Target is the second-largest discount retailer in the United States with over 1,900 stores nationwide. Target offers a vast variety of products including food, toys, pet products, toiletries, electronics, household items, and clothes for people of all ages just to name a few. The massive amount of products and brands that Target offers demands that its supply chain is equally as complex and large.
Retailers, such as Target, must try their best to avoid out-of-stocks because they disappoint customers and decrease sales greatly. It is especially difficult for companies like Target to avoid out-of-stocks because of both the large number of stores nationwide, and the large number of products, options, and sizes that the Target brand promises to its consumers.
In the past, Target used a traditional linear model for its supply chain, in which goods would simply flow from the manufacturer to its stores according to demand. Target has been active in its efforts to improve its supply chain and inventory management and is adopting an Omnichannel commerce approach. They announced this plan last year with hopes it will improve inventory accuracy for brick and mortar locations, as well as for its e-commerce department.
Retailers expend a lot of money paying employees to constantly restock shelves. Target has addressed this problem by reducing the number of sizes and brands it offers. For example, they may have previously offered 8 different brands of shampoos, all with three different size options. Now they would offer something like 4 brands of shampoos with 2 size options. Target’s changes have decreased out-of-stocks by 40% during the holiday shopping season. Target reports they decrease the amount they spend managing their inventory by 15%.
How would you judge Target’s efforts and system changes to improve their supply chain and inventory management? Are there any other concepts from class that Target could possibly implemented to further build upon their success?