s problems were technology based.
9-16: How responsible was management for Target Canada’s problem? Explain
your answer.

Management equally was responsible for Target Canada’s problem, similar to


technology. Management rushed into expanding Target in Canada within two years.
Management quickly moved to build three new gigantic distribution centers in Canada,
where all the products are sorted and prepared for shipment to individual store
(Laudon, 2015, p.366). Additionally, management of Target Canada failed to keep track
of its products or make sure that the right amounts of products were being ordered,
stored, and shipped(Laudon, 2015, p.366). In United States, Target’s operation used
custom-built systems for ordering products from vendors, moving goods through
warehouses, and stocking store shelves (Laudon, 2015, p.366). The system worked very
well and Target’s IT staff and business end users were highly experienced in using
them(Laudon, 2015, p.366). Since, the system requires considerable time and effort to
internationalize this system, management decided to use SAP (Laudon, 2015, p.366).
However, to implement SAP in a large company requires a lot of time, from three to
five years and million of dollars. Target’s management rushed into implementing SAP
within two years, using consultants from Accenture who were experienced in SAP.
Management put a lot of pressure on their suppliers to enter data quickly into SAP,
these suppliers entered data were entered manually. Therefore, the data used by SAP
were full of flaws, and the system required correct data to function properly(Laudon,
2015, p.367). Management brought POS software from Israeli company called Retalix,
which is not an industry standard(Laudon, 2015, p.367). These POS system were not
working properly, terminals for cash payments too long to boot, and froze, items
wouldn't scan, and self system would not provide the correct price (Laudon, 2015, p.367).
Considering POS system are not working properly, management did not take the time
to replace or improve the software. Overall, Management was responsible for
Target’s Canada Problem comparable to technology.

9-17: What things should Target Canada have done differently to be


successful?

There are several things Target Canada should have done differently to be
successful. For example, Target Canada should have rushed into expanding Target
into Canada within two years. Also, Target Canada should implement a system to keep
a track of its products or make sure that the right amounts of product were being
ordered, stored, and shipped(Laudon, 2015, p.367). Target Canada should improve or
replace their Point- of Sale (POS) system, since the system was unreliable and did not
process transaction properly. Additionally, Target Canada should have implemented
Target’s United States operation that used custom-built systems for ordering
products from vendors, moving goods through warehouses, and stocking store
shelves. The system works well if Target’s IT staff and business end user are trained
and experienced. Conversely, Target should have taken their time to implement SAP
system using consultant from Accenture who are experienced with SAP. Since the data
entered into SAP were incorrectly, which caused a lot of flaws within the system,
therefore the system were not functioning properly. Target Canada should have
installed an automatic verification tool earlier to catch data before they were
entered into SAP or after entering SAP. This system will not allow a purchase order to
proceed until an employee enter product data code were entered correct(Laudon,
2015, p.368). Therefore, these are things Target Canada could have done differently to
be successful.
Reference:
LAUDON, KEN. MANAGEMENT INFORMATION SYSTEMS: managing the digital
firm. New York, Pearson, 2015.