Targets Operations and Supply Chain Management - Case Study Example

Target’s Operation Management “Student’s Name” “Institution Affiliation” “Instructor” “Date” Table of Contents Table of Contents 2 Target’s competitive priorities 3 Importance of operation management plan in achievement of competitive priorities 4 Features of the Target’s operations which reflects common operations management practices 6 Issues experienced by Target and how operations/supply chain management can be used to resolve these issues 8 Process map highlighting the company’s store and head office operations 10 Conclusion and recommendations 11 Operations and Supply Chain Management-Target Corporation Target’s competitive priorities Cost is Target’s first competitive priority. This priority is apparent in the company’s brand promise, which is “expect more, pay less.” In order to achieve this priority, Target continuously strives to align prices with consumer behavior as well as pairing its promise with delivering value messages. Target Corporation targets a wider consumer base and engages in price cuts in order to win customers (Market Line, 2014). With its competitors engaging in similar strategy, Target can keep up with the pricing. The company presents customers with discount coupons, keeping the low-price promise that is consistent with competitors’ prices. Low prices are not easy to maintain; however, Target is successful at keeping prices low because it has a focus on cost as well as the design of operations (Collier & Evans, 2012). Target, which is cost-conscious engages in environmental-friendly and cost-saving methods, all which are linked to company’s operations. Environmental friendly operations at Target are evident. For instance, the chain of supermarket installed water saving methods on all its stores to save water use by 30 percent. Definitely, providing low cost products as well as conserving water and other resources have contributed to the success of the company. Another competitive priority in Target is innovation. According to the company’s mission statement, Target seeks to become the preferred shopping place through the provision of great value, excellent customer experience, and continuous innovation. In order to achieve its mission, the company engages in developing great design that is simple, attractive, and affordable. Target has invested in strategic alliances, collaborating with exceptional designers for fashion and décor in order to provide consumers with up to date trends in fashion and match them with quality. Some of its partners include Michael Grave and Mossimo among others. The company has embraced innovation in all its operations to help meet customer needs as well as achieve efficiency in operations (Target Corporation, 2015). In addition, innovation has helped the company stand out as unique among its competitors (Barwise & Meehan, 2004). Enhancing quality service is another competitive priority of Target. Quality is not only observed in meeting customer quality needs but also ensuring store cleanliness and providing its workforce with appropriate training to serve and assist customers. Target invests heavily in its training program in preparation for excellent customer service. The trained team assists shoppers find the items they are looking for, therefore, enabling a quick check out process (Target Corporation, 2015). Clean stores are attractive to customers with proper display in place, and excellent organization of shelves to facilitate ease of movement within its stores. The focus on quality is not only attractive to shoppers but also workers and partners doing business with Target. It eases operations in the store. Importance of operation management plan in achievement of competitive priorities Target’s operation function aims at getting things done. Furthermore, the company is concerned with providing customers with excellent products and services. Nonetheless, its operation management is important because it is responsible for managing most of the company’s resources. Target’s operation management provides a set of instructions that guide the long time direction of actions required to ensure success of the company in the future. The company’s operations are strategically important because its activities of day-to-day lie within operation function. According to Hayes et al (2005), operation management is key determinant of the company’s ability to survive or achieve long-term success. Through technology, Target has been able to keep labor costs at a minimum. The company utilizes technology to move its supplies in bulk thereby cutting down on labor costs. The company also uses RFID technology that gathers and coordinates information to a central database. RFID tags are placed on products, such that it is easy to note when stock requires replenishing (Nutter & Colleagues, 2013). From information channeled to a central database, operations manager are able to see which store require replenishing stock, which store is performing well, and what products are on demand. Such information is crucial to making operation decisions and contributes to supporting distribution centers in supply scheduling. The efficiencies created by this process help reduce lead-time and hasten supply chain, thereby increasing productivity and efficiency (Slack, Chambers, & Johnston, 2010). The company achieves a smooth flow of business because of fast movement of product from deliveries to shelves and replenishment of products on time. In addition, increased efficiency in operations helps maintain labor costs at a minimum. Technology is also used at the company to develop and deliver quality products. The company uses latest technology to serve customers