While other retailers shuttered brick-and-mortar stores in response to the growing e-commerce threat, Target took the opposite tack, building out a distribution network that places its stores front and center. That strategy paid off big time when the pandemic hit.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
The past two years have been both terrifying and exhilarating for retailers. They’ve experienced the lows of pandemic-induced shutdowns that kept customers away from stores as well as the highs of an exploding online marketplace.
Managing it all for Target is Arthur Valdez Jr. As executive vice president and chief supply chain and logistics officer, he oversees all aspects of Target’s global supply chain and logistics network, including inventory management, replenishment, fulfillment, global transportation, logistics, and distribution.
Valdez joined Target in 2016, bringing more than 25 years of retail supply chain and logistics experience to his new role. He previously served in senior leadership positions at Amazon and Walmart, and has spent much of his career building retail supply chain networks in North, South, and Central America as well as in Europe and Asia.
The son of Mexican-American and Cuban parents, Valdez was the first member of his family to attend college. A graduate of Colorado State University, he currently serves on the university’s Global Leadership Council as well as on the boards of directors for Advance Auto Parts and Shipt. He also volunteers his time to mentor other first-generation and minority college students, and assists women and minorities in developing their careers and progressing within Target. He recently spoke with DC Velocity’s David Maloney about the retailer’s innovative stores-as-hubs model and the future of automation and robotics in Target’s supply chain operations.
Q: You have many years of experience managing supply chains for retail companies. How has supply chain management changed during your time in the industry?
A: Supply chains—really, the logistics of supply chain—have evolved considerably over the last 30 years. Early on in my career, supply chains were decentralized; there were several disparate parts to the whole. In the 1990s, the practice of supply chain management was popularized. You saw companies streamlining the planning and logistics of their supply chain network. Ten years later, that evolution morphed into a focus on supply chain integration in service of speed—that is, getting the most out of the network by consolidating or integrating tasks to reduce the number of “touches.” And over the last decade or so, we’ve seen the practice of automating supply chains and the introduction of mechanization and robotics with a more holistic view of the end-to-end process. This most recent change has brought greater insight into inventory, both upstream in supply chain facilities and downstream to stores and digital. It’s this modern approach to supply chain logistics that feeds Target’s path forward.
At Target, our stores are at the center of what we do. We’ve invested in our stores as local shopping service hubs. Doing so has enabled us to fulfill a rapidly increasing number of digital orders by improving speed of inventory, adding throughput capacity, and lowering cost. And we’re building a precise supply chain to keep those stores well-stocked and ready for guests.
Q: You’ve worked for a number of leading retailers. How does Target’s supply chain compare with those other operations?
A: I’ve had the opportunity to work across the retail sector, and one thing that really stands out to me about Target is the balance of the investments in our people and innovation for an improved guest experience. The past two years have been great proof of that, as our investments in our team led to better innovation in service to our guests, which drove business growth on top of growth. Our team is the connection between solving for improved distribution processes and technology, which allows us to deliver safety, ease, reliability, and even joy during times of uncertainty.
In addition, we set ourselves apart through our stores-as-hubs model to sort and ship product, creating efficiencies across our supply chain and leveraging the talent of our team members.
Q: Target has experienced tremendous growth in online sales. How has that changed your distribution strategies?
A: During the pandemic and the growth of online shopping, we knew we were playing a crucial role in communities across the country, making sure our guests had what they needed to take care of themselves and their families. The investments we had made ahead of time helped us play an essential role in our communities where they were choosing to shop online, while putting in place the building blocks for continued growth in years to come.
To do so, we accelerated new capabilities in our supply chain that were needed to support the growing demand in our stores and enable Target’s growth for the weeks, months, and years ahead. From opening new supply chain facilities that could move inventory in new ways to scaling robotics sortation for more precise store replenishment to introducing sortation centers that give stores more capacity to fulfill online orders—we continue to prioritize the investments that will support our team and fuel Target’s growth.
Q: You mentioned that Target has begun using stores as local service hubs. Could you describe what you’re doing?
A: Target has spent years building and scaling capabilities that put our stores at the center of how we serve our guests, no matter how they choose to shop. Our stores are the heart of our business and play a critical role in inspiring our guests; powering fast, convenient in-store and digital shopping trips; and supporting and developing our incredible team.
The investments we’ve consistently made to put stores at the center of our operation have given us flexibility to deliver on our commitments to team members and guests, deepening trust in our brand and positioning us for future growth.
When 2020 arrived, our stores were already positioned as local shopping service hubs to meet guests’ needs quickly and at a lower cost, with the flexibility in our operations to ramp up to meet growing demand. Prior to that, we had made investments in our supply chain to support our stores-as-hubs model—from making store replenishment faster and more precise to building new capabilities so our facilities could serve guests in many ways.
