Target Cracks Down On Vendors [Video]

Reuters has learned that the discount retailer is tightening its supply chain so it can keep its shelves full and not miss out on sales. Fred Katayama reports.

Video transcription:

You may soon find the shelves better stocked at Target in the U.S. Reuters has learned that the discount retailer is cracking down on its suppliers. A letter to suppliers obtained by Reuters saysTarget is tightening deadlines for delivering goods to its warehouses. It's boosting fines for late shipments. And it could escalate penalties for inaccurate product information. Target's target: keeping shelves full so it doesn't miss out on sales.

It's part of Target's multibillion dollar overhaul to speed up its supply chain so it can better compete with Wal-Mart and Amazon. Wal-Mart is also taking similar steps. Target's supply chain became more complex over the years after it expanded its grocery lineup and began catering to online shoppers. That made it harder to keep items in stock in stores at levels shoppers expected.

Experts say the overhaul will mean Target can hold less inventory. Kantar Retail principal analyst Amy Koo said, "In theory, everything can move faster, and they will have less stuff in the system."

The letter says Target will roll out the changes over the summer. Next on its list for improvement: its international supply chain.