Reference no: EM13580979

Managing the effectiveness and value of the supply chain has become a top priority. Supply chain management focuses on aligning people, processes, information, and technology to a common set of goals and objectives across the supply chain of products and services to meet the needs of all industries, companies will drive increased profitability and efficiency. In 2002, discount stores such as Kohl's, Target, and Wal-Mart were recording strong sales, while Kmart Corp.--the granddaddy of them all declared bankruptcy. Several factors contributed to the downfall, but one of the biggest is that Kmart didn't compete on price, a failure some attribute to its inability to master supply-chain technology and, consequently, benefit from supply-chain efficiencies. For instance, unlike Kmart, Wal-Mart used E-business system to regularly communicate sales and inventory data from every store to thousands of suppliers and buyers, and deploy a private trading hub to consolidate its purchasing globally and bring suppliers online to bid on contracts--all part of a plan to lower costs and pass on savings. Promotions almost never caused problems for Wal-Mart because of its tight links with suppliers. As a result, Kmart's consumers often found that the sales merchandise and/or merchandise that were part of a promotion, was often out of stock when they reached the store.

(1) If you were advising Kmart's CEO, what changes (in your own words) would you recommend to help Kmart become more profitable?

(2) Given your answer to (1), explain how your recommended changes would help Kmart become more profitable and a more viable competitor to stores like Wal-Mart.