Supply chain

A big US retailer upends its digital supply chain

How business-to-consumer or B2C ecommerce sites operate have a direct correlation on how business digital commerce and supply chains perform.

A true case in point is Target Corp., one of the biggest US mass merchant chain retailers. Target is spending $100 million to open new distribution centers and speed up its supply chain.

“We plan to invest $100 million to expand our flexible, best-in-class supply chain sortation network to more than 15 facilities by the end of 2026, bringing our next-day delivery capabilities to guests across major U.S. markets,” says Target chief global supply chain and logistics officer Gretchen McCarthy.

Target expects to sort and deliver 50 million packages in 2023, double the number from 2022.

As online sales grew, however, Target’s backrooms became crowded with packages. Target began testing sortation centers, a facility where packages arrive from about 30 to 40 nearby stores, get grouped into more efficient delivery routes and get picked up by a third-party carrier or a vehicle of a contract worker for Shipt, a third-party delivery company that Target owns. It opened the first one in 2020 in Minneapolis.

It has opened sortation centers across major markets in Minnesota, Texas, Colorado, Illinois, Georgia, and Pennsylvania. Last month, it opened them in the Chicago and Denver area.

By switching to the model, Target has cleared space in its backrooms and freed up time for store employees to help customers, McCarthy said. She declined to specify the savings that come from each hub but said since the sortation centers have opened the company has saved “tens of millions of dollars in last-mile expense.”

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