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How ISO 9001 Could Have Saved Target Canada

February 9, 2016

A great article came out in last week's edition of Canadian Business titled "The Last Days of Target: The untold tale of Target Canada's difficult birth, tough life and brutal death." by Joe Castaldo.  It's a fascinating tale of how Target overcommitted and underperformed their way through 7 billion dollars in 4 years.  Just as important is the impact on the 17000 people in Canada who were, at one time or another, employed by Target.  Employees were described as weary and frustrated. "I remember wanting to vomit" said one senior official.  Others used words like heartbreaking, and insane.  Said another employee about the former CEO of Target, Tony Fisher: "He was a ghost of himself. He just had nothing left."  The article delivers the straight goods on the mistakes made by Target, obtained by interviewing more than 30 employees.   As I read the article, I noticed how a lot of these mistakes could have been avoided by applying some of the principles of ISO 9001.

 

One of the key reasons for Target's downfall was the inexperienced and untrained staff at the helm of the Target ship. Target's motto was "hire for culture, train for the job".  This has worked well for them in the US, where employees receive months of training and are paired with a mentor.  But in Canada, employees received a few weeks of training and were left to run the company. And since the ERP system, the replenishment software, the warehouse software AND the point of sale software were being implemented at the same time, I have to wonder what they were being trained on.  Said one employee: "I was one of the oldest people there, and I was in my mid-30's".  Other former employees said that Fisher's background—primarily in merchandising—was ill-suited to helping him deal with the severe operational and technological problems Target Canada eventually faced.   And the merchandisers and business analysts were often completely inexperienced. “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.” said a former employee. Section 7.2 of ISO 9001:2015 states that an organization shall "determine the necessary competence of person(s) doing work under its control... and ensure that these persons are competent on the basis of appropriate education, training or experience".  Perhaps different hiring choices would have been made, at least for some positions, or different training provided, had this clause been followed.

Another reason for Target's demise was the poor data integrity in the ERP software, SAP.  Target had decided to implement SAP on a 2 year timeline, compared to best practice in the industry of 3 to 5 years. When the software was finally switched on, there were all sorts of problems from not being able to move products out of distribution centres, to items not fitting onto shelves.  Said the author, "what appeared to be isolated fires quickly became a raging inferno threatening to destroy the company's supply chain".  At one point, Target Canada printed a flyer in which nearly every single item on the front cover was out of stock.  The root cause of these issues was determined to be flawed data in the system - including incorrect product measurement units, wrong currency, and missing tariff and customs codes.  It was estimated that the ERP information was accurate about 30% of the time - compared to 99% in Target US.  Section 7.5.2 of ISO 9001:2015 states that "when creating and updating documented information, the organization shall ensure appropriate identification and description, format and media, and review and approval for suitability and adequacy." Section 8.1 states that "The organization shall plan, implement and control the processes needed to meet the requirements for the provision of products and services, by... determining, maintaing and retaining documented information to the extent necessary 1) to have confidence that the processes have been carried out as planned; 2) to demonstrate the conformity of products and services to their requirements.

Most of these data flaws were fixed during "data week" - a week in 2012 where the merchandising division was shut down and Target employees manually confirmed 3.75 MILLION data points in SAP.   But the company failed to address the root causes that had led to such a data meltdown - and soon found the data corrupted once again. Section 10.2 of ISO 9001:2015 states that "when a nonconformity occurs... the organization shall a) react to the nonconformity and take action to control and correct it, and deal with the consequences"  which it appears that Target did during data week.  But section 10.2 goes on to say they should also "evaluate the need for action to eliminate the case(s) of the nonconformity, in order that it does not recur or occur elsewhere... implemente any action needed and review the effectiveness of any corrective action taken".  If these steps had been taken, perhaps the gains made during data week would have been maintained.

 

Lastly, it seems that although everyone knew the operation was spiralling the drain, the leadership didn't want to acknowledge the depth and scope of the problems.  Management meetings became a rundown of crippling operational problems, but rather than addressing the issues, the president ended the meeting with a pep talk, reiterating how proud he was of the team and all they had accomplished.  One employee said "Nobody wanted to be the one person who stopped the Canadian venture.  It wound up just being a constant elephant in the room.".  While you can't fault Fisher for encouraging his team through what must have been an exhausting ordeal, it is also important to acknowledge operational realities and set objectives accordingly.   Section 5.1 of the ISO 9001:2015 states, in part, that top management shall demonstrate leadership and commitment .... by a) taking accountability for the effectiveness of the quality management system;...  g) ensuring that the quality management system achieves its intended results;...h) engaging, directing and supporting persons to contribute to the effectiveness of the quality management system...and i) promoting improvement.

 

While energy, smarts and a good work ethic will get you a long way, it clearly was not enough to tame the ornery, unforgiving beast that is SAP.  All 133 Canadian Target stores closed their doors by April 2015.   Careful selection and training of employees (including management), good data management, sustaining operational improvements and good leadership are just four elements of ISO 9001 that could have saved Target.  Businesses launching into new markets would do well to understand Target's mistakes and try to learn from them.  

 

 

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Sara Haynes

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