Target Tests Retail 'Flow Center' for Faster, Nimbler DistributionSource: Smith, Jennifer. "Target Tests Retail 'Flow Center' for Faster, Nimbler Distribution." https://www.wsj.com/articles/target-tests-retail-flow-center-for-faster-nimbler-distribution-1526299200?mod=djemlogistics_h, posted

5/14/2018.

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.Part 2Under 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.Part 3Target 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.Part 4Target 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."Part 5Critical Thinking Questions1. Target is seeking a new distribution system because

A.

it needs to speed up restocking.

B.

it wants to reduce inventory in stores.

C.

competition from Amazon and Walmart is intense.

D.

All of the above.

Part 62. Target's existing supply chain

A.

is working ideally.

B.

has a replenishment cycle in days.

C.

refills orders in hours.

D.

uses the same pool of inventory to refill stores and fill online orders.

Part 73. Using a "flow center" approach, Target

A.

ships to stores more frequently.

B.

does not ship big cases of products to stores.

C.

sends shipments to stores in smaller lots.

D.

All of the above.

Part 84. Target has expanded the use of stores to fill online orders because

A.

shipping from stores reduces costs.

B.

very little online sales come through stores anyways.

C.

"flow centers" increased back room inventory.

D.

it invested $7 billion to help workers in stores pack the orders.