Target hires supply chain help from Amazon

Discussion
Mar 02, 2016
George Anderson

It’s no secret that Target has a supply problem. The company admitted as much when announcing on Monday the hiring of Arthur Valdez, an Amazon.com executive, to run Target’s supply chain, including distribution, planning and transportation.

Mr. Valdez, who most recently served as Amazon’s vice president of operations, overseeing its international supply chain, was with the e-tail giant for 16 years. He has also held positions with Walmart and Kmart during his 20-year career in retailing. He will officially join Target on March 28.

“While we’ve made significant progress in improving our operations, Target’s growth hinges on our ability to enhance the fundamental aspects of our business, starting with the supply chain,” said John Mulligan, executive vice president and chief operating officer at Target, in a statement. “Arthur’s leadership and experience will be a tremendous asset as we continue to drive improvements in end-to-end processes including leveraging our almost 1,800 stores to deliver a seamless experience for our guests.”

Target saw its online sales jump more than 30 percent in the fourth quarter after it announced free shipping on all orders regardless of size.

Arthur Valdez

DISCUSSION QUESTIONS: Where do you expect Mr. Valdez will concentrate his efforts when he joins Target next month? If you were with Target, what would you most hope to learn from his experiences at Amazon?

Braintrust
"Target has had supply chain issues for many years, based on its seeming inability to keep its shelves and pegs full. If I were Mr. Valdez, this is the first issue I would tackle as a sales and reputational problem for Target."
"I say this with all due respect to supply chain practitioners. The objective is to get the assortment right and get the products to the right stores. These are my thoughts for today. I hope he surprises me!"

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9 Comments on "Target hires supply chain help from Amazon"


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Dick Seesel
Guest
1 year 10 months ago

Omnichannel initiatives (like BOPIS) and the growth of e-commerce have made effective supply chain management more challenging. And nobody has mastered this aspect of the business like Amazon — with the caveat that they are not experts in brick-and-mortar logistics. Target has had supply chain issues for many years in its physical stores, based on its seeming inability to keep its shelves and pegs full. If I were Mr. Valdez, this is the first issue I would tackle as a sales and reputational problem for Target.

Paula Rosenblum
Guest
1 year 10 months ago

I see this as a two-sided problem. 1. The need for speed, and; 2. The ability to balance inventory in stores.

He knows a lot about the speed side. But I always worry about applying supply chain minds to what is fundamentally a merchandising problem: distribution. I say this with all due respect to supply chain practitioners. The objective is to get the assortment right and get the products to the right stores.

These are my thoughts for today. I hope he surprises me!

W. Frank Dell II
Guest
1 year 10 months ago

Step one would be to have as much supply chain visibility as possible. Step two would be to reduce the time cycle of every component in the supply chain. Step three would be to move from forecast to a demand-driven supply chain. When you sell one you order one. Step four is to reduce costs.

Richard J. George, Ph.D.
Guest
1 year 10 months ago

I believe he will go after the low-hanging fruit, namely, how to get products to the final mile both efficiently and effectively. Relationships with third-party carriers, UPS and FedEx will certainly be an early priority as well.

Two things Target would like to learn from his Amazon experiences: 1. the mechanics and economics of Amazon Prime; 2. the costs, benefits and operations of warehouses capable of delivery same-day or next-day.

Kenneth Leung
Guest
1 year 10 months ago

Does anyone remember that when Amazon.com first started they hired retail veterans from Walmart to help them understand retail operations and profitability? