6 Supply Chain Lessons from Target’s Canadian Misadventure

January 28, 2016

Last week came a fantastic feature in Canadian Business about Target’s foray into Canada, outlining how Supply Chain problems led to the venture’s collapse in 2015. It’s a fascinating, vital read for any Supply Chain Professional (or anyone looking to learn about the field). It goes into astounding detail about the importance of a strong Supply Chain for any expanding company, and outlines – on a granular level – how a particular set of Supply Chain oversights led to a complete collapse of one company’s expansion.

As a boutique recruitment firm specialized in finding the best talent for Supply Chain Management, we’re interested in covering the field from all angles. We’ve written often in the past about how Supply Chain seems to only make the news when failures happen, which is something we’d like to change – by highlighting successes when they occur. And we don’t mean to pile on to one particular company’s Supply Chain failures. Still, it’s worth examining Target’s Canadian Supply Chain as a case study. What were the particular Supply Chain issues that led to the company’s Canadian collapse? The Canadian Business article, based on interviews with over 30 insiders, provides enough detail that we think it’s possible to draw some wider lessons.

Before we continue, we think it’s important to mention (as a recruitment firm that gets what makes Supply Chain talent great) that Target’s Supply Chain failures don’t seem to have sprung from any particular lack of strong individual performers. From all accounts, the Supply Chain team at Target Canada was dedicated, tireless, and innovative in trying to solve the problems as they arose. If anything, it seems to be more of an organizational failure than a lack of skills or dedication on the part of Target’s SCM staff.

That being said, let’s dive into some of the issues discussed in the Canadian Business article and see what lessons we can draw when it comes to Supply Chain talent development.

1. Vendor Communication is Absolutely Crucial

Canadian Business highlights a basic error in the company’s Canadian Supply Chain that wasn’t discovered until 2014:  a miscommunication about shipping dates between the company and its vendors. From Canadian Businessweek: “What target thought was the in-DC date, meaning the date on which product would arrive at the distribution centre, was interpreted by some of its larger vendor partners as the day on which they would actually ship the products to Target.” The result of this misunderstanding was that, for quite a while, vendors thought that product was arriving on time, while, from Target’s perspective (and in reality) it was late.

We often write about the importance of so-called “Soft Skills” in developing Supply Chain careers. There’s a perception that Supply Chain is a strictly analytical function, but the field in fact involves a huge emphasis on written and verbal communication and strong relationship-building skills. Vendor relationship management can help assure that an organization’s objectives and information are in sync with those of their vendors, avoiding crucial oversights like this one.

2. Supply Chain Technology Implementation Needs to be Well-Aligned with Organizational Strategy

Another crucial factor that Canadian Businessweek highlights in Target’s inability to keep store shelves stocked is that of a mishandled implementation of new technology. Target decided on a technology strategy of implementing SAP software to manage the Supply Chain for its new Canadian operation (a software package that was new to the vaunted U.S. operation), with the end goal of implementing SAP across their U.S. Supply Chain as well, aligning one system across the business once the expansion was complete. The problem? No one at the company had the strong functional understanding of SAP that would allow for a new technology implementation at the same time as aggressive territorial expansion. This crunched the timeline for the SAP implementation, which led to huge Supply Chain problems, for example a lack of configuration of the software for the Canadian market. What’s more, the company didn’t set up their SAP software to speak with their JDA forecasting and replenishment software.

The talent angle? An even stronger IT sourcing practice would help align the organization’s goals for expansion with its technological needs.

3. Data is King in Supply Chain

Reading the Canadian Businessweek article, it’s striking to see how much of Target Canada’s Supply Chain failures came down to problems with data. The firm’s Supply Chain software was hampered by a litany of mistakes in product information (model, dimensions, weight, etc.). Problems with data led to piles of product collecting dust at the company’s Distribution Centres. And once the data was faulty, the company was playing catch-up from that point forward. They were forced to allocate critical resources to fixing data manually instead of strengthening the Supply Chain.

The talent angle for this one is: even though soft skills are immensely important to Supply Chain (as we said above), the ability to enter and ensure the integrity of Supply Chain data is crucial.

4. Training is Key

Once again: Target’s Supply Chain failures seem to stem from organizational dysfunction rather than any individual lack of skills. One aspect of this dysfunction stuck out to us in the article, and that’s that “Young staff received only a few weeks of training, according to former employees…The Canadian team lacked the institutional knowledge and time to properly mentor the new hires.”

There’s another crucial lesson to be learned here: organizations that are able to invest the considerable up-front resources in not only hiring the brightest individuals, but also training them about the specifics of the company’s culture and Supply Chain strategy, are best positioned to succeed.

5. Supply Chain Analysts and Sole Contributors Need to be Held Accountable

Target’s Supply Chain technology used an auto-replenishment system to alert vendors whenever a product ran out of stock. And the performance of the company’s analysts was measured by their ability to keep products in stock; if an analyst’s category ran low, they’d need to answer to the business’s leadership. But this simplistic measure of accountability fell prey to a loophole in the system: “by flipping the auto-replenishment switch off, the system wouldn’t report an item as out of stock, so the analyst’s numbers look good on paper.” Cut to empty store shelves.

The lesson to take away from this particular incident is that an organization needs to find effective ways to keep junior talent accountable. In the midst of the time crunch Target was under, it looks like they relied on simplistic, tech-based measures of accountability instead of investing the time in being able to more holistically monitor and improve their employees’ performance. That encouraged panicked analysts to game the system, instead of participating in fixing the underlying issues.

6. Executives Also Need to be Held Accountable

Our last Supply Chain takeaway from the case study of Target’s Supply Chain failure is this: executives also need to be held accountable to their teams, just as analysts need to be accountable to higher-ups. Reading the Canadian Businessweek article, we were struck again and again by moments where executives were nowhere to be see in the company once the operation began taking on water. Granted, the profile also describes moments of refreshing candour and honesty from Target Canada executives about the company’s Supply Chain issues. But a final, crucial lesson is that executives need to be visible, transparent and accountable throughout any Supply Chain issues that arise. Anything else causes even further panic and anxiety across the organization.

This list isn’t exhaustive: we’re eager to hear of any other lessons that you think can be drawn from Target’s Canadian Supply Chain woes from 2012-2015. And we also highly recommend the Canadian Business feature! It’s a great read.

1 Comment

  1. Paul Lauro

    Interesting….I am wondering, do you know if Canadian tire has similar issues when trying to expand South of the Canadian border? Perhaps both could have mutually benefited from a partnership? I would be happy to assist either (or both) to hard wire their Supply Chain, Procurement Management, and associated logistics!

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