Implementing Multi Echelon Inventory Optimization Project

Target Corporation (NYSE:TGT) is the leading large-format general merchandise and discount retailer in the U.S., challenging Wal-Mart in electronics, toys and apparel while also seeking to differentiate with higher-end fashions and products for an upscale audience. As of the close of their latest fiscal year (FY2011), Target operated approximately 1,760 stores encompassing 233,000 square feet in 49 states and the District of Columbia. The company is divided into the retail and credit card divisions and moves the majority of its products through a highly integrated network of 37 different distribution centers, which include four food distribution centers. Target is one of the most well-entrenched large format retailers in the U.S., has the ability to manage their pricing strategies at a level of accuracy and precision that is comparable to Wal-Mart (Henderson, 2001). Unlike Wal-Mart, Target concentrates on a value-based message that concentrates on quality and price differentiation to sustain their gross margins while Wal-Mart concentrates on supply chain efficiency and a continual reduction of supplier and transaction costs (Krishnamurthi, 2001).

Evaluate the role their inventory plays in the company’s performance, operational efficiency, and customer satisfaction.

The aim of this paper is to highlight the strategic position of the company with an overview of its internal and external environment. The study of its strategy, design and other forces, one can easily gauge why and how target has managed to become the retail giant it is today.

When the trucks arrive a small team unloads and bring product to their designated section of the store. For apparel, the clothing is put on racks and wheeled out. Where a small team folds, locates and displays them according to planograms and sets. The process of unloading, locating, displaying should be concluded before the store opens with no products on the sales floor. This is to keep the store looking clean and providing the customers with a clean, stocked environment. The effectiveness of Targets current distribution is good; however, inventory counts often have a crippling effect on the company. Since target launched their online pickup and ship from store the company has noticed an error in their operations. Their inventory counts did not refresh fast enough, if a guest just bought say a dress, it would not be accounted for, for 3-5 hours later in the system. Thus, issues for customer satisfaction would occur when a guest would either see online that we had it in stock, or order it for in store pick up and us not being able to fulfill their order. By improving their inventory management system, Target could see an increase in sales, customer satisfaction and online and in store customer traffic.

In today’s world, especially in Canada, consumers generally want to satisfy all of their needs in a way that saves them the most time and energy. In order to meet this need, Target offers their customers the chance to buy different products that they would normally have to go to two or three different stores

More often than not, Target’s products fall under the consumer discretionary category. Thus, the company is vulnerable to macroeconomic forces— consumer spending trends, employment and income, and GDP (gross domestic product) growth rate. After a failed attempt to expand into Canada, Target’s operations are limited to the United States market. This makes the company’s financial performance more vulnerable to our fluctuating economy. It is primarily these macro forces, in the recession and thereafter, that forced Target to shift towards an affordability focus in all of its product lines. However, these macro forces, in the betterment of the state of the economy, also provide Target with the opportunity to refresh its product offerings according to the tastes and preferences of its consumers, while continuing to offer a relatively low price point, regardless of the product area. In this way, Target is shifting from employing a production concept, in which its main focus is to sell products at a low production

So when Target sent the letters to the vendors demanding they give them the exclusive rights to the products was unethical by asking vendor only to cater to their needs. This action forced many vendors to look at how they could support Target but be ethical themselves to other customers of the products they were supplying to Target and other customers. So reviewing this behavior by Utilitarianism, Target was not making everyone happy including their vendors nor the customers that may have been purchasing directly

• Target will need to focus on cost cutting in order to reduce their prices that are applied to the products.

The main purpose of this paper is to show my knowledge of the supply chain and relate it to Targets supply chain reviewing if target has an efficient supply chain set up. The head corporate office is in Minniapolis but target has many stores throughout the world. Their main strength is their customer service which keeps the customers remaining faithful not only to the store but to targhets personal brand as well. If you want to know the effectiveness of targets supply chain then continue to read and relate what I am saying to your pwn personal shopping experience. By the

Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.

If Target were forced to consider re-organization and bankruptcy strategies the changes that may occur to its finance policy and capital structure could be devastating. Target is currently the number two retailer behind Wal-Mart, but would change with any sort of re-organization or bankruptcy. Target would have to liquidate its inventory in order to repay its debt. It would also have to close plants and cut employees to reduce overall costs. Target would also have to sell many of its assets and plants around the

Target Corporation has recognized itself as one of the top retailers in the United States market on the basis of excellent service quality, customer experiences, operational excellence, strong financial position, and a wide array of product offerings. Through its high degree of service orientation at physical outlets and adoption of fair business practices, Target Corporation has become the most distinctive retailer in the eyes of its potential customers. Being one of the top-notch retailers in the United States, Target Corporation has to carefully strategize on its business operations and marketing tactics so as to keep itself in the row of competitive brands of the industry.

One of the issues Target could face if it continues to only focus on private label store brands and do not promote national brands is losing a percentage of its customers. Although Target’s innovative amount of store brands on its aisles has proven successfully for the retailer and consumers have shown a positive reception to the products, there are still a number of customers who are accustomed to

The procurement section of Target’s supply chain is an essential part of how it replicate costs to customer requirements. The overall affiliation between customer fulfillment and the supply chain are closely linked to products that are designated based on benchmarks that have been appropriately matched to target costing structured with market criticism and feedback provided. When focusing on purchasing products to sell to customers, the organization selects and processes the best option that best matches Target’s

Even though Target is using diverse range of suppliers, China is still one of Target’s single largest sources. To meet Target’s requirements, suppliers from China have to give discounts and other incentives in order to meet challenges imposed by the other suppliers from different country. By that advantage, Target Corp. can offer products that are of high standards. However, because of political of financial instability, currency fluctuations, trade restrictions, labor unrest, weather condition…., the relationship between Target and its suppliers could disrupt and adversely affect its sales.