Kmart-Supply Chain Management Analysis - Case Study Example

Kmart-supply chain management analysis Name Institution Course Instructor Date Table of contents I. Table of Contents……………………………………………………………….2 1. Introduction………………………………………………………………………...3 2. Kmart’s competitive priorities……………………………………………………..3 2.1. Retail stores……………………………………………………………………..4 2.2. Pricing…………………………………………………………………………...4 2.3. Technological enhancement in operations management……………………..5 3. Operations management and the company……………………………………….5 3.1. Significance of operations management to Kmart…………………………...5 3.2. How operations management helps Kmart to achieve its priorities………...6 4. Kmart’s common operation management practices……………………………..7 5. Kmart’s issues and resolutions…………………………………………………….8 5.1. Issues…………………………………………………………………………….8 5.1.1. Poor operations management practices……………………………….8 5.2. Possible solutions to the issues…………………………………………………9 5.2.1. New management………………………………………………………10 5.2.2. Technological advancements…………………………………………..10 5.2.3. Rebranding……………………………………………………………..10 6. Company’s process map…………………………………………………………...12 7. Conclusion………………………………………………………………………….13 II. References………………………………………………………………………14 Kmart-supply chain management analysis 1. Introduction Effective management of the supply chain is of great significance to the prosperity of any business especially the retail enterprises. Most successful retail businesses have effective and well managed supply chains that ensure the company produces according to the demand forces in the market. Kmart is a retail business distributed nationwide in the United States. Its retail business is focused on non-perishable commodities such as furniture, toys, and electronics among other things. Dealing with such commodities in the retail business, the supply chain has to be effective and well managed. With effective management, the supply chain is able to determine customer preferences and even establish permanent relationships with important customers (Lummus & Vokurka, 1999, p.13). For any business to prosper, the core values of the business should be integrated together with the supply chain management. Together with Walmart and Target, Kmart has been one of the fastest growing retail shops in the country. But lately the retail enterprise has been facing stiff competition from its equivalent rivals, Walmart and Target. According to business analysts, the successes and the failures of Kmart in the retail business are associated with the management of the supply chain. The goals of the supply chain have to be integrated in to the core values of the company. This paper seeks to present an assessment research report that highlights the strengths and the critical issues affecting the management of Kmart’s supply chain. Among the issues to be discussed include the priorities, significance and issues affecting supply chain management of Kmart. 2. Kmart’s competitive priorities Kmart is a retail company that was founded in the year 1962 and it was the most successful retail enterprise in the country for the following period of almost fifteen years. However, things started to fall apart due to the business strategy that was being employed by the company. Based on most business research findings, the dwindling of Kmart’s business performance is as a result of failing to develop a clear and effective supply chain. The poor tactics employed by the then management team led to the decline of the firm (Lehavy & Udpa, 2011, p. 411). However, since the year 2000, new management dedicated themselves in developing and reviving the operations management of Kmart. Various strategies were used to revive back the competitiveness of the enterprise. 2.1. Retail stores One advantage that Kmart has over other competitors is the availability of retail stores. The retail stores are responsible of serving customers in their local areas. The higher the number of retail stores indicates that a higher number of customers are being reached. Since the foundation of the business, higher number of retail stores has been one of the stronghold values of Kmart. The company’s priority is however slowly changing as they close some of the retail stores to a minimum number that is manageable (Lehavy & Udpa, 2011, p. 417). 2.2. Pricing This is one of the strategies employed by Kmart since the year 2000. Kmart had already lost the battle to Walmart because of WalMart’s relatively cheaper prices and quality services (Comm & Mathaisel, 2008, p. 187). To get back in the game, Kmart needed to offer affordable prices that could attract back customers. The company has however struggled so much and even at a certain point went in to bankruptcy as they tried hard to maintain competitive prices in the market. However, despite the bankruptcy, the priority of the company still remains the same, to reduce prices of their products. 2.3. Technological enhancement in operations management In its initial stages as a business enterprise, Kmart did not invest technologically in terms of supply chain management. The current world is constantly changing technologically .The operations management systems require to be technologically equipped to survive in the current world (Brown et al, 2005, p. 114). Kmart has been undergoing a long journey since the dawn of 2000 to enhance and equip their supply chains technologically. Through this, Kmart is aiming to implement its business strategy which can be monitored by the new installed information technology. 3. Operations management and the company The issue of operations management is an important area in the survival of Kmart. The Company has been struggling to advance the management of the supply chain. The firm has however implemented several operations management systems that have resulted in good performance. 