Commentary: Blame Enough to Go Around at Kmart

 
 
By Edward Cone  |  Posted 2002-01-23
 
 
 

The profound failure of Kmart's ever-vacillating technology strategy was both a cause and a symptom of the problems that drove the retailer to bankruptcy.

On the cause side, Kmart has been unable to build the systems that would get its supply chain in shape to compete with Wal-Mart and Target, two of the best-run and tech-savviest companies in the world.

As a symptom of the larger dysfunctional culture at Kmart, senior tech managers at the Troy, Mich., company have had less job security than the drummer for Spinal Tap. Five CIOs in seven years is a recipe for disaster.

The big discounter went bust for a lot of reasons, but you have to wonder if getting its inventory systems in shape wouldn't have made up for a lot of other failings.

Et tu, i2
Yes, Kmart is saddled with aging stores, and over the years it has suffered self-inflicted wounds from inconsistent strategy and a culture of poor service. While getting the right goods on the shelves at the right time wouldn't have resolved those issues, it would have made a real difference. But a series of supply chain projects didn't get the job done, and the latest effort to modernize with software from i2 Technologies (a key element of CEO Chuck Conaway's turnaround plan) looks moribund.

Fixing its supply chain is going to be expensive, and Kmart also needs cash to reconfigure its stores to meet a new strategic direction. Hello, bankruptcy.

But these IT failures are symptomatic of the larger problems at Kmart as well. No statistic is more telling that the body count in the CIO's office, which has been vacant again since last summer. As management lurched from one strategy to another, IT got lost in the mix. Tellingly, both Target and Wal-Mart enjoyed continuity of IT management.

It's no coincidence that Target turns its inventory 6.3 times a year; Wal-Mart 7.3 times a year; and Kmart, just 3.6 times.

IT was a key cause, and a telling symptom, of the slow-motion disaster at Kmart. If the company is able to right itself, technology will have to be a cause and a symptom of that recovery as well.