Hi! Thanks for the question.
Upon researching the topic at hand, I thought that they were distinct
things but were actually interrelated concepts. The following are
articles and papers, which directly discusses the points of your query
in relation to the bankruptcy of K-mart. I will also provide direct
quotations, whenever possible, from the articles so as to save you
time but I highly recommend that you read them in their complete form.
Remember some of the concepts may overlap among themselves during the
presentation of the sources. I will take supply chain and IT systems
first since they are mostly interrelated.
1. Supply Chain:
One of the great contributors to the problems of Kmart was an
inadequate management of its supply chain.
“The contrast between the retailers' supply-chain systems has been
evident in stores, says Gartner analyst Gale Daikoku, who worked in
the retail industry. Wal-Mart has almost no supply storage areas
because its vendor-managed inventory system makes suppliers
responsible for delivering product when Wal-Mart needs it, she says.
At Kmart stores, Daikoku says, it wasn't unusual for a supplier's
sales representative, wanting to discover why something wasn't selling
at a certain branch, to find shelves empty but products piled up in
stockrooms.”
“ Kmart has tried to change in the last 18 months. New packaged
logistics and proprietary merchandising software helped the retailer
improve its dismal record of getting holiday promotional shipments in
on the date they're promised to customers. CEO Charles Conaway, who
joined in June 2000, contracted with i2 Technologies Inc. that October
for logistics-monitoring and transportation-management software, and a
custom version of TradeMatrix supply-chain management software.”
“Now In Bankruptcy, Kmart Struggled With Supply Chain” (Jan. 28, 2002)
http://www.informationweek.com/story/IWK20020125S0020
“Conaway had diagnosed Kmart's Achilles heel as its supply chain. In
September, Kmart wrote off $130 million for supply chain hardware and
software and another $65 million for replacing two distribution
centers.”
“ Part of its problem: Kmart was never able to demonstrate the
operating benefits it gained by adopting software from i2
Technologies. Instead, it moved less product off its shelves in
Christmas 2001 than it had 2000, while rivals such as Wal-Mart enjoyed
hearty gains in retail volume.”
“Kmart: SCM Gone Wrong”
By Kim Girard
http://www.baselinemag.com/article2/0,3959,11974,00.asp
2. IT system:
Strongly tied to its supply chain system, the other parts of IT
suffered as well but we could also see that after the bankruptcy,
Kmart is trying out new ways to remedy the situation.
“In the 1970s and early '80s, Kmart lagged Wal-Mart on adoption of
several waves of retail technology, including back-end computers for
individual stores, electronic cash registers and scanners that could
read UPC bar codes. By 1973, the growing Wal-Mart chain had computers
in 22 of 64 stores. Kmart didn't get serious about putting them in
every store until 1978. By 1982, it had computers throughout its
stores, but the lack of scanning cash registers meant that sales data
wasn't kept as current.”
“As a result, Wal-Mart got a head start on many elements of what is
now called "supply chain management." The scanning cash registers fed
updates to store computers, which adjusted sales and inventory
records. Store managers could watch the inventory of a fast-moving
item drop and electronically file replenishment orders with Wal-Mart's
distribution centers.”
“How Kmart Fell Behind”
http://www.baselinemag.com/article2/0,3959,35972,00.asp
In trying to keep up, Kmart installed new systems that maybe of help
to its sales problems. The next two articles will discuss these
concepts.
“Kmart (NYSE: KM) officials see self-service checkout as one
ingredient in the company's overall recipe for emerging from
bankruptcy. But some observers are skeptical about how much immediate
help automated cashiers can provide, since they are not yet widely
accepted."
“Last fall, the troubled discount retailer marked the 1,000th store
installation of self-checkout units made by NCR (NYSE: NCR). By the
end of January, the units were expected to be in place in about 1,300
Kmart stores in the United States.”
“Kmart and NCR say the systems, dubbed FastLane, are easy to use and
have received good responses from consumers.”
“Dennis said use of the systems will increase as customers get used to
the technology, adding that self-checkouts are part of a long-term
strategy by Kmart to increase choices for consumers.”
“Can Self-Service Help Kmart Beat Bankruptcy Blues?”
http://www.crmdaily.com/perl/story/16207.html
“Ten days after filing for bankruptcy, Kmart Corp. executives
simultaneously turned on new software for apparel distribution
centers, opened two centers, meshed two warehouse computer systems and
held their breath.”
“Kmart's distribution network, composed of four apparel centers and 14
general merchandise facilities, has been dubbed the Achilles' heel of
the company. The inefficient system was blamed for empty spots on
shelves and souring consumers who routinely went to stores for items
advertised in Sunday circulars and found they weren't there.”
