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Target Aims for Better Inventory “Flow” With Pilot Delivery Center

As part of Target Corp.’s three-year, $7 billion investment in advancing its supply chain, the retailer has kicked off a pilot program at a warehouse in Perth Amboy, N.J.

Dubbed a “flow center,” the company sends shipments to its stores more frequently and in smaller lots to be more in sync with demand rather than bulk shipments on a scheduled basis, a Target spokesperson told Sourcing Journal. This confirmed information from a speech at last week’s Retail Supply Chain Summit by Preston Mosier, Target’s senior vice president of global supply chain and logistics field operations, and reported by the Wall Street Journal.

In announcing the overall commitment last year, CEO Brian Cornell said, “We’re investing in our business with a long-term view of years and decades, not months and quarters. We’re putting digital first and evolving our stores, digital channels and supply chain to work together as a smart network that delivers on everything guests love about Target.”

Mosier noted in his summit address that the purpose of the flow center is to shorten Target’s replenishment cycle to hours from days to reduce inventory at stores, especially at its new small-format stores and locations in denser urban areas.

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,” Mosier said, according the Journal. “Or it could mean sending similar items prepared to move directly to a pack station to later go out to a guest in the neighborhood.”

The Target spokesperson confirmed that the retailer is also creating a new warehouse management system meant to better integrate its distribution and fulfillment operations. Target has made a series of moves of late to speed up the order fulfillment process and integrate online and in-store sales.

On Tuesday, it said Target Restock, the retailer’s next-day delivery service of household essentials, is now available coast to coast and free for all Target REDcard purchases and $2.99 for all other orders.

Earlier this year, Target put free two-day shipping in place for hundreds of thousands of orders on Target.com, many of which are shipped from stores.