The Importance of a Well-Oiled Supply Chain: A Lesson from Target’s Canadian Closure

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At Procurify, we love all things supply chain.

So when news broke this morning of the retail giant’s impending closure of its Canadian operations (133 stores, 17,600 job losses and $5.4 billion in expected losses), and one of the reasons being blamed for the decision was routine empty shelves, we took an added interest in the headline-grabbing story

A fundamental piece of any successful business – whether it is a small business or a giant national retail chain – is a well-oiled supply chain.

According to a Globe and Mail article from January 15: “[Target] struggled from the outset to find a proper mix of inventory, often having too much of some products and not enough of others. Shoppers complained of empty shelves and a lack of selection. The company had been working to improve its inventory management, but it was too little too late.”

Couple that inability to stock the shelves with intense competition from already well-established chains in Canada such as Wal Mart and you’re fighting a significant uphill battle. If you can’t keep your shelves full, your competition will.

Some industry experts are pinning the weakness in Target’s supply chain on poor logistics and transportation services. Product was, allegedly, making its way into Canada but, ultimately, remained stranded at warehouses and distribution centres in some cases for months. Of course, supply chain management is difficult.

And an operation the size of Target should be pros at such a practice (their U.S. operations, after all, remain strong). But since we spend a lot of out time thinking about supply chain best practices, we’ve cobbled together a simple list of supply chain tips that anyone in business (whether they work in tiny or massive firms) should follow.

  • Define your supplier management strategy, including tools and processes
    What do we expect of our suppliers?
  • Define the evaluation criteria for supplier performance
    How are we going to evaluate those expectations?
  • Collect and analyze performance data
    How are our suppliers doing?
  • Measure, report and share the performance data
    What does the analyzed data tell us about our suppliers?
  • Conduct meetings for supplier reviews
    What should we do with our suppliers?
  • Track and report action points and design improvement plans
    How can we improve our supply chain management best practices?
  • Review and reset goals
    What do we expect now of our suppliers?

For more on the Target story, here’s a roundup of some of the morning’s best coverage:

Canadian Business magazine: http://www.canadianbusiness.com/business-news/target-canada-closing-all-stores/
Business in Vancouver: http://www.biv.com/article/2015/1/target-pulling-out-canada-closing-all-133-stores-a/

To lesser fanfare, but still interesting news, Sony also announced today that it would close each of its 14 Canadian retail stores.

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About Author

Sean Kolenko

As a former award-winning journalist, Sean Kolenko covered natural resources and energy throughout B.C. He holds a Masters degree in Journalism from Carleton University and an undergraduate degree in English Literature from York University. When not behind the keyboard, Sean can found at the record store spending money he shouldn't be.