and its employees. Technology is evident in Point of Sale Software used to serve customers, which is not only fast but also accurate and simple to use. Target uses import redistribution warehouse as an inventory buffer in which imported goods are stored until a future date when they are required by distribution centers. Having a strategic location can help save costs associated with goods movements, repairs, security, and building costs. Target has managed to keep its operational costs down by operating a strategic warehouse that is located strategically. Delivery of products to the warehouse is efficient while supply of products from the warehouse is smooth and fast. Thus, the effective utilization and efficiency of distribution centers is achieved. In addition, it ensures that delivery trucks for distribution centers are full. This minimizes movements to and from distribution centers thereby saving fuel and associated costs. The warehouse is, therefore, crucial to cost-saving and stock replenishment, which are core components of operation management. Target engages in supplier diversity, an operation management strategy geared towards ensuring the company has an upper hand over suppliers. The company has been able to engage diverse suppliers through its commitment to creating network with suppliers from diverse professional background. The company sources it products from a variety of qualified suppliers who offer competitively priced products. This collaboration between Target and its suppliers contributes to the development of the company’s successful business. In addition, it helps Target to expand its network connectivity promoting ideas and supporting them. The collaboration also helps Target develop customized goods for its consumers, making it unique among its competitors. The company’s uniqueness and interest in consumers makes the company to stand out and provides consumers with exciting shopping experience. Features of the Target’s operations which reflects common operations management practices With regards to environmental sustainability, Target Corporation is an active contributor of environmental sustainability. Most of the company’s operation management practices are framed around environmental sustainability activities. The company places a great deal of emphasis on energy consumption, reduction of air emissions, water usage, and resource conservation. To accomplish its objectives, the company has a team of experts in place to help manage waste disposition. The team of experts also helps coin appropriate means to recycle waste (Corporate Social Responsibility Report). According to Chinander (2001), the company reaps positively from its environmental sustainability initiatives through positive image that the company sends to the society. This positive image helps create brand awareness, thus promoting Target’s popularity. Plan and control of operations at Target are the main constituents of company’s success. At Target, activities dictate what resources ought to serve and how tasks ought to be accomplished (Slack, Chambers, and Johnston, 2010). In addition, the company creates career positions for its staff members and trains them to perform their operations effectively and enthusiastically. While the company seeks to employ qualified individuals, the company provides its employees with an opportunity to learn, lead, and provide them with autonomous working environment. Its workforce combines human operators, machines, and human resources responsible for controlling autonomous operations. The combination of resources, as well as, appropriate training helps increase productivity and enhances efficiency at the company (Kotob, 2015). According to Jones (2014), Targets takes a channel-agnostic view of growth, which helps the company develop a strategy that enhances customer interaction in the stores as well on the web. In addition, the company’s quality management practice allows Target to evaluate itself in relation to customer satisfaction. This practice reveals flaws and excellences in product and service delivery, therefore, enabling Target to reflect on its operation management and rectify grey areas (Schonsleben, 2011). Issues experienced by Target and how operations/supply chain management can be used to resolve these issues Target experiences expensive Less-than-Truckload (LTL) moves. The company used to place massive orders per week to replenish stock yet it paid less attention to visibility of shipment. The result of this overlook was an increased number of costly LTL moves. In order to streamline LTL moves and keep shipment costs at minimum, Target instituted NTE OMS to link Target with all its trading partners, which provided computerized transactions. The system put in place could help visualize transportation costs from all vendors, assisting Target to note which transactions were overly expensive and act accordingly. The system provided competent transportation management system. Unified coordination of key data according to HIU and Bilington (1992) helps to enhance the supply chain. It provides high proximity in communication, providing the organization with information sharing capability, which fosters multidimensional approach to collecting views from members and stakeholders, therefore, aiding the company make informed decision (Jacobs, 2013). In Canada, Target experienced frequent shut downs in 2012 because of stock situations. The Canadian stores experienced delayed stock ordering times, thus, delayed replenishment time. This issue emanated from poorly functioning distribution system. The company reacted to this issue a year later by recalculating inventories in a bid to reset its supply chain operations (Canadian