Target Corporation Supply Chain Assignment Target’s Supply Chain Unit 2 Assignment GB570 Managing the Value Chain Dr. Rita Gunzelman Kaplan University December 12, 2011 Target’s Supply Chain The purpose of this paper is to show evidence of cohesive knowledge of the supply chain and how it works by the exploration of Target Corporation’s supply chain.
Target, one of the nations largest retail chains, first opened in 1962 in Minnesota as key leadership were looking for new ways to move from a family-run (The Dayton Family) department store to a mass market national chain strengthening customer relationships by appealing to value-oriented shoppers in quest of a higher-quality experience. Today, Target operates approximately 1750 stores (including nearly 240 SuperTarget stores) in 49 states with Gregg Steinhafel as their CEO. We will review the effectiveness of Target’s supply chain and analyze if it meets the necessary expectations of their demand chain. Target, 2011) Overview of Target’s Supply Chain Target, the 2nd largest discount-retailer in the U. S. has focused on their slogan, “Expect More Pay Less” and strategizes to increase optimal value and growth for global networking, an exclusive upscale and trendy product line, and value added service that creates a distinctive niche throughout the world. This multi-billion dollar company set out to change how consumers thought about discount shopping by offering a more upscale shopping experience.
In 1998, Target purchased Associated Merchandising Corporation (AMC) as part of the development of their global service network in efforts to offer products at more competitive prices and survive one of their biggest competitors, Walmart. Target and its founders have always focused on constantly reducing costs, improving sales, adopting efficient and competent distribution and logistics management systems while using sophisticated and cutting-edge information technology (IT) systems—thus creating the makings for an efficient supply chain management system.
Components of Target’s supply chain that will be evaluated include product and service specs, order processing and management, evaluation of delivery options, procurement, inventory management, processing/manufacturing, and transportation (Target, 2011; Walters and Rainbird, 2007). Product and Service Specification Target believes in a differentiated approach to set them apart from their direct competitors and provide products and services based on what their customer needs and wants.
They begin by offering customers a more upscale shopping experience that makes shopping easier in stores that are always clean and attractive with more trend-forward merchandising at lower costs. For added value and convenience for the customers the development of new store prototypes birthed where they are offering more than just a general merchandise store with pharmacy, photo processing center, Food Avenue restaurants, but a grocery store with fresh produce and quality food items, Target. om website, an optical department, their own credit card, more exclusive deals with various name brands and designers, and sell more gift cards than any other retailer in the country. Also, unlike Walmart, Target does not sell firearms (real or toy firearms that look real) or tobacco products. As well, Target does not promote services or items on their public address system or use music in its stores.
All of this, with a highly contemporary design, signage, and graphics enhances the attractiveness and appeal of the store along with knowledgeable and well-dressed employees (who are referred to as Team Members) attract a different type of customer or “Guests” than that of Target’s direct competitors. Target tends to attract a younger, affluent, educated, and fashion-forward customer. Order Processing and Management To further deliver on Target’s Brand Promise and optimize their supply chain network, leveraging cutting-edge logistics technologies to drive service and meet the needs of the guests cost-effectively and efficiently is critical.
With great leadership and effective management, Target prepares, plans, and delivers the guests what they want, where they want it, and when they want it (whether customer purchases online or in store) via analyzing, developing, and implementing successful supply chain strategies and initiatives. This is done by coordinating activities from Finance, Merchandising, Distribution, transportation, and stores. Senior leadership will be addressed with additional opportunities, alternative solutions, and anticipated benefits via the internal systems, company infrastructure, and streamlining.
Value Delivery Options In efforts to enable Target to deliver more value to their customers and shareholders, Target, a Partners Online Website is utilized as a vehicle to communicate to Target’s Partners business- critical information that ultimately elevate performance, speed, and accuracy while maximizing profitability within the supply chain. Due to the ability of cutting expenses, Target provides customers with high-quality merchandise at low margins.
