While the customer-facing e-Commerce site is vital to an omnichannel retailer’s success, it is supply chain and fulfillment optimization that serve as the backbone of smooth, efficient operations.
At the Manhattan Momentum conference in Orlando, Fla., Target fulfillment systems experts Elena Cowan, Director of Product Management, and Adam Wright, Senior Product Owner, discussed the retailer’s continued evolution on the back end as the customer-facing side adapted to an endless aisle offering.
In the case of Target, the big box discount chain has been working hard to revamp its fulfillment processes by:
Opening three new fulfillment centers in 2016;
Speeding up wave picking performance times, from 90 minutes to 15 minutes;
Accommodating more than 140,000 pick locations within its Tucson, Ariz. fulfillment center;
Building out “war rooms” to bolster communications between warehouse employees and headquarters; and
Having its most successful peak 2015 holiday season from an operational standpoint.
Increasing SKU Volumes Drives Creation Of “Bin City”
As the endless aisle concept began to gain traction among consumers, product demand — and therefore the number of SKUs being managed — increased, especially when it came to apparel and beauty products. To accommodate the increase in SKUs, Target had to increase the number of picking locations within the Tucson warehouse, physically building a “bin city” that served as a backfill for additional volume through the peak season. The bin city was initially built to store an extra 30,000 SKUs.
“With more than 140,000 active locations, we have more than double what we initially anticipated,” Wright said during the presentation. “Overall outbound volume is remaining very similar. To give this a concept of scale, we’re getting the same outbound throughput, but now we’re doing it with twice as many SKUs.”
War Rooms Improve Internal Communications
In 2014, Target built out two “war rooms,” one in its Tucson fulfillment center — staffed by internal IT members and Manhattan Associates support resource team members — and one in its Minneapolis headquarters. With the war rooms established, Target could foster direct communication between onsite and headquarters support teams.
“We’d have a pretty major issue that happened out on the floor,” said Wright. “Within three minutes, our onsite war room in Tucson was being notified of the problem. A team member identifies the supervisor, and the supervisor notifies us directly via radio. We follow through our standard process to have a help desk that manages the call, and for almost every issue, we had support resources at HQ working on triage immediately, before any more problems occurred.”
Wright attributed this interconnected lineup — consisting of support resources, IT resources and operational teams — to the retailer’s successful 2014 holiday season. Target’s ability to address issues in a timely manner was critical: “Even if we had as little as a one-hour resolution time on all of those items, we would not have gotten through the peak season in the way that we did.”
Warehouse Management Technology Hastens Holiday Prep
To prepare for the following year’s peak season, the Target team upgraded to the Manhattan Warehouse Management for Open Systems (WMOS) 2013 platform. Designed to handle high-volume pallet movements, the solution could streamline inventory receiving processes with cross-docking, quality audit and vendor performance, and leverage advanced fulfillment logic for constraint-based selection and real-time replenishment.
While onboarding the WMOS 2013 platform, Target’s operations team went through a process freeze as well as a technology freeze, giving them an opportunity to get up to speed within six to eight weeks on any warehousing changes taking place during peak season preparations.
With the new process in place, the retailer began its holiday season preparations in June 2015, and had every item ready by October.
“That helped us in being able to set the foundation that if new items came up, we had resources to handle it, as opposed to resources focusing on the things we’ve known for months have needed to be taken care of,” Wright stated.