Target Upgrading Supply Chain Saying Complexity Hurt Sales Alex Wong, Getty Images

Target Upgrading Supply Chain Saying Complexity Hurt Sales

Showing that it means business, Target CEO Brian Cornell told a meeting of analysts in New York this week that the company is taking action to ensure that events of last year don’t happen again.

The company said its "incredibly complex supply chain" was responsible for unacceptable stock levels in 2015 that hurt sales growth at established stores.

To correct this problem, as well up build up its online growth, the company announced on March 2 that it will invest $2-$2.5 billion annual, starting in 2017, to upgrade its supply chain and technology infrastructure.

This year the company will invest $1.8 billion and last year it invested $1 billion.

"We laid out a bold multi-year transformation agenda last March..and we'll be laser focused on those initiatives in 2016," Cornell told a meeting of analysts in New York, as reported by Reuters.

To simplify the supply chain the retailer will cut the number of sizes and brands it stocks. The need arose after merchants across the board complained of issues in combing and fishing through hundreds of product categories to identify how many various packets and flavors of different products need to be stocked on the stores’ shelves, as reported by Noor Us Subah, Bidness.  

Target aims to improve sales online and on mobile, localize assortment in stores and open more smaller-format stores in urban markets. The retailer has also thrown down the gauntlet at one of its biggest retail rivals, and former online partner, Amazon. Target recently hired Arthur Valdez, Amazon's VP of operations, to lead Target's supply chain transformation, including planning, distribution and transportation.

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