Target Canada - lecture notes PDF

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Target Canada Case Analysis Aayush Doshi 30/01/2021

Question 1) What did Target do wrong? What managerial errors took place? What was wrong with Target’s Information System in general? What was wrong with Target’s Supply Chain System in particular? Answer: It is clear from the article that Target Canada had several issues within their supply chain operations that ultimately led to their demise in the Canadian market. However, the root cause of all these issues can be pinpointed to one underlying reason, which is poor managerial decisions. This started with Target Canada assuming the Canadian market to be similar to the United States market. However, an expansion into a new market cannot be done based on assumptions as it requires proper planning. Target’s entry into the Canadian market was rushed to say the least. This is clearly evident as they opened 124 stores within 10 months. Without any planning or analyzing, Target bought these stores from Zellers. Buying these stores from Zellers gave Target no control over the location. Some of these stores were placed in a location that were not easily accessible to customers. This along with poor technology implementation aggravated their fall in the Canadian market. Target’s experience with implementing the POS technology from the Israeli company was not successful to say the least. The put the software in use without trying and testing. Additionally, employees were not trained to use the new technology either. Further, they underestimated the use of SAP as well. Not having a full strong understanding of the SAP technology and rushing its implementation led to issues in forecasting, storing data, and communicating about stockouts with the management. Even though investing in new technology was a step in the right direction not being able to use it properly to their benefit led to having technology issues in the supply chain. Their situation was made worse by their shelves being empty all the time. They had poor communication with

their vendors. What vendors thought was on time and arriving at the stores, in reality it was late. Therefore, due to the drawbacks from its technology they were not able to place in new orders in time. From its inception in Canada, Target struggled with having proper mix of inventory. Assuming, the Canadian market would adopt the one-stop shopping model of the US market led to inventory shortages. However, as mentioned before, the root cause of all problems in Canada is credited to poor managerial decisions. The management in Canada should not have rushed its expansion and instead should have carefully analyzed its market, implement proper technology and train its employees. Question 2) What should Target have done differently? Answer: Target’s expansion into Canada was flawed right from the beginning. Poor managerial decisions regarding planning and execution of the expansion led to the demise of Target in Canada. There are several things in its supply chain that Target could have dealt with differently in order to avoid such huge losses in its operations. This has to start with proper planning and execution. Target Canada assumed that the market in Canada would be similar to that in the US. However, this proved to be untrue. Before entering a new market, Target should have carefully analyzed the Canadian market and set up its operations in a way that would be beneficial to the Canadian population. For instance, the location that Target purchased from Zellers were not easily accessible to the Canadian people. Just by having 12 stores withing 10 months does not guarantee profits. The management should’ve ensured that the stores are located in a way that are easily accessible by both the customers and the vendors. Additionally, opening 124 stores in 10 months just goes to show how rushed the expansion into the Canadian market was. Target should have opened a few stores across Canada to test the Canadian population and see how

they react to its operations. This would’ve helped Target understand the market better and also save them huge costs that went into buying the 124 stores from Zeller. The implementation of technology was also flawed. Any supply chain technology that is implemented should be able to align with the organizations supply chain strategy and overall strategy. In Targets case, the technology implemented was one of the biggest problems that led to its downfall in Canada. It created all sorts of problems in it supply chain right from accurately forecasting to the checkout counters. Employees had to manually enter product details into their SAP software which did not have the ability to translate to the data to their forecasting or replenishing software. This often led to more communication problems as well. Management was left unaware of the inventory stockouts and vendors, who thought their product was in Target’s distribution centers was in reality not actually there. Additionally, Target just used the same technology in the Canadian market as they did in the US market, which led to further issues at the checkout as the checkout counters encountered several bugs like not being able to accurately exchange currency. Therefore, it is important that any technology employed is able to efficiently reduce costs and resources instead of adding them. Finally, Target should have properly trained their employees before stores opened to the public. Newcomers only received a few weeks of training, thereby, lacking the required knowledge to operate stores and effectively use the technology in place....