what happened at Kmart :: essays research papers

Kmart, erstwhile the leader in the discount origin industry, has found itself surpassed by Wal-Mart and position in recent years and is now facing the possibility of remnant its doors. The differences among the companies successes can be seen in their business models and strategies. Wal-Mart focused on f each expenses and Target established its market placement as a high-quality cheap discount store. In contrast, Kmart used a promotions-driven business model. Because of this, Kmart focused on trying to generate gross sales from promotions, rather than trying to cut expenses to join on their profits Management contributed greatly to Kmarts problems by not paying attention to their business environment. As their competitors worked at lowering costs and up(p) customer service, Kmart continued with its strategy to carry as many products as possible and offer promotion after promotion. Even after Charles Conaway took over, he continued expanding the products carried rather than focusing on those products that were most profitable. In all respects management failed to embrace technology as a way of improving the business. It was not until 1987, that Kmart began to put money into its information infrastructure. However, management spurned any use of technology that could benefit them. For example, while Kmart had the capability to aggregate data for forecasting, it did not. Rather management still developed the forecasts themselves. Additionally, a proposal of marriage to integrate computer systems in distribution was rejected because management opinion it too costly. The technology lag in the distribution centers was so bighearted that reorders were often based on hand tracking.Kmarts supply concatenation management contributed to their problems. The company did not have a strong descent with suppliers. Unlike Wal-Mart where the supplier relationship focused on establishing strong sales of individual products, Kmarts suppliers continueed them to se ll as many products as possible. Because of the push of products into the system, Kmart continued using the promotion-based model. The promotion-based approach in turn led to incompatible demand for products that made it difficult for Kmart to forecast and maintain optimal strain levels.Also contributing to the supply concatenation problems was the organizational structure. The majority of exaltation was planned centrally, rather than at the local level causing store inventories to be either in excess or short. Particularly in cases where inventory was in excess, stores ran into problems with warehousing and shrinkage. The effort to rebuild the supply chain management systems was a step in the right direction.