Target’s continued investment in its stores-as-hubs model places our more than 1,900 stores at the center of how we serve guests, continuing to enhance the guest experience, including shipping online orders in store and offering same-day pickup and delivery, while providing an easy and safe in-store experience for our guests.
Q: Target has recently acquired several businesses, including Shipt, Grand Junction, and Deliv. How have these helped you meet your service commitments?
A: Today, the e-commerce race is focused on speed. And while that’s a crucial component of delivery, the future will be much more about precision with a focus on providing a customized, local experience and ultimately giving consumers even more choices and control over how they shop.
The investments we’ve made over the last few years have allowed us to integrate Target’s technology, facilities, and operational capabilities to be even more precise and efficient, allowing us to create a customer-centric experience that’s fast and helps fulfill orders closer to the guest and drive growth of our digital delivery.
Target acquired Shipt and Grand Junction in 2017 to bolster our fulfillment capabilities and provide quick and efficient same-day delivery to guests across the country. This accelerated the work we had done to improve our speed of delivery to allow guests to get products on their own terms. Our acquisition of Deliv’s technology in 2020 is another opportunity that focuses on last-mile delivery at Target, ensuring stores are kept at the center of our strategy and lowering shipping costs, all while delivering packages even quicker.
Our continued investments and innovation will drive growth and differentiation for years to come, including bold investments across the business of $4 billion annually.
Q: Can you talk about your new facility in New Jersey that fills both store replenishment and direct-to-consumer orders from the same pool of inventory?
A: Supply chain facilities like the one in Logan, New Jersey, were created to use one inventory for the use of however the guest needs it—whether we send it to a store or ship it right to a guest. Having the capability to do both allows Target to get orders to guests faster and keep our shelves stocked by delivering the right amount of merchandise to a store when it’s needed and in a way that makes it easy for our store teams to put it on the shelf.
Target’s aim is to replenish stores in hours and to maximize the inventory placed on the sales shelf, especially in new small-format stores and locations in denser urban areas. This approach also uses the same pool of inventory to replenish stores and fulfill online orders. These facilities send shipments to stores more frequently and in smaller lots tailored more precisely to demand rather than shipping big cases of products.
We’ll continue to invest in our stores, our supply chain, and our team members, which all fuel Target’s growth, to build the supply chain of the future.
Q: You’ve built four new sortation centers. How do they fit into your network?
A: Our sortation centers are just one part of our extensive global supply chain and logistics network that is fully mobilized to support our guests, no matter how they choose to shop.
With Target’s stores fulfilling the majority of guests’ online orders, sortation centers make this process even faster, retrieving packages frequently from stores and sorting, batching, and routing them for delivery to local neighborhoods.
By removing the sorting process from our backrooms, we save valuable time and space for our store teams to fulfill additional orders, and because our sortation center technology presorts and arranges packages for easy pickup, it reduces processing time for our delivery partners too.
Q: Labor can be tough to find these days. What do you do to attract and retain workers?
A: We care about and invest in team members and consistently hear from them that they’re attracted to Target because of our industry-leading pay and benefits, caring culture, and opportunities for ongoing career development. We’ve invested in pay and benefits that include a $15 starting wage, education assistance, bonuses, access to counseling services and doctors, and more-stable schedules.
Due to our longstanding investments in our team members and listening to their needs, we have been able to retain our team and confidently staff our supply chain facilities and stores during an unprecedented labor market. In fact, we’ve exceeded our goal to hire 30,000 new supply chain team members and 100,000 seasonal team members at our stores across the country. These investments have helped us evolve and pivot successfully over time, leading to higher guest satisfaction and greater efficiency, all of which help to fuel our continued business success, safety culture, and ability to flex to meet guest demand.
Q: What roles will automation and robotics play in the future of Target’s supply chain operations?
A: At Target, we’re focused on building capabilities that give our guests options for how they engage with us—whether it’s shopping in-store, online, or through drive-up order pickup. We’re committed to providing the easiest and safest shopping experience in the years to come.
To do so, we’ll continue to invest in many developments across our stores and supply chain that fuel Target’s growth. We’ve laid out more automation, robotics, and artificial intelligence throughout our supply chain to build a fast, efficient, and precise supply chain. Target is always exploring automated solutions upstream to support the work of our team. We invest in automation that helps sort and move millions of items quickly and precisely, so our teams deliver them to our stores and our guests where, when, and how they want.
We’ll continue building the supply chain of the future, while keeping our stores and our team members at the center of how we deliver a joyful shopping experience to our Target guests.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.