Kmart’s Supply Chain Disconnect

The following research paper is based on The Home Depot Company, one of the largest home improvement specialty retailers in the United States. In addition, the analysis also includes supporting feedback obtained through an interview session with the Home Depot’s Operations Manager, Jaime. Jaime has a bachelor’s degree in business administration and has been employed by the company for eleven years. He possesses the knowledge and skills that are necessary to administer the supply chain management process for the 605 W. Morrison Rd. location store. The Home Depot has utilized several IT technologies that have helped the company gain core competencies in supply chain management processes. They have adopted the Omni-Channel Supply

Walmart’s approach means frequent, informal cooperation among stores, distribution centres and suppliers and less centralized control. The company’s supply chain allowed consumers to effectively pull merchandise to stores rather than having the company push goods onto shelves by tracking customer purchases and demand. Through the use of universal product codes, implementation of Retail links at the store, use of RFIDs and smart tags, suppliers and manufacturers within the supply chain synchronize their demand forecaste under a collaborative planning, forecasting and replenishment scheme, and every link in the chain was connected through technology that includes a central database, store-level point-of-sale systems, and a satellite network. As per report, there was a 16% reduction in out-of-stocks with the use of RFIDs and pointed out that the products using an electronic product code were replenished three times as fast as items that only used bar code technology. These strategies have made Walmart to be the dominant force over other competitors with information and technology helping its supply chain strategy attain greater

In recent years, Kmart has established itself as the third leading discount retailer in the United States, following behind Wal-Mart and Target. Kmart’s low prices and array of product have appealed mainly to low-middle class families. Kmart has fallen from the glory days when it was the leading and only discount retail store on the block. After the opening of discount giant Wal-Mart in 1962, and second largest discount retail store Target in the same year, Kmart slowly began to enter the back of consumers’ minds.

Kmart (sometimes stylized as K-Mart), is an American chain of discount stores headquartered in the United States. The chain purchased Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Walmart and Target, with stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam (which houses the world 's largest Kmart).[2] As of January 29, 2011, Kmart

Rising competition during this time included “Target, Wal-Mart, Home Depot, etc.” Sears’ doesn’t have a fresh look like Target and Wal-Mart, and loses its ability to attract the customer’s attention. With tough competition, Sears’ holding was losing in terms of amount of stores. In 2012, Kmart and Sears together only had a total of 2019. It couldn’t compete with “Wal-Mart’s 4,005, Target’s 1778, and Home Depot’s 2200” stores.

TSC is planning for large corporate growth over the next couple of years, and there are concerns of whether or not, in its current state, the supply chain strategy is adequate to meet the growing demands.Brad Twiddy, the director of distribution, recently produced a forecast model of future inventory volumes, and examined the affect the inventory had on the supply chain. The model predicts the company will experience capacity issues as soon as next spring. With larger volumes of inventory looming over a static inventory space, it would be prudent to examine alternatives of how to adapt the supply chain to the corporate expansion goals.

This was because this is more pleasing to the eye, so costumers are more likely to stay longer and shop. The store layout changed and was influenced by IKEA to have a "conveyor belt" layout so that customers follow the pathways around the store in order to see the most products possible. Wesfarmers opened up factories owned directly by them which now supplies products to the stores. These meant that costs were greatly decreased as Kmart stopped paying suppliers and products became very cheap and quality could be directly controlled. These accumulated changes were noticed by the customers and by 2011, the store revenue started to

In today 's economy you have the issue of Internet commerce which is taking up many of these stores sales and putting them out of business just by Kmart (Foster, L.,2015). However, with Walmart and target being online and being able to shop online it attracts people from other cities therefore and his help them remain a great powerhouse in the retail Industry which interns keep their revenue fairly high. Due to Walmart’s rapidly high expansion it is said that they are a thought for 40 to 50% of the decline a smaller store such as Kmart (Foster, L., 2015). It is due to the fact that the way Kmart is set up it makes it difficult for them to be able to compete against their well-known competitors. Due to globalization there are many things in society that have been affected by it. Such as rising gas prices and in regards leads to the closing of one of the longest standing stores as well as the workforce in the community.

