Target Facing Mounting Pressure to Gain Control of Its Supply Chain

Reports from MPR News published late last week highlighted the retail giant’s recent struggles to assure that its shelves are fully stocked - an issue that CEO Brian Cornell once dismissed but now reportedly says is a major issue that needs to be immediately addressed.

Part of Cornell’s efforts to remedy the matter included the appointment of John Mulligan last month to manage Target’s supply chain operations.

The solution, Mulligan said in a recent interview, is in the corporation’s ability to be flexible in its supply chain management.

“We’ve been asking our supply chain to move well beyond its original design and become more flexible in the way we serve our guests,” he said. “However, while we understand the reasons, the simple fact is that our current performance is unacceptable.”

Reports said Target hasn’t specified exactly how bad its supply chain management problems are.

Earlier this year the company was forced to pull out of Canada following disappointing performance in the then-new market. Much of the criticism against Target in Canada, reports said, was its failure to keep store shelves stocked.

Last month, Target CEO Brian Cornell called the situation unacceptable and appointed veteran Target executive John Mulligan to find a fix - Mulligan acknowledges the retailer’s supply chain network has been struggling to deliver goods when, how and where customers want them.

Analyst Mark Wulfraat, president of supply chain consulting firm MWPVL International, told reporters that one major challenge for Target is that the demand of its consumers online and in store vary greatly. “They have to please both masters,” he said.

“They’ve got the online customer who wants it immediately, and then they’ve got the shopper in the store who wants to have the stock when they go there as well. So, now you have two separate supply chains that you now have to optimize inventory for.”

Another issue, analysts said, is that many customers go to Target for its food supplies but that Target is not truly a grocer. “That’s probably one of the areas that needs greater attention, not just in terms of inventory but in terms of what is stocked and how deep and how broad of an assortment of products that they’re going to have,” said University of St. Thomas business professor Dave Brennan in an interview.

Source: PYMNTS.com