In addition, with over 1700 stores globally and more than 300,000 employees, Target offers continued customer relations improvement and greater guest experiences through their product life-cycle whether receiving assistance in stores or online. (Target, 2011; Walters and Rainbird, 2007) Procurement Target takes seriously the need to provide efficiency and opportunity in this area with the use of internal consultants who ensures performance improvements of safety and quality, driving service, and strong financials.
For example, due to the high costs of fuel in today’s challenging economy, Target and their Logistics Management Team across the country to re-calculate and strategize the impact and develop alternatives to continue low costs that are passed on to their customers. As a result, Target will keep goods moving on the cheapest forms of transportation whether via all-water, railroad, or transload methods for as long as possible to minimize exposure to high-fuel expenses (Target, 2011; Tirschwell, 2008). Inventory Management
Target has developed and caters to the needs of each individual store through their sophisticated technology and Online IT systems. In-stock improvements are supported for efficiency, speed, and profitability with excellent tracking and communication systems (Target, 2011). Processing Target focuses on continued improvements of their customer’s product life-cycle starting at set-up to the delivery of the product by managing process improvements, organizational support, consistent measurement, and technology updates.
This global focus helps the Distribution Centers maintain the grounds, equipment and systems, and buildings as well as as providing the leadership and facility operations processes it requires. Transportation To ensure Target meets the needs of their guests effectively and cost efficiently, they manage their overall supply chain to provide the fastest and shortest routes and create a team that has a direct and vital connection between internal purchasing, distribution centers and stores, and their import warehouses. Assessment of Supply Chain Efficiency
My assessment of the efficiency of Target’s supply chain based upon your review above and the reference materials provided in this unit is that Target has a very effective supply chain. They provide a high value proposition as it pertains to their products, suppliers, distribution, and manufacturing and service systems. The focus of value, quality, cost reduction, network optimization, and profitability was delivered in a cost and time efficient manner and re-strategized their plan if it did not. (Target, 2011; Walters and Rainbird, 2007). Relationship of Supply Chain to Demand Chain
I believe Target’s supply chain successfully supports its demand chain. Target focuses on their customer’s needs and wants and let their market knowledge determine working relationships with suppliers, employees, and customers. Therefore, the focus is primarily on customers and product service and offering, exclusivity, quality, and affordability while increasing performance and adding value. This differentiation is an integral factor in seeking a competitive advantage. Target provides efficiency in their processes to ensure customer satisfaction by having state of the art technology that’s fast and efficient.
Target supports partnership and flexibility in efforts to foster growth and sustainability. Target has great customer relations management as well supplier relationship management, which overlaps and makes for a more efficient and effective management (Target, 2011; Walters and Rainbird, 2007). Conclusion Target’s supply chain management practices effectively met the needs of their demand chain. This resulted in increased efficiency in customer value, offering of quality products and services, and optimal effectiveness in operations and customer service.
The use of excellent strategies with customer and value focus will ensure Target will continue to create sustainable competitive advantage that separates it from the evident competitive activities of their direct competitor. This will guarantee Target has a strong market position, increased profitability, and contribute to their ongoing success. References Misra, H. , & Choudhary, K. (2010). Opportunities and challenges for ICT mediated innovations in a development oriented value chain: The case of Jaipur Rugs Company.
Vilakshan: The XIMB Journal of Management, 7(2), 21-48. Target. (2011). Retrieved on December 13, 2011 from http://sites. target. com/site/en/company/page. jsp? contentId=WCMP04-031316. Tirschwell, P. (2008). The Journal of Commerce: Target reconsiders supply-chain strategy. Retrieved on December 13, 2011 from http://www. ittc. com/uploadedfiles/News/07_14_08_target_reconsiders_supply_strategy. pdf. Walters, D. , & Rainbird, M. (2007). Strategic operations: A value chain approach. New York: Palgrave Macmillan.