Target's Disastrous Failed Expansion into Canada

Target is a well-loved brand in the US, so it seemed only natural that it would be just as well-received with expansion into Canada. Target executives had a decision to make. They needed a way to track their retail inventory, and they chose to work with an entirely new and untested system. Target Canada would eventually learn what happens when inexperienced employees working under a tight timeline are expected to launch a retailer using technology that nobodynot even at the US headquartersreally understood. In 2013, the company washaving trouble moving productsfrom its cavernous distribution centres and onto store shelves, which would leave Target outlets poorly stocked. The checkout system was glitchy and did not process transactions properly. Worse, the technology governing inventory and sales was new to the organisation; no one seemed to understand how it all worked fully. It did not take long for Target to figure out the underlying cause of the breakdown: The data contained within the company's supply chain software, which governs the movement of inventory, was riddled with flaws. Besides technology issues, problems of ordering and inventory were uncontrolled. Items with long lead times coming from overseas were stalledproducts were not fitting into shipping containers as expected, or tariff codes were missing or incomplete. Merchandise that made it to a distribution centre could not be processed for shipping to a store. Other items were not able to fit correctly onto store shelves. What appeared to be isolated fires quickly became a raging inferno threatening to destroy the company's supply chain. Target's distribution centres were bursting with products. Target Canada had ordered way more stock than it could sell. The company had purchased a sophisticated forecasting and replenishment system, but it was not particularly useful at the outset, requiring years of historical data to provide meaningful sales forecasts. When the buying team was preparing for store openings, it instead relied on wildly optimistic projections developed at US headquarters. Roughly two years after it launched, Target Canada filed for creditor protection, marking the end of its first international foray and one of the most confounding sagas in Canadian corporate history. The debacle cost the parent company billions of dollars, sullied its reputation and put roughly 17,600 people out of work.

Question

As an advisor to Target, discuss how Target can benefit from proper forecasting. (15 marks)