本文发表在 rolia.net 枫下论坛THE LAST DAYS OF TARGET
The untold tale of Target Canada’s difficult birth, tough life and brutal death
By Joe Castaldo

http://www.canadianbusiness.com/the-last-days-of-target-canada/

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Finding an answer was tricky. By using Target’s existing technology, employees in Canada could draw on the large amount of expertise in the U.S. That plan had shortcomings as well. The technology was not set up to deal with a foreign country, and it would have to be customized to take into account the Canadian dollar and even French-language characters. Those changes would take time—which Target did not have. A ready-made solution could be implemented faster, even if the company had little expertise in actually using it.

The team responsible for the decision went with a system known as SAP, made by the German enterprise software company of the same name. Considered the gold standard in retail, SAP is used by many companies around the world, from Indigo in Canada to Denmark’s Dansk supermarket chain. It essentially serves as a retailer’s brain, storing huge amounts of data related to every single product in stores. That data would be fed by SAP into Target’s other crucial systems: software to forecast demand for products and replenish stocks, and a separate program for managing the distribution centres. After implementing SAP in Canada, Target wanted to eventually switch the U.S. operations over as well, aligning the two countries and ensuring the entire company benefited from the latest technology.

While SAP might be considered best in class, it’s an ornery, unforgiving beast. Sobeys introduced a version of SAP in 1996 and abandoned the effort by 2000. (It wasn’t until 2004 that the grocery chain tried again.) Similarly, Loblaws started moving to SAP in 2007 and projected three to five years to get it done. The implementation took two years longer than expected because of unreliable data in the system. Target was again seeking to do the impossible: It was going to set up and run SAP in roughly two years. The company wasn’t doing it alone, however, and hired Accenture (which also worked on Loblaws’ integration) as the lead consultant on the project. Target believed the problems other retailers faced were due to errors in data conversion. Those companies were essentially taking information from their existing systems and translating it for SAP, a messy process in which it’s easy to make mistakes. Target, on the other hand, was starting fresh. There was no data to convert, only new information to input.

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It didn’t take long for Target to figure out the underlying cause of the breakdown: The data contained within the company’s supply chain software, which governs the movement of inventory, was riddled with flaws. At the very start, an untold number of mistakes were made, and the company spent months trying to recover from them. In order to stock products, the company had to enter information about each item into SAP. There could be dozens of fields for a single product. For a single product, such as a blender, there might be fields for the manufacturer, the model, the UPC, the dimensions, the weight, how many can fit into a case for shipping and so on. Typically, this information is retrieved from vendors before Target employees put it into SAP. The system requires correct data to function properly and ensure products move as anticipated.

A team assigned to investigate the problem discovered an astounding number of errors. Product dimensions would be in inches, not centimetres or entered in the wrong order: width by height by length, instead of, say, length by width by height. Sometimes the wrong currency was used. Item descriptions were vague. Important information was missing. There were myriad typos. “You name it, it was wrong,” says a former employee. “It was a disaster.”

It was also something the company should have seen coming. The rush to launch meant merchandisers were under pressure to enter information for roughly 75,000 different products into SAP according to a rigid implementation schedule. Getting the details from suppliers largely fell on the young merchandising assistants. In the industry, information from vendors is notoriously unreliable, but merchandising assistants were often not experienced enough to challenge vendors on the accuracy of the product information they provided. (The staff were also working against the countdown to opening.) “There was never any talk about accuracy,” says a former employee. “You had these people we hired, straight out of school, pressured to do this insane amount of data entry, and nobody told them it had to be right.” Worse, the company hadn’t built a safety net into SAP at this point; the system couldn’t notify users about data entry errors. The investigative team estimated information in the system was accurate about 30% of the time. In the U.S., it’s between 98% and 99%. (Accenture, which Target hired as a consultant on SAP, said in a statement: “Accenture completed a successful SAP implementation for Target in Canada. The project was reviewed independently and such review concluded that there is no Accenture connection with the issues you refer to.”)

The investigating team went to Fisher and John Morioka, the senior vice-president of merchandising, with a drastic proposal: Shut down the entire merchandising division so everyone could comb through and verify every single piece of data in the system—manually. The team stressed there was simply no other way to get it done. Hiring an external consultant would take too long, and it was impossible to expect the employees to do such a painstaking, arduous task and their regular jobs at the same time. Fisher immediately gave the green light.

Thus, “data week” was held in the fall of 2012. Merchandisers essentially had to confirm every data point for every product with their vendors. A buyer might have 1,500 products and 50 to 80 fields to check for each one. The more experienced employees had the foresight to keep records of verified information (dubbed “sources of truth”), which made the task a little easier. Others weren’t so lucky. Complicating matters was the dummy information entered into the system when SAP was set up. That dummy data was still there, confusing the system, and it had to be expunged. “We actually sat there and went through every line of data manually,” says a former employee. “It was terrible.” Target anticipated how awful it would be and designed the week to help keep employees sane. To kick it off and rally spirits, a few employees performed a hip-hop song-and-dance routine on the first day. Ice cream and pizza flooded in to keep employees fuelled up, some of whom stayed well past midnight that week, squinting at screens through bleary eyes.

