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Kmart’s Supply Chain Disconnect Essay

1016 words - 4 pages

Effective retailing technology allows companies to manage inventory by efficiently storing, shipping, and stocking items that its customers want. Inventory management is the key to a company’s success or failure, and Kmart seems to be the poster child of poor supply chain management. Since as far back as Joseph Antonini’s leadership, Kmart has had logistics issues (Young, 2002). Another recent CEO, Chuck Conaway, went so far as to admit that supply chain management was “the Achilles Heel” of Kmart (Carr & Cone, 2001). This paper will examine how investing in redundancy, having an increase velocity in sensing and responding, and by building an adaptive supply chain community could have reduced the risk that is damaging to a supply chain.
The Supply/Demand Disconnect
Poor supply chain management led to inefficient merchandise management at Kmart. Being able to query data regarding product sales would have allowed the company to be more of what customers were buying, less of what they were not, and to predict what merchandise mixes were going to be popular in the future. That is the epitome of an effective system. Or as Anne Obarski, executive director of Merchandise Concepts, explains it, the five rights of merchandising: the right merchandise, the right time, the right quantity, the right price, and the right location (About.com). This requires an increase velocity in sensing and responding to customers’ needs.
Increase velocity in sensing and responding
However, there is a time element involved, advises Liz Simpson. “Monitoring what sells quickly is key” she says. Finding out what customers want to buy is critical. “If you do not know what they need, then you are not in the best position to meet that need” (Simpson, 2002). Being able to respond rapidly to shifts in product demand separates the retail winners from the losers. Despite Kmart’s need for speed and flexibility in order to support its weekly promotional blitzes, the company continually fails to react quickly to shifts in demand. This makes its earlier Blue-Light Special’s campaign even more curious, given the obvious stress it placed on an already overworked system.
Behind Kmart’s supply chain issues, however, is its lack of a clear understanding of its customers’ needs. Without knowing its customers and their needs, Kmart is unable to effectively stock merchandise and their needs. “Kmart should have gotten to know its customers on a store-by-store basis,” says Simpson. Collecting data from each individual store and using technology to capitalize on that data would have significantly improved its operations, she says. However, customer demand could not be adequately met using the existing technology in place at Kmart.
Create an adaptive supply chain community
Kmart’s distribution centers could not keep pace, suggests Professor Don B. Bradley III of the University of Central Arkansas. Whereas Wal-Mart and Target were building distribution centers nationwide to serve their...

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