I have chosen to analyze the supply chain of Target for this assignment. Although Target is considered to be a part of the same industry as Wal-Mart, it attempts to satisfy customers by making its supply chain transparent so they know that they are getting the best service possible. This analysis will consider how Target’s supply chain operates by defining the nature of its separate functions, and will include descriptions of purchasing, inventory management, transportation, and customer service. In addition, I will consider whether the individual functions in the organization’s supply chain should be centralized or decentralized.
Target’s purchasing and procurement is a decentralized task in which many parties are involved with making decisions on the goods that will be sold, their prices, and their acquisition. Target has many individual contracts with the company’s who’s products they sell; as a consequence, it is necessary for their purchasing and procurement to remain decentralized. This is an advantage for their company because different employees are able to use their knowledge and expertise in certain fields to ensure that the purchasing methods used allow them to make maximal profit. For example, it is best for someone with specialized knowledge of the pharmaceutical industry, such as a pharmacist, doctor, or scientist, to provide information the products themselves, their value, and what they should be sold for. Target ensures that its purchasing and procurement is highly ethical and holds itself to “Standards of Vendor Engagement” when making contracts with other companies. On this account, Target strives to sell only products that are manufactured according to applicable laws, including the United States manufacturing code and laws that apply to the product’s country of origin if produced overseas.
Recently, Target took advantage of a web-based transportation system that will centralize this step of the supply chain. Before this system was established, transportation from the company’s 24 warehouses to the stores was far from optimal; all transportation logistics were done manually, and it was difficult to keep track of many aspects of the process (internetretailer.com, 2002). In this case, centralization is an advantage because it will speed up delivery of the product and save the company millions of dollars in transportation costs; similar companies who have yet to adopt such a transportation model should consider making the switch. This advantage is an intrinsic property of centralization; it allows companies to become more efficient when making business decisions.
Target manages its inventory in a similar way it does its purchasing; this process is decentralized to allow individual employees to utilize their organizational expertise. Although this would be a good strategy if Target only had several stores, it’s important to consider that it is a chain corporation and organization in both the warehouses and stores are difficult to manage and keep uniform. Therefore, Target should centralize this system by inserting all related information on a database that is managed by either one or a small group of individuals. This will provide similar framework for all of Target’s stores, and less time and effort will be necessary to manage inventory.
Lastly, Target’s customer service is a decentralized operation and should remain as such. Although Target employees do adhere and should continue to adhere to the same general customer service guidelines and policies, it is important to consider that many issues that can arise in customer service are different in nature and should be treated as such. These issues can arise in either the warehouse or stores, and a solution that would be applicable in one store may be different in another. Therefore, it is important that each employee and their management team remain responsible for customer service decisions. This will allow customers to get the help they need most quickly, which is the purpose of customer service.
Internetretailer.com. (2002). Target installs a web-based transportation logistics system. Retrieved from http://www.internetretailer.com/2002/09/04/target-installs-a-web-based-transportation-logistics-system