“’It takes two to three days to get an item now," she said. "Before it
could have been 21 days.’ That's because the previous system had
inventory requests being passed from store manager to Troy
headquarters to the vendor for fulfillment. Now for high turnover
items such as socks and underwear, the order goes straight to the
distribution center, Austin said.”
"The new software was part of a $195-million change that included
hiring Manhattan Associates Inc., an Atlanta firm that provides
technology for retail distribution systems. The bulk of that cost,
$130 million, was a charge related to tossing out an i2 Technologies
software program.”
“USA: Kmart Is Patching Up Clothes Distribution”
http://www.bharattextile.com/newsitems/1979071
3. Marketing Position
The problem of Kmart’s market positioning could be clearly seen from
this insightful article from Inc Magazine. From Kmart’s positioning as
the place for “women’s fashions” in 1992 up to the ill effects of
being in the first mover disadvantage syndrome, the article analyzes
Kmart’s marketing mistakes way before its bankruptcy.
“Wal-Mart positioned itself as the unequivocal low-cost discounter
with superior service and super-efficient supply-chain management that
kept costs down. Target emerged as the mass merchandiser that did not
have everyday low prices but made up for it with bright, well-stocked
stores and a splash of style.”
“Hoch points to four key factors that spell success or failure for
retailers: location, price, assortment and service. Many Kmart stores
are older than those of its competitors and located in
less-than-attractive urban areas, Hoch says. A concentration of older
stores in congested places makes the stores less appealing to
shoppers. It also makes it hard for trucks to deliver merchandise
efficiently, which makes it difficult to achieve economies of scale.
‘Kmart suffered from its early success in opening a lot of stores in
urban settings. It’s an example of what you could call first-mover
disadvantage,’ Hoch says.”
“Kmart's 20-Year Identity Crisis”
http://www.inc.com/articles/finance/fin_manage/bankrupt/23876.html
(Part 1)
http://www.inc.com/articles/finance/fin_manage/bankrupt/23876-2.html
(Part 2)
4. Cash Flow
All the reports of going into Chapter 11 filing time was triggered
when analysts predicted that Kmart’s cash flow would not stand the
heat.
“Viewing Kmart's estimated $400 million in cash and $3.8 billion in
total debt, many investors now wonder whether the Troy (Mich.)
company's cash flow is strong enough to allow it to stay afloat, let
alone implement an ambitious restructuring plan under CEO Charles C.
Conaway.”
“Kmart: The Flood Waters Are Rising”
http://www.businessweek.com/magazine/content/02_04/b3767081.htm
More evidence of Kmart’s cash flow dilemma before the bankruptcy
filing could be gleaned from this Forbes website report.
“But that's expensive, and right now the company is suffering from
cash-flow problems. Thanks to slow sales in November and December,
when year-over-year sales probably dipped 2.5%, Kmart's fourth-quarter
earnings are projected to drop to 20 cents per share from an original
estimate of 43 cents per share. And winter is supposed to be every
retailer's best season.”
”What's worse, Kmart will have to sell its fourth-quarter excess
inventory at deep discounts, further cutting into the profits it needs
to pay off the stock it bought for the holiday season. Retailers
generally use their credit lines to stock up for the fourth quarter
and use the proceeds of those sales to pay for that inventory in
January. Prudential's Hood says the company used about $1.4 billion in
credit. "But Kmart isn't going to be able to get entirely out of debt
after this season," says a Wall Street source. Prudential's Hood
predicts Kmart, which had $366 million in cash as of Oct. 31, could be
cash-flow neutral for 2001.”
“For Kmart, Bankruptcy May Be Best”
http://www.forbes.com/2002/01/03/0103kmart.html
To sum up all of the articles mentioned above, I think this document
would be a perfect fit.
“Kmart's 5 big blunders”
http://www.bcentral.com/articles/krotz/123.asp
I think that the main problem of Kmart was that, it wasn’t able to
find its true identity or create one as the challenge from Wal-Mart
tightened. When Wal-Mart started to distinguish itself from the pack,
Kmart couldn’t keep up. It failed miserably to market itself and with
poor utilization of technology, its supply chain management was found
inadequate to the times. It might be said that the mistake came from
being too much of an early adopter by opening too many stores in
unprofitable locations.
Simply put Kmart failed because it never had an accurate vision of who
they are and where are they going.
Search terms used:
Kmart bankruptcy marketing IT “supply chain” “cash flow”
I hope these links would help you in your research. Before rating this
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Easterangel-ga |