Press, 2014). The company also resulted in reconfiguring its technologies to put in place more efficient operation management systems. The desired operation management system would allow tracking of supplies, monitor products leaving shelves, and allow the company to visualize items on high demand (Kotob, 2015). The replacement of the old system with the new system saw improvement and efficiency in stock taking activities. Specifically, the new system eliminated non-value added activities. According to Hau (2002), in order to achieve cost efficiency operations, organizations ought to invest in cost-effective information connections, eliminating non-value added activities and deploying optimized techniques in their operations. Process map highlighting the company’s store and head office operations In the following process map (Fig. 1), distribution flow for domestic and overseas products is established through de-consolidators operated by third parties. Alternatively, domestic and overseas products are sent to import warehouses. The third parties organize as well as loads the vessels into trailer and deliver them to Target’s regional distribution centers. In addition, Target engages venders who directly flow goods into regional redistribution centers. Direct flow is done for full truckload volumes while smaller volumes are subjected to domestic consolidation checkpoints that serve to combine the smaller volumes on transit point in a bid to capitalize on full truckloads and reduce the cost of transportation. Domestic consolidation points eliminate the possibility of delivery trucks that are not full, capitalizing on truckload and providing Target with cost-effective transport measures. At regional distribution centers, pallets are unloaded and merged. This helps in achieving truckloads of mixed vendors. The mixed truckloads must be full, which is a requirement for inspection before the trucks leave for Targets stores. Products arrive at stores in full truckloads. Fig. 1 Conclusion and recommendations From the above analysis, Target’s competitive priorities are: Quality in terms of service provision and store environment Low cost in terms of product pricing and organization operations Innovation in design of products and service delivery The company’s operation management is considered important in terms of import redistribution warehouse, technology, and supplier diversity. These areas of Target’s operations allow the company to achieve its competitive priorities. In addition, the essence of operations management is to achieve company’s competitive priorities. The company concentrates its operation management practices around plan and control of operations, environment sustainability, and quality management practices. This is evident in the amount of investment that the company puts in place to oversee efficient operations. Inefficiencies in operation management stemmed from shipments and transportation, which cost the company more than minimum costs. Effects of these costs would reflect on product prices as well as effect on time replenishment of product. In order to resolve these issues, Target invested in centralized transport management system and technologies to monitor flow of products. This helps Target to measure its efficiencies and correct areas that seem unproductive. Reference List 2013 CORPORATE RESPONSIBILITY REPORT Corporate Responsibility Report 2013. Corporate Target, n.d. retrieved from http://www.target.ca/en/corporate/report?lnk=snav Barwise, P., & Meehan, S., 2004. BULLS EYE: TARGET’S CHEAP CHIC STRATEGY. Harvard Business School. Canadian Press (2014, August 12). TARGET CANADA PRESIDENT AIMS TO ‘RESET’ SUPPLY CHAIN, IMPROVE PRICING TO WIN OVER CANADIANS. Financial Post. Available from: http://business.financialpost.com/2014/08/12/target-canada-chiefaims-to-improve-pricing-products-to-win-over-canadians Chinander, K. R. 2001. ALIGNING ACCOUNTABILITY AND AWARENESS FOR ENVIRONMENTAL PERFORMANCE IN OPERATIONS. Production and Operations Management, vol. 10 (3) Collier, D. A., & Evans, J. R. 2012. OM3 STUDENT EDITION. United States of America: South-Western Cengage Learning. Hau, L. L. 2002. ALIGNING SUPPLY CHAIN STRATEGIES WITH PRODUCT UNCERTAINTIES. California Management Review, vol. 44, no. 3, pp. 105-119 Hau, L. L., & Billington, C. 1992. MANAGING SUPPLY CHAIN INVENTORY: PITFALLS AND OPPORTUNITIES. Sloan Management Review, vol. 33, no. 3, Hayes, R., Pisano, G., Upton, D. and Wheelwright, S. 2005. OPERATIONS, STRATEGY AND TECHNOLOGY: PURSUING THE COMPETITIVE EDGE, New York: John Wiley. Jacobs, F.R. 2013. OPERATIONS AND SUPPLY CHAIN MANAGEMENT. The Mcgraw-Hill/Irwin Series. 13th Edition. Jones, K. 2014. EVP, MERCHANDISE PLANNING AND OPERATIONS, TARGET CORPORATION. San Francisco-Boardroom Insiders. Retrieved from: http://media.proquest.com.ezproxy.uow.edu.au/media/pq/classic/doc/ Kotob F. 2015. TBS808: OPERATIONS AND SUPPLY CHAIN MANAGEMENT. Market Line, 2014. COMPANY PROFILE: TARGET CORPORATION. Retrieved from http://store.marketline.com/Product/target_corporation? productid=74F5EE7D-E1E7-4D57-B88B-9C0AC3D96501 Schonsleben, P. 2011. INTERNAL LOGISTICS MANAGEMENT: OPERATIONS AND SUPPLY CHAIN MANAGEMENT WITH COMPANIES. CRC Press. 4th Edition. Slack, N. and Lewis, M. 2002. OPERATIONS STRATEGY, Harlow: Pearson Education. Slack, N., Chambers, S., & Johnston, R. 2010. OPERATIONS MANAGEMENT, 6th edition, Pearson Target Corporation. 2013. ANNUAL REPORT 2013. Retrieved from Available from: https://corporate.target.com/annual-reports/2013 Target Corporation. 2015. A BULLSEYE VIEW: DISTRIBUTION CENTER AND SUPPLY CHAIN MANAGEMENT. Retrieved from https://corporate.target.com/careers/career-areas/distribution-center-supply-chain-management Read More