There was an entirely different process to ensure the correct data actually made it into SAP. The employees in Mississauga couldn’t do so directly. Instead, the information was sent to a Target office in India, where staff would load it into SAP. Extra contractors had to be hired in India, too. “Sometimes even when we had the data correct, it got mixed up by the contractors in Target India,” says a former employee. (Another former employee disputes this: “Sometimes the quality of their work wasn’t so great, but for the most part they did a good job.”) In any event, uploading took longer than expected, and data week stretched into two. Periodic data blitzes in individual departments became common into the following year.

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Ironically, even as consumers encountered barely stocked stores, Target’s distribution centres were bursting with products. Target Canada had ordered way more stock than it could actually sell. The company had purchased a sophisticated forecasting and replenishment system made by a firm called JDA Software, but it wasn’t particularly useful at the outset, requiring years of historical data to actually provide meaningful sales forecasts. When the buying team was preparing for store openings, it instead relied on wildly optimistic projections developed at U.S. headquarters. According to someone with knowledge of the forecasting process in Minneapolis, the company treated Canadian locations the same way they did operational stores in the U.S. and not as newcomers that would have to draw competitors away from rival retailers. Even if the stores were in out-of-the-way spots—and some of the locations in the Zellers portfolio certainly were—the company assumed the strength of the Target brand would lure customers. There was another element at play, too. “Once you signed up to do 124 Zellers locations, it felt like there was a point where it’s like we have to assume sales will be good,” says the former employee. “It’s very backwards.”

In Canada, some buyers also relied on vendors for guidance, but vendors fell under the Target spell like everyone else. “They would say, ‘Because it’s Target, they’ll sell double what Zellers was selling.’ And that would be what we put in that initial forecast,” says a former buyer. In consequence, Target ordered too much product that first year. It all hit the distribution centres at the same time, creating a severe bottleneck.

The depots were hampered by other factors, caused by lingering data problems and the learning curve associated with the new systems. Manhattan, the company’s warehouse software, and SAP weren’t communicating properly. Sometimes, the issues concerned dimensions and quantities. An employee at headquarters might have ordered 1,000 toothbrushes and mistakenly entered into SAP that the shipment would arrive in a case pack containing 10 boxes of 100 toothbrushes each. But the shipment might actually be configured differently—four larger boxes of 250 toothbrushes, for example. As a result, that shipment wouldn’t exist within the distribution centre’s software and couldn’t be processed. It would get set aside in what was designated as the “problem area.” These sorts of hang-ups happen at any warehouse, but at Target Canada, they happened with alarming frequency. Warehouse workers got so desperate to move shipments they would sometimes slice open a crate that was supposed to contain, say, a dozen boxes of paper towels but only had 10, stuff in two more boxes, tape it shut and send it to a store that way.

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To add even more headaches, the point-of-sale system was malfunctioning. The self-checkouts gave incorrect change. The cash terminals took unusually long to boot up and sometimes froze. Items wouldn’t scan, or the POS returned the incorrect price. Sometimes a transaction would appear to complete, and the customer would leave the store—but the payment never actually went through. The POS package was purchased from an Israeli company called Retalix, which worked closely with Target Canada to address the issues. Progress was maddeningly slow. In 2014, a Retalix team flew to Toronto to see first-hand what Target was dealing with. After touring a store, one of the Retalix executives remarked, “I don’t understand how you’re using this,” apparently baffled the retailer managed to keep going with so many bugs. But Target didn’t have time to find a new vendor and deploy another technology. “We were bound to this one bad decision,” says a former employee. (Retalix was purchased in 2012 by NCR Corp., the American global payment transaction firm.) “When entering a new country, it is normal for retail software systems to require updates to tailor the solution to market needs and processes,” NCR said in a statement in response to questions about Target’s experience. “NCR was making progress to customize the solution for the market and Target’s new operations until their decision to exit the country.”

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Tony Fisher felt it too. He was open about telling employees that he’d never managed through such a challenging situation before. Former employees say his background—primarily in merchandising—was ill-suited to helping him deal with the severe operational and technological problems Target Canada faced. Those close to Fisher say he took the company’s troubles personally. In the early days, he was a constant sight on the floor of Target Canada’s open-concept office, chatting with employees at all levels. But he and some of his leadership team became less visible as problems mounted. “For leaders who have experience with failure, that would be the last thing you do,” says a former employee. “You would be front and centre, give confidence and reinforce the direction. That didn’t happen.” Others contend Fisher’s schedule didn’t allow him to be as visible. As the situation worsened, he was frequently in meetings, participating in conference calls, visiting stores or flying to Minneapolis. (Fisher declined to comment.)