Due to slow sales and less traffic at both Sears and Kmart, the two have decided to merge creating one entity named Sears Holdings. Kmart has agreed to buy Sears for $11 Billion. This puts Sears Holdings at the third largest retailer behind Wal-Mart and Home Depot. Although Wal-Mart is a direct competitor with Kmart, Sears Holdings goal is not to compete with Wal-Mart directly, but find areas that have been overlooked by other retailers, and take advantage of the expanded line of products the new company has to offer. Sears has had higher sales than Kmart, so hundreds of Kmart's will be transformed into Sears stores. As of now, most of Sears 870 stores are only found in malls. The new strategy would be to open Sears stores in current Kmart

I believe, that should Kmart focus on returning to its original company development, it can regain its market share. The original five and dime philosophy worked. A successful approach that, at one time may have become somewhat outdated, but the greatest growth and expansion has in fact happened with the furtherance of the discount retailer motto. The shrinkage of excess overhead, and labor would enable the company to explore the development of a stronger base line. As stated, “At its peak, the Kmart property accommodated 5,000 employees. When it was sold in 2005, it had fewer than 1,900, many of whom were transferred to Illinois (Crain Communication, 2016).” Buying power has shown to be a very important factor in terms of profit margin. The need to increase profit margin being the number one change needed.

With the exception of profit margin, Wal-Mart is above the industry average. They have a lower return on assets and a higher return on equity than Target. This means that they are borrowing more money and getting less return on their assets than that of Target. Target’s profit margin, though lower than the industry average, is higher than Wal-Mart. Wal-Mart’s profit margin is significantly lower than the industry average. However, their return on assets exceeds the industry average of 8%. Basically, this means that Wal-Mart earns less on each sales dollar, but they balance that by turning over their assets quicker. Industry averages were found on Reuter’s web site (2007).

Due to such a large scale of operations, Wal-Mart can make there prices low at cost, this is an advantage. Also Wal-Mart has over 10,130 stores. The wide ranges of products, with this Wal-Mart have a lot of brands to choose from. The Competence in information system, the effective management of the supply chain and the logistic is one of the most important factors for Wal-Mart. The cost leader strategy, help Wal-Mart with the prices, as for they are able to put prices at the lowest over other competitors. The last one international operation, Wal-Mart does not rely on US stores only, but the competitors do (Jurevicius,

A few reasons as to why Wal-Mart became a leader in the retail industry is due to their practices in obtaining competitive advantage by offering the lowest prices for the market. Wal-Mart built their practices by giving suppliers transparency to meet the demand of customers and granting them long-term relationships by purchasing goods in bulks. In addition, their turn times on inventory are three-five days faster than regular competitors. The inventory shelves are similar to Honda since they only hold up to four hours of inventory in their manufacturing site. Also, Wal-Mart holds their own transportation which is why they can manage their costs efficiently for the company. Their transportations system constitutes links between suppliers, distribution centers and retail stores. They have restrictive criteria for drivers where in order for them to be hired they would have to be accident free for a consistency of minimum 300,000 miles accident free. The supply chain practice that they have gained since they began the business was strategically faster and cheaper than all competitors. 85% of Walmart’s inventory is taken care of by their own transportation system and only about fifteen percent is taken care of by the suppliers through cross-docking. Wal-Mart uses

Walmart 's competitive advantages from a value chain perspective. First of all it is a distribution capability: well-organized distribution, leadership of Walmart’s own distribution centers and “inside-out” location strategy. Second, is partnership relationship with merchants: integrates suppliers via IT & treats them well in terms of pricing, they are more business partners than “value takers”. Third, is

Kmart started off as a discount retailer successfully pioneering the same concept as that of F. W. Woolworth. As stores began to grow and diversify, Kmart stepped in and took the lead role in offering a one-stop shopping center that fulfilled everyone's needs. As new niches began to emerge offering larger, more specialized stores, Kmart hit a major hurdle. The successful management strategies it had developed early on were now outdated and in major need of being renovated to coincide with changing market place and customer values. As Kmart attempted to revolutionize its image and infrastructure, stores such as Target and Wal-Mart took over as the leaders in the discount retailer arena. As Kmart's image began to sink