Case study 3

1
Case study 3

• Bravo
• ???, ???, ???

2
Evaluate Kmart using the value chain and
competitive forces models. What was Kmarts
business model and business strategy?

• Value chain
• Dont create value.

Supplier
Customer
Value add
PkMS
Distribution center
Store
Customer
Supplier
Inbound Logistics
Outbound Logistics
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• Competitive forces models

• Several suppliers
• Pharmavite Corp.
• of Northridge, California
• -Bell sports Corp.
• of Irving Texas.
• and so on

Industry set
New market entrants
Industry competitors
K-mart
Another on-line competitor
Customer
Wal-mart Target
Kmarts business model Promotion driven
business models. Kmarts business strategy
Diversifying of products.
Sale of discount products.
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2. What was the relationship of information
systems to Kmarts business processes and
business strategy? How well did its systems
support its strategy?

• Business strategy
• Diversifying of products
• Sale of discount products
• Business processes

Distribution center
Store
Supplier
Improve customer service - POS system
Improve inventory management - I2 software
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Relationship

• Positive
• It was to improve Kmarts management of sales
  forecasting inventory sourcing, logistics, and
  reporting
• It enables individual stores to select their own
  merchandise according to the needs and demand of
  their local community
• Lowering costs, and enabling Kmart to lower
  prices.
• It able to track the movement of goods.

• Negative
• Outdated technology at the distribution centers
  resulted in supplies often sitting on pallets for
  24 or hours still they were recorded in the
  central tracking systems.
• The ability of the project to succeed in such a
  giant, complex project.
• It could only be solved by Kmart purchasing more
  hardware an expensive solution for a company
  facing Kmarts financial problem.

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How well did its systems support its strategy?

• Kmarts inventory turnover rate?
• Kmart in a project to rebuild its supply- chain
  system.?
• I2 project practice.
• I2 software is problem that software is very
  complex and
• giant ? Kmart purchasing more hardware an
  expensive solution for a company facing Kmarts
  financial problems.
• Than didnt connect distribution center and
  system.

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3. What management, organization, and technology
factors contributed to Kmarts problems?

• Management
• To expand the variety of products (Strategy
  failure)
• Impossible price cutting
• Dont warehouse management
• Modernization necessity of supply chain more than
  modernization of stores
• Blue light web business failure
• Organization
• Change of CIO
• Technology
• Complex and giant i2 project
• Dont connect systems

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4. How important was supply chain management in
contributing to Kmarts problems? Evaluate
Conaways decision to use i2 software to improve
Kmarts supply chain management
If had expected that Kmart could add 1.9
billion in profit just by marching its
competitors turnover rate
- Kmarts inventory turnover rate was very low.
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Evaluate Conaways decision to use i2 software to
improve Kmarts supply chain management

• Cause
• Supply- chain management software for
  manufacturing still accounted for 90 present of
  i2s business, and it is not applied in retail
  stores.
• Result
• POS system and inventory management system are
  not connected easily at retail store.
• ( The projects difficulty in connecting its
  point-of-sale and inventory
• systems to its distribution system, Kmart was
  still sending many of
• its orders on paper)

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5. Were those blaming software for the collapse
of Kmart correct? Explain your answer.

• We say No
• Because it is the problem of selection!
• It is problem at operation that is not functional
  problem of software.

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6. It has been said 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.
Wal mart Wal-mart expanded quickly by
following a strategy of everyday low prices.
Wal-mart used information technology (IT) to
track sales in all its stores and to replenish
its fastest selling products. Wal-mart
demonstrated its willingness to spend needed
funds on IT by installing register with
bar-code scanner in each store.
We say No

• Kmart
• -Hard to support enough SCM system with wal-mart
  by difference of strategy.
• (Kmarts promotions-driven business model created
  
• sharp spikes and drops in demand for products and
  
• has been much more difficult to support with
  supply
• chain management systems than everyday low
  pricing
• models such as Wal marts)
• -Unification was difficult to selection of wrong
  SCM software(i2 software).

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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.

• The sort- long-range policies

• The problems
• - It gained the image of being old-fashioned,
  outdated, and frumpy.
• (Inferior selection of products)
• - Many of its shelves were empty while its
  prices were too high.
• - To offer poor customer service and to not
  care about competition.