In February 2014, Target headquarters released its annual results, revealing a US$941-million loss in Canada. The company attributed the shortfall to growing pains, expansion costs and—because of all that excess inventory sitting in warehouses—significant markdowns. “As we enter 2014 with a much cleaner inventory position, the team’s number one operation focus is on in-stocks—ensuring we have the right quantity of each item in the right place at the right time,” Steinhafel said on the earnings call. It was his last as Target CEO. A month prior, Target had disclosed a massive security breach in which hackers stole the personal information of 70 million customers in the U.S. Combined with the bleeding operations in Target Canada, Steinhafel’s position was untenable, and he stepped down in May. (He walked away with US$61 million in compensation.) Fisher—hand-picked by Steinhafel—left the company two weeks later.

By the end, Fisher was practically a ghost. “He gave every last ounce of himself. He was just done. He had nothing left,” says a former employee. His departure wasn’t surprising, but it was deeply felt. “I loved Tony. He’s probably one of the smartest people I’ve met,” says someone who worked with him closely. “He absolutely took the fall for Target Canada.” The reality is the odds were stacked against him from the start, given the extremely tight timeline and the thin margin for error. “Everyone was trying to execute Gregg Steinhafel’s deal,” says a former employee, “and once one thing went wrong, it was an impossible achievement.”

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A small group of employees also made an alarming discovery that helped explain why certain items appeared to be in stock at headquarters but were actually missing from stores. Within the chain’s replenishment system was a feature that notified the distribution centres to ship more product when a store runs out. Some of the business analysts responsible for this function, however, were turning it off—purposely. Business analysts (who were young and fresh out of school, remember) were judged based on the percentage of their products that were in stock at any given time, and a low percentage would result in a phone call from a vice-president demanding an explanation. But by flipping the auto-replenishment switch off, the system wouldn’t report an item as out of stock, so the analyst’s numbers would look good on paper. “They figured out how to game the system,” says a former employee. “They didn’t want to get in trouble and they didn’t really understand the implications.” Two people involved in the discovery allow that human error may have been a component, too. Like SAP, the replenishment software was brand new to Target, and the company didn’t fully understand how to use it. When Schindele was told of the problem, he ordered the function to be fully activated, which revealed for the first time the company’s pitifully low in-stock percentages. From there, a team built a tool that reported when the system was turned on or off, and determined whether there was a legitimate reason for it to be turned off, such as if the item was seasonal. Access to the controls was taken away from the analysts, depending on the product.

The company had also been learning more about using SAP correctly. Former employees describe decoding SAP as like peeling an onion—it had multiple layers and made you want to cry. One initiative in particular greatly improved Target’s data quality. A technology team was finally able to install an automatic verification feature to catch bad data before it could enter SAP and wreak havoc. If an employee entered a UPC that was short one digit, for example, the system wouldn’t allow that purchase order to proceed until the code was correct. The technology Target used in the U.S. has these checks and balances, as do other retailers who use SAP. Target Canada finally implemented a verification tool in 2014, according to a former employee who was involved, owing to time constraints. “This happened very late in the game.”

There was yet another basic error Target Canada didn’t discover until 2014. According to one former employee, there was a misunderstanding about shipping dates. What Target thought was the “in-DC date,” meaning the date on which product would arrive at a distribution centre, was interpreted by some of its larger vendor partners as the day on which they would actually ship the product to Target. As a result, stock was constantly arriving late from Target’s perspective but on time according to vendors. “It was like, ‘Holy crap, how did we possibly not know this?’” says the former employee. (Others dispute this characterization and say the impact of the mix-up was limited.)

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The news on Jan. 15 was much worse: Target Canada was filing for bankruptcy protection. It had spent $7 billion on the expansion so far, and it didn’t project turning a profit until at least 2021. Early that morning, Schindele’s direct reports broke the news to their teams, who then informed their own departments. One of these leaders recalls moving through a fog and hyperventilating while struggling to remember how to dial in to a conference call. After running through the prepared script he was given, he broke down, crying. “These were people I’d hired. I’d impacted their lives. I’d become friends with them. So that was horrible,” says the former employee. A press release went out at 8 a.m. By then, the entire company knew.

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All 133 stores closed by April. Schindele soon returned to Target in Minneapolis, where he’s now senior vice-president of Target properties. Fisher later resurfaced as a senior vice-president at a consumer health-care company also in Minneapolis. Steinhafel, the one who put the entire operation in motion and set it on a path toward self-destruction, has kept his head down. His LinkedIn profile simply lists him as a “retail professional.” (He did not respond to requests for comment.)

Curiously, the U.S. retailer has not abandoned the country entirely. In October, Target launched a small pilot project to ship goods ordered online to Canadians. The company that lost billions, suffered a humiliating defeat here and endured an ordeal that left its employees drained, exhausted and ultimately jobless, titled the website for Canuck shoppers “Target loves Canada.”更多精彩文章及讨论，请光临枫下论坛 rolia.net