Posted by: Matthew Molinari | February 24, 2012

Target-ing the Supply Chain

There’s been a story going around about Target sending baby coupons to a high school girl. This led to a less than pleased Dad going into to the local store to share his displeasure with the Manager. The Dad, probably rightly so, thought it was inappropriate to send a teenage girl coupons for diapers and cribs.

Turns out, the Dad went home to find out that his daughter was in fact pregnant. So how did Target know this before the father? Simple – purchase tracking. It is easy to see why this story has made all the rounds but I think there is more to this than just a catchy article with an ironic twist. What does this tell us about the implications on the supply chain?

Think about the power that companies like Target are holding if they are able to assign every customer a unique number that tracks all the purchases made. This system is detailed enough to be able to predict when a woman is pregnant and even how far along she is based on what she is buying. The possible uses to improve the supply chain are endless.

The whole point of supply chain management is to make sure that you have what the customer wants, when and where they want it at a price they are willing to pay. There are a variety of ways this is achieved but a lot of the results are still nothing more than estimates based on sophisticated formulas. This software that Target uses goes beyond that and is actually able to accurately predict what a customer wants and when they will be looking to purchase it.

Imagine if every company knew what you were going to want 6 months before you were going to need it. That is an incredibly strong forecasting tool. Now, this may seem to cross some privacy lines and there are legitimate questions about how much a company should know and track about your personal life. However, if Target can tell that in 3 weeks that bag of dog food I bought is going to run out and send me a coupon for my brand, why wouldn’t I want that?

With people having less and less free time, many are looking for all the help they can get. By being aware of customer buying trends a business would be able to better control their inventory and maximize their promotions. This would mean getting customers what they want at cheaper prices and isn’t that a win-win?


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