Target is testing a new distribution strategy aimed at speeding up its restocking and making the…
Target is testing a new distribution strategy aimed at speeding up its restocking and making the retailer more nimble as it competes with rivals like Amazon and? Walmart. The aim is to pare?Target’s replenishment cycle from days to hours and reduce inventory at stores. The? approach, now in pilot mode at a warehouse in? N.J., also uses the same pool of inventory to replenish stores and fulfill online? orders, a departure from?Target’s existing supply chain.
Under the? operation, through a? “flow center,” the company sends shipments to stores more frequently and in smaller lots tailored more precisely to demand rather than shipping big cases of products. That could mean shipping? “five bottles of? shampoo, a case of? ketchup, two polo shirts on hangers and a pallet of?water, all prepared to move out directly to the sales? floor,” said the Supply Chain VP.
Target is also creating a new warehouse management system intended to better integrate its distribution and fulfillment?operations, which now use separate systems. The logistics effort comes as Target is investing? $7 billion in improvements as it adjusts to the changing consumer shopping patterns that have buffeted the retail world. The explosive growth of? e-commerce has put a premium on rapid delivery to online buyers and pressured traditional retailers to make better use of their? “big box” real estate.
Target has been expanding its use of stores to fulfill online?orders, and nearly? 70% of its online volume is handled by stores. With less inventory held at? stores, “we can dedicate more room to digital fulfillment. Shipping more orders from our stores reduces our? costs, while allowing us to move? faster,” said the COO. Stores supported by the flow center have reduced? back-room inventories? “to a fraction of the? norm.”
Q.) Target’s existing supply chain
A. has a replenishment cycle in days.
B. refills orders in hours.
C. is working ideally.