Read the case study and answer " you make the call question answer
Marketing in Action Case Real Choices at Targ When can offering too many choices become too much to handle? Target has gone through a period of bad press as a result of an unacceptable level of stock-outs that upset customers and decreased sales. The discount retailer believes that it can solve the problem by reducing the number of brands and varieties of product options on the shelves. Brian Cornell, CEO, believes that the increased efficiency will allow for more focus on priority categories "like wellness, stylish home goods, apparel, and baby products. efficiency. Amy Koo, an analyst with Kantar Retail, says, "In theory, everything can move faster, and they will have less stuff in the system Targets supply chain transformation includes other changes as well. Store shelves are being physically restruc- tured to hold more product, pushing inventory out of back- ooms and onto the sales floor. Suppliers are being requirecd to adjust case sizes (how many individual items are inside a shipped carton) to increase inventory turnover and decrease Target's distribution process became more complicated th number of times a store employee has to handle the with the expansion of its grocery business to include permerchandise. In addition, Target wants suppliers to give a ishables like meat, fresh produce, and dairy products. Then,single-day arrival date for shipments to Target's warehouses, the situation became even more complex when it began eliminating the prior practice of a "grace period" that al- allowing online customers to receive orders directly from its ows shipments to arrive a few days after the promised date warehouses or pick up their online orders in stores. Because wtho penalties. These and other changes will help Target of the mess, Target has committed to redesigning its supply achieve its goal of better inventory management. chain to make it more streamlined. John Mulligan, chief operating officer, thinks that includ- Target has a rich history of success. In 1902, George ing suppliers in planning and executing the transformation is Dayton founded a company in Minneapolis, Minnesota, called a key to success. Stock-outs not only hurt Target, the lost sales Dayton Dry Goods Company. Over the years the company also mean that everyone in the supply chain suffers. How well went through various retail format changes and in 1962, the the company uses this reinvigorated supply chain to deliver first Target store opened in Roseville, Minnesota. It called itself its value proposition to customers will be critical to its future the "new idea in discount stores" differentiated by merging competitive success. key department store features with the lower prices of a dis- counter. Target became a store you can be proud to shop in You Make the Call a store you can have confidence in, a store that is fun to shop and exciting to visit." The retailer is the third largest U.S. store11-34. What is the decision facing Target? chain, operating over 1,800 retail locations throughout the United States. 11-35. What factors are important in understanding this deci- 11-36. What are the alternatives? 11-37. What decision(s) do you recommend? 11-38. What are some ways to implement your recommen- Despite this lofty history, more recently growth at its established stores has been hindered by unacceptable stock levels because of their overly complicated supply chain. Target is spending more than $5 billion (yes, BILLION), to upgrade its distribution network and technology infrastruc ture to reduce stock shortages and facilitate the capability for online growth. In addition, the retailer is shrinking the number of different products it keeps in stock and reducing the number of sizes across those products. These changes will result in less overall inventory and improved handling dation? lmi...~w.MnsaHMNwKwww.2201.Mn"meww
