Target penalises suppliers for delivery mistakes – but at what cost?

© Nisarg Lakhmani

As of yesterday, US retailer Target is penalising suppliers for delivery mistakes. Target has had several supply chain problems and its latest initiative imposes harsh financial penalties – of up to of up to $10,000 for inaccuracies in product information or delays. There will be no ‘grace period’. While this new plan was announced a few weeks ago, this article questions whether bullying suppliers is really the right answer to ensuring a better supply chain. As some suppliers say they will simply put up prices, the writer notes that while the ‘stick’ approach works well in the short term, in the longer-term collaboration is more effective.