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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- May 27, 2014 -


Supply Chain News: Wrong Units of Measure on Cases Played Key Role in Disastrous Launch of Target Canada Last Year

Target had more Goods Coming in then It Did Going Out, Snafu Brings Back Memories for SCDigest Editor Dan Gilmore


 SCDigest Editorial Staff


It is well known that Target had a very bad start in its efforts last year to penetrate the Canadian market.

What wasn't known until last week is that bar code and data issues on incoming cartons of merchandise played a key role in the disaster.

Target opened more than 100 stores in the Canadian market within a single year, starting last March. But the results have been far from expectations. Target has lost some $1.4 billion thus far in its Canadian operations, leading to the recent firing of Tony Fisher, head of the Target Canada, replaced by company veteran Mark Schindele, who has deep experience in managing supply chains.

SCDigest Says:

"The Reuters story says it can't learn where this data error occurred, but I guarantee you Target knew how it happened right away," Gilmore says.
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Many have cited a failure to understand the Canadian market, a too rapid rollout of stores, non-competitive pricing and other factors as reasons for Target's Canadian snafu. But Reuters just last week reported that issues with data integrity - specifically with how many units were in each carton of goods - may actually have been at the root of many of the problems.

Although the specifics are a bit fuzzy, Reuters reports that in Target's new Canadian DCs, "Goods were coming into the warehouses faster than they were going out, in part because the bar codes on many items did not match what was in the computer system."

That in turn led to complaints of empty shelves at many of Target's 127 new Canadian stores.

Reuters further noted that "As goods arrived at the warehouses, workers found errors, 12 shirts per box when the computer system expected 24, for example," according to interviews it conducted with two former employees of Eleven Points Logistics, a division of Genco that is managing the DCs for Target there.

Reuters said it has not yet learned what the source of the data errors was.

Before long, Target had to send dozens or maybe even hundreds of workers and managers from the US to the Canadian facilities to try to unclog the outbound backlog.

SCDigest editor Dan Gilmore, it turns out, has some direct experience with such a bar code data mismatch.

In 1998, he and current SCDigest materials handling editor Cliff Holste were jointly leading the implementation of a Warehouse Management System and carton sortation system for a new 650,000 square foot DC in the Cincinnati area for totes Isotoner.

The DC was built because totes had acquired Isotoner from Sara Lee the year before. The plan involved closing two existing Isotoner DCs in North Carolina and New Jersey, and moving the combined volumes across both companies to the new automated facility.

The system depended heavily on the use of the "I 2 of 5" case code bar code, also known now as the GTIN-14. The GTIN-14 is directly related to the traditional UPC code (now known as the GTIN-12), except that rather than being used at an item level, the GTIN-14 is used at the case or carton level.

The GTIN-14 uses basically the same item identification as does the UPC, but an application identifier at the beginning of the code identifies it as being a case code, and then different numbers are used to identify different packing levels. So, as in the Target example cited above, there would be one pack identifier for boxes with 12 items per case, another for 24, etc.

(Distribution/Materials Handling Story Continues Below )


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In the new totes Isotoner system, the case codes were used broadly. They were used in receiving to identify income goods, and crucially were used in print and apply systems to generate retailer specific serialized shipping container labels (GTIN-18). As cartons approached the automated print and apply stations on a conveyor, a scanner read the case code to identify the SKU. The control system would then look up which retailers in the current "wave" ordered that SKU, and then print the right label format and data for the next order on the list.

Problems at the New Jersey DC

The Isotoner cartons in North Carolina and New Jersey did not have case codes on them. So, as the goods were prepared for transfer to Cincinnati, workers applied new bar code labels to each carton.

In the North Carolina DC, things went pretty smoothly. But at the facility in Edison, NJ, there were issues. Specifically, not enough care was taken to ensure the right pack quantity identifier was in the printed case label.
The result: the same exact case label might be used on cases of 12, 24 or even 36 items.




And that situation was not recognized until most of the goods had already been received and put away in the new Cincinnati DC.

It almost killed the project, Gilmore says.

But, Doug Baker, now VP of operations at totes, developed a workaround. When a pallet was picked for replenishment to the pick-to-belt areas, or when individual cartons were picked using order picker trucks for SKU not in the mechanized pick modules, they were directed to a special processing area. There, they were inspected to see if the actual pack quantity matched the pack indicator.

If it did, the driver just moved on. If it didn't, new labels were printed and manually applied. When those bar codes were later scanned on the system, it updated the inventory and ensured the correct number of actual units were being sent to the customer.

"It definitely slowed down the material flow, but it was a lot better than the alternative, which would have been often shipping too many or too few items to the retailers," Gilmore recalled. "It really could have been a financial and customer service debacle for totes, but in the end it wasn't."

Gilmore says something similar must have happened at Target Canada.

"The Reuters story says it can't learn where this data error occurred, but I guarantee you Target knew how it happened right away," Gilmore says. "But, with inventory already in the DCs, they probably had to go through some rather massive manual effort just like we did at totes to work through the mis-labeled merchandise. And at Target Canada, we're talking three DCs of 1.5 million square feet each."

To help overhaul the Canadian operations, Schindele is hiring two consultants to do a 30-day assessment of the retailer's problems and draw up a "road map" for recovery, saying his priority is to get products back on shelves and tailor items better to customers' needs.

For want of the right label, Target Canada was almost lost.

What do you think actually happened at Target Canada? Have you ever experienced a similar data/label sync issue? Let us know your thoughts at the Feedback button (email) or section (web form) below.

Recent Feedback

Well, Dan, it looks like they never did get that problem resolved. As someone who lived a good many years in the US before returning to Canada, I was excited to see Target coming here. Sadly, their Canadian stores never made the grade. Many times I heard the complaint that the Canadian store was nothing like the US store. The biggest issue I saw was the empty shelves. We would go to Target looking for something and the cupboards were bare. Even during the Christmas rush, the electronics department looked like it hadn't seen stock in 6 months. This is a great article on the root of their problem, certainly one of the best I've seen. I always had a lot of respect for the Target logistics group. This has turned into a complete debacle and I suspect that other heads will be rolling. Great article.

Brian Tingley
Category Manager - Transportation Services
Cameco Corp
Jan, 21 2015