Twine, Thread—But No String

When a large company such as Kmart fails, the causes can often be traced to IT.

When a large company such as Kmart fails, the causes can often be traced to IT. Our sister publication, Baseline, studied Kmarts supply chain woes in its November/December issue.

I can relate to Kmarts problems on a more basic level. A Kmart superstore near my home has a knack for being out of the most common items. The situation hit new heights of absurdity after Christmas when I asked a Kmart clerk where I could find string. She looked at me quizzically and said, "Sir, we have twine or thread but no string."

Flabbergasted, I found string at the pharmacy and the grocery store next door. The scenario at Kmart has been repeated many times over the years, and each time, my loathing for the store increased. From certain types of light bulbs to filters for the Dustbuster I bought there, I could count on empty Kmart shelves at least half the time when it came to items I needed most.

Conversely, my affinity grew for the Wal-Mart 5 miles further away. The store is bright and staffed by people who elevate the notion of discount store customer service. And it has everything.

Despite the string incident, Kmarts supply chain is improving. My local store was better stocked over the past 18 months. However, last September, Kmart wrote off an inadequate supply chain system and two distribution centers to the tune of $195 million, which undoubtedly helped replicate string incidents thousands of times each day at its 2,114 stores.

One IT-driven area where Kmart outpaced Wal-Mart was the e-tailing site. While Wal-Mart and other hot retailers such as Home Depot tried to reconcile clicks and mortar, Kmart charged fearlessly ahead with in 1999. But the initiative was too little, too late. and are now beset by the uncertainty of a Chapter 11 filing.

To its credit, Kmart eased the blow of bankruptcy in its pension plan. The company said that only 3.5 percent of the assets in its 401(k) plan were Kmart shares owned by employees. That means a better fate for Kmart pensioners than the Polaroid and Enron employees who watched their 401(k) accounts evaporate. Regardless, Chapter 11 reorganization is ugly. Kmart had many chances to turn around in the past decade. The days of Kmarts rescue depending mostly on IT are gone. Now, its up to the courts and creditors.

What other companies are threatened by inadequate supply chain systems? Write to me at [email protected].