3.1. Significance of operations management to Kmart The benefits of a well established operations management are known. Walmart was a smaller enterprise when compared to Kmart but has managed to overtake it as a result of a well structured and equipped operations management. Over the years, Kmart has witnessed the improvements in the operation management systems. With an effective supply management system, Kmart has been able to gradually improve on its design technologically to help in the efficient delivery of the firm’s commodities and services offered. In a nutshell, the growth of Kmart’s operations management is aiming to reduce the costs of doing business. As they reduce the costs, they will be able to offer attractive prices and woe more customers back. When low costs are also offered they are likely to yield customer satisfaction with the range of services and products offered (Schniederjans, Cao & Ching, 2012, p. 3979). The operations management at Kmart ensures that the firm still has its competitive edge. Maintaining the competitive edge ensures that the company is still relevant in the battle for market control. Through inventing new ways of managing their supply chain, Kmart has been able to survive in the competition up to now. The new management that started the revolution in the year 2000 helped sustain the firm or it could have perished a long time ago. It is therefore significant to indicate that operation management is the core of the firm and constant improvements in the way the supply chain is managed are very important to the prosperity of the firm. 3.2. How operations management helps Kmart to achieve its priorities For any firm to thrive, the business strategy put forward should be able to be supported by the operations management system. Kmart has been on a long journey and knows very well that certain business strategies require a strong operations management backbone. Through the operations management strategy, Kmart though not effectively, have managed to revive their supply chain to be able to support their main strategy which price reduction for the products and the services they offer (Dehning, Richardson & Zmud, 2007, p. 819). Another most important priority to Kmart is to advertise itself to the multitude of potential customers throughout United States. Most recently Kmart has taken its bid to advertise itself to a higher notch. A lot of advertisements are done through television and radio while others on erected billboards. All this is being done to revive a fallen giant back to the highly competitive market. Therefore, operations management is there to ensure that the strategy taken by Kmart is achieved. When the advertisements are effective, Kmart will be able to raise their selling power and increase their market share. Managing the supply chain also will ensure that goods are delivered to the consumers effectively and the feedback of the company’s performance recorded (Tracey, Lim & Vonderembse, 2005, p. 185). 4. Kmart’s common operation management practices Kmart carries out various duties to ensure that most critical issues are well managed in their retail stores. Managing operations in larger stores such as Kmart entail starting out with small and critical issues that do matter a lot in the retail business (Jayaram, Tan & Nachiappan, 2010, p. 6849). Small issues such as pricing do matter a lot in the retail industry. Prices have to be reasonable and appealing. Although, the operations management at Kmart do begin with issues such product creation. To make sure that Kmart maintains the consistency of their customers like Walmart and Target, they have to promote their products, an initiative that is currently being adopted by Kmart. As stated in the above discussion, Kmart is doing a lot of product promotions to increase their amounts of sales. Product promotion is done through rebranding of the existing products so that they appeal to both new and old customers of the store (Schmuck, 2014, p. 139). Kmart has closed down a relatively big number of retail shops. To be fair, one can correctly indicate that 30 percent of the number of stores that Kmart originally began with has been closed down. According to analyst the closing down of the stores was as a result of the poor management adopted by the retail giant. But the recent operations management strategy has embraced the low number of retail stores. This simply because the management of smaller number of retail outlets ensures that quality products and services are offered while the outlets themselves are easily managed (Ketchen Jr & Hult, 2007, p. 578). This is done despite the fact that Kmart is considering to close more outlets. 5. Kmart’s issues and resolutions 5.1. Issues From the foundation of Kmart in 1962 to the early 1990’s, Kmart was a strong retail firm that enjoyed a larger market percentage compared to its competitors. Kmart’s main issues became apparent in when it was surpassed by Walmart as the largest retail store. The real issues affecting Kmart began several decades ago. Part of the issues at that particular time included outdated structures and most important, poor operations management practices. 