Target’s Supply Chain Turnaround

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History has a tendency to repeat itself regardless of how people try to change it, but retailers that sit back without fixing the problems of the past risk self-inflicted financial wounds, especially during the holidays. And few retailers know this better than Target.

Target drew a good deal of flack toward the end of the summer for several high-profile problems with its supply chain management that left dozens of stores with inadequate inventory and empty shelves. However, Target COO John Mulligan told The Wall Street Journal that his organization has spent the better part of the third quarter building up reserves of inventory at key stores to deal with the expected surge in holiday shopping. In fact, the end of the quarter showed a 4-percent spike in inventory across the board thanks to a targeted focus on resupplying stores with what Mulligan called “fast turning” products.

“In a very short time, the results of our efforts have been encouraging,” Mulligan told The WSJ.

Those results are nothing short of a miracle for Target, whose CEO Brian Cornell admitted as recently as August that the retailer’s supply chain strategy was too old-fashioned to satisfy both the increasing sales from online and the need to keep shelves stocked.

“Over time, Target has developed an incredibly complex supply chain built to serve an outdated, linear model in which products flowed from vendors through distribution centers to stores,” Cornell explained during an August call with investors, as quoted by the Minnesota Star Tribune. “Frankly, as a result, some retail fundamentals have started to suffer.”

Only days away from Black Friday and the “official” start to the holiday shopping season, Target appears to have cured its inventory ills — though whether the retailer’s revamped supply chain management can roll with the punches of Cyber Monday and beyond remains to be seen.