Kmart Supply Chain Analysis

This paper presents an overview of Kmart retail supply chain in New Zealand. Various IT systems and software used by Kmart are presented in this paper. The new IT systems and business applications are also proposed. In retail sector, IT is involved at every point right from supply chain management to POS terminals for transaction processing. Efficient use of technology and IT systems can bring innovation. The paper highlights an SLA and business case for a new business application proposed for Kmart New Zealand. The paper also through light on critique of created IT plan for Kmart and comparison with another plan.

Company Overview

Kmart is retailer formed by the purchase of Coles group. It is a chain of discount departmental stores around

Kmart’s supply chain includes organizations, resources, people, activities and information or moving products from supplier to end customer. It involves ordering to suppliers, transportation of products, storage of products in warehouse, moving products to Kmart stores and finally providing products to customers. Kmart supply chain takes care of entire flow from manufacturing to warehouse till stores.

General merchandise and apparel products for Kmart are produced directly by factories located in Bangladesh, China, India, Cambodia and Indonesia.

Illustration of Kmart using Porter’s Model:

The Porter’s model was created by Michael Porter in 1979. It is used to understand the structure of the industry and level of competition in that industry. It specifies the effect of five forces on an organization which are Threat of new entrants, Bargaining power of buyers, Bargaining power of suppliers, Threat of substitutes and Rivalry among existing competitors. The organization is less profitable if competitive forces are high. The model specifies where the actual power lies (Jurevicius, 2013).

Based on this model, Kmart can be evaluated using five forces as follows:

1. Threat of New Entrants: (Low Pressure)

There are many hurdles for penetrating in supply chain

It controls the product levels as per demand and reduce stock outs.

• POS (Point of Sales system):

These systems are billing and payment systems implemented in Kmart retail stores integrated with payment mechanisms like cards. At these terminals, retail transaction is completed. POS checkout software handles transactions and multiple payment types.

• Price checker system:

In Kmart stores, there is a price checker system that scans the barcode and show the price.

Alignment of current systems with business goals:

CBX software increase direct sourcing with suppliers to reduce the prices satisfying its customer tag-line “Lower prices everyday”. Using JDA, Kmart’s objective of customer satisfaction is further enhanced as products are allocated properly reducing stock outs. Using POS systems, staff cost was reduced and transactions became easy. Inventory management systems helps Kmart to organize inventory and manage orders conveniently. Price checker systems bring customer convenience and satisfaction which is primary goal of Kmart. Supply chain management system manage supply chain operations, reduce time to market of