What Happened to Kmart

Case Study What Happened to Kmart? 1. Evaluate Kmart using the value cosmic string and competitive forces models. What was Kmarts care model and business organization strategy? Kmart has numerous problems with its value chain. This is evident from the suppliers sending items that the suppliers want to sell, shelves remaining unstocked, the hand shifting reordering carry out for popular items, products beingness allocated by central planners and not based on individual store demand, excess inventory stored in 15,000 truck-trailers behind its stores, shrinkage, and having to choose to all ship toothpaste or Christmas trees.Since its entrance as the first discount store in the 1960s, Kmart has not been able to ward off new entrants into the discount chain business. The new entrants, such as Wal-Mart and Target, have come on strong and surpassed Kmart. Kmarts suppliers seem to be calling the shots with the retailer, since they are promoting the items that they can sell and not p ortion Kmart address its mounting problems. Kmarts customers are voting with their pocketbooks and shopping at its competitors stores.Kmart uses a promotions-drive business model. The company uses advertising circulars to promote its blue-light specials. 2. What was the relationship of information systems to Kmarts business processes and business strategy? How well did its systems support its strategy? Kmarts information systems and its business processes and business strategy were not in alignment. As an example, the information systems could collect selective information, but the selective information were not available for analysis and decision-making purposes.As the case mentions, forecasting decisions were based on ways judgment, not on the data. Kmarts systems did not support its strategy. One of the problems mentioned in the case is that its bestow chain management system could not easily accommodate the sharp increases and decreases in demand. The distribution center ons outdated technology led to supplies sitting on pallets for 24 hours until they were recorded in the central trailing system. When reordering popular products, the employees would hand sift through previous purchasing receipts. . What management, organization, and technology factors contributed to Kmarts problems? From the case, it appears that Kmart management is inconsistent with its performance of the companys strategy. Management is unable to use data to forecast demand it has lost sight of its core competencies, and is unable to interpolate Kmarts image. Although management cherished to restructure its put out chain, it continued to expand its product offerings, as opposed to focusing on the fastest selling items. Mr.Conaways plan to restructure Kmart has obviously not worked out. Although Mr. Conaway wanted the local stores to make their own stocking decisions, the stocking decisions were still being made by the central planners. When the new system was installed, Mr. Buze k made the comment that the information would be useless because management just didnt believe in the system. Although the company uses a promotions-driven strategy, the company reduced its advertising circulars. As the case points out, no other alternative for achieving the strategy was provided.Although Kmart wanted to reinvent its supply chain, management was unwilling to unify the distribution systems two computers because the project was too expensive. From an organizational perspective, the suppliers, central planners, business processes, individual stores, warehouses, and distribution center have definite communication problems and are not sharing data as efficiently as possible. One could argue that precise little data sharing is going on. Central planners are making the stocking decisions for the individual stores, but what needs to be stocked at each store is not being effectively communicated.From a technology perspective, outdated technology and incompatible systems we re in place. The new i2 project did not succeed for a variety of reasons, including the need for more than hardware, the inability of the project to impute the point-of-sale systems and inventory systems to the distribution systems, and not being robust enough to handle a large number of SKUs. 4. How consequential was supply chain management in contributing to Kmarts problems? Evaluate Conaways decision to use i2 software to improve Kmarts supply chain management.Supply chain management was very important to Kmart. Kmart has been unable to successfully manage its inbound logistics, operations, sales and marketing, service, and outbound logistics. Unfortunately, the companys inability to effectively manage its supply chain led to ineffective advertising, tons of items being everyplacestocked, popular items being understocked, a large product offering, curt communication with suppliers and its business units, items sitting on pallets waiting to be entered into the central tracki ng system, and shipping problems.The goals for the i2 project were commendable, since the project was supposed to improve Kmarts sales forecasting, inventory sourcing, logistics, and reporting. The project was supposed to facilitate micromarketing, supplier product tracking, order execution, shipment scheduling, and economy tracking. It is interesting that Mr. Conaway chose i2 Technologies for the new supply chain management project, since i2 Technologies had only recent and limited experience in the retail sector. The decision to use i2 Technologies was not a good decision, since the system was not designed to work with the large number of SKUs, Kmart (according to some) wrote off and abandoned some of its i2 software, the project fell behind schedule, and the inability to connect the point-of-sale systems and inventory systems to the distribution systems. 5. Were those blaming software for the collapse of Kmart correct? Explain your answer. Actually, there is enough blame to go a round. 2 Technologies did a very poor job analyzing and designing the system for Kmart. It also appears that Kmarts management did not get behind the project and was also unwilling to transform its core business processes. 6. It has been tell that Wal-Mart uses their IT strategically, and they fully integrate it into their operating model. Does this statement apply to Kmart? Explain your response. This statement does not apply to Kmart.Kmart is using an outdated business model and has been unwilling to change its model. Its unwillingness to change is one of the reasons why Wal-Mart and Target have been able to successfully compete against Kmart and why Kmart is in bankruptcy. 7. List the problems Conaway faced when he took over Kmart, and then describe the short- and long-range policies you would have followed had you been in his place. When Mr. Conaway took over Kmart, he faced several problems, including stiff competition from Wal-Mart and Target.The company was using an outdate d business model, spending more money than the competition to get its goods into its stores, its information systems were collecting data but not using it effectively, it had significant problems with its entire value chain, it had a frumpy reputation, its shelves were often empty, it offered a wide range of products, it provided poor customer service, and it did not care about the competition. Students will provide a variety of short- and long-range policy recommendations.