5.1.1. Poor operations management practices This has been the major issue that has largely led to the failure of Kmart from being the largest retail store in the United States and its environs. One of the operations management practices that Kmart failed on was to improve and manage their supply chain operations technologically (Chandra & Kumar, 2000, p. 113). Other competitors like Walmart began incorporating the use of technology in their businesses from the early 1970’s. Failure to technologically enhance themselves led to the fall in the quality of products and services offered. Kmart was holding the highest number of retail stores and the manual management system was not effective. Apart from the poor management of the retail stores, Kmart also lacked an effective operations management structure that could support their business strategies. When the new management was unveiled in the year 2000, they came up with a new strategy that was meant to reduce prices in order to woe back customers. The operations management and the strength of their supply chain could not support the new strategy and almost rendered the firm bankrupt (Lehavy & Udpa, 2011, p. 418). Kmart has since then been struggling with the issue of offering affordable prices and quality products. Most customers who gave their views on the services offered by Kmart indicated that they were being charged high prices for poor quality of products. Kmart price tags indicate that they have lowered their commodity prices but in real sense they have not. The price tags are there to fool people in buying cheaper products that are being charged more at the counter. The level of customer service is also poor as most of the stores are poorly managed. Poor customer services have made more people opt for more established retailers such as Walmart and Target. As part of an effectively managed supply chain, better services offered to the customer ensures that one will always want to come back to the stores for more services (Şen, 2008, p. 592). A supply chain is not complete without the support of the customers and this is the issue that is constantly affecting Kmart. From Kmart’s 2014 report, they are going to close more retail shops as result of low number of recorded customers. Currently as the situation is, most people do not see the essence of Kmart being around. This is simply because of the failed business strategy that does not accommodate many. Failure to refresh their old way of doing business up to the current standards that are accepted by the modern society is also one of the reasons. Kmart has lost all its logistics and serious measure need to be taken to ensure that the retail giant remains relevant. 5.2. Possible solutions to the issues Kmart has been struggling to get back on its feet in terms of doing good business. The management of the firm have tried several measures which include merging with Sears but failed (Mentzer, Min & Zacharia, 2000, p. 559). Therefore as an external source analyzing the case, various simple business strategies can be carried out to revive the firm that is slowly diminishing. 5.2.1. New management Kmart relied on a management team that was slow to change with time hence the beginning of their downfall. New blood with fresh ideas is required to be at the helm of management at Kmart. The owner of Kmart also requires depending on external individuals who are not related to him in any way, to be the managers of the retail store. A well managed retail store is more likely to retain a high number of customers (Ayad & Rahim, 2013, p. 220). 5.2.2. Technological enhancements Kmart should be able to incorporate technology in most aspects of their transactions. Failed retail stores of Kmart are only as a result of long queue and congestions witnessed in the retail stores. Through using a faster technology like radio frequency could aid on faster movement of people in the stores and avoid congestions (Lancioni, Smith & Oliva, 2000, p. 51). 5.2.3. Rebranding The only way Kmart could bounce back fully is when it rebrands itself and come back as a new enterprise. This will seek the attention of the majority thereby creating a market for their new commodities (Sridhar, 2011, p. 440). To be also on the safe side, Kmart requires to also search for new suppliers who are only dedicated to supplying to them. Efficient supplies will ensure that they are able to operate at slightly lower prices compared to their competitors. In consideration of the economies of scale, Kmart should only produce only one or two brands of a particular product and avoid the trend they have been doing of offering more than two brands per product (Lee, 2002, p. 111). 6. Company’s process map Company’s process map (courtesy of strategicsupplymanagement.com) 7. Conclusion The article has reviewed all the relevant operational management issues that are related to Kmart. In the discussion, the article has highlighted the priorities of the company and what is required to be done to revive the giant retailer. The article concludes that for any business entity to prosper, the operation management backbone has to be very strong. Good supply chain ensures that both the firm and the customers benefit. II. References Ayad, A & Rahim, E 2013, “Toward a theory for management success: the role of evidence-based management in the retail industry,” International Journal of Project Organisation and Management, vol. 5, no. 3, pp. 199-221. Brown, JR, Dant, RP, Ingene, CA & Kaufmann, PJ 2005, “Supply chain management and the evolution of the “Big Middle,” Journal of Retailing, vol. 81, no. 2, pp. 97-105. Chandra, C & Kumar, S 2000, “Supply chain management in theory and practice: a passing fad or a fundamental change?” Industrial Management & Data Systems, vol. 100, no. 3, pp. 100-114. Comm, CL & Mathaisel, DF 2008, “Sustaining higher education using Wal-Mart's best supply chain management practices,” International Journal of Sustainability in Higher Education, vol. 9, no. 2, pp. 183-189. 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