CASE STUDY SISP

QUESTION 1. What was the relationship of information systems to Kmart's business processes and business strategy? How well did its systems support its strategy? Kmart's information systems and its business processes and business strategy were not in alignment. As an example, the information systems could collect data, but the data were not available for analysis and decision-making purposes. As the case mentions, forecasting decisions were based on management's judgment, not on the data. Kmart's systems did not support its strategy. One of the problems mentioned in the case is that its supply chain management system could not easily accommodate the sharp increases and decreases in demand. The distribution centres outdated technology led to supplies sitting on pallets for 24 hours until they were recorded in the central tracking system. When reordering popular products, the employees would hand sift through previous purchasing receipts.

QUESTION 2. How important was supply chain management in contributing to Kmart's problems? Evaluate Conaway's decision to use i2 software to improve Kmart's supply chain management. Supply chain management was very important to Kmart. Kmart has been unable to successfully manage its inbound logistics, operations, sales and marketing, service, and outbound logistics. Unfortunately, the company's inability to effectively manage its supply chain led to ineffective advertising, lots of items being overstocked, popular items being under stocked, a large product offering, poor communication with suppliers and its business units, items sitting on pallets waiting to be entered into the central tracking system, and shipping problems. The goals for the i2 project were commendable, since the project was supposed to improve Kmart's sales forecasting, inventory sourcing, logistics, and reporting. The project was supposed to facilitate micromarketing, supplier product tracking, order execution, shipment scheduling, and delivery tracking. It is interesting that Mr. Conaway chose i2 Technologies for the new supply chain management project, since i2 Technologies had "only recent and limited experience in the retail sector." The decision to use i2 Technologies was not a good decision, since the system was not designed to work with the large number of SKUs, Kmart (according to some) wrote off and abandoned some of its i2 software, the project fell behind schedule, and the inability to connect the point-of-sale systems and inventory systems to the distribution systems.

QUESTION 3. 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. This statement does not apply to Kmart. Kmart is using an outdated business model and has been unwilling to change its model. Its unwillingness to change is one of the reasons why Wal-Mart and Target have been able to successfully compete against Kmart and why Kmart is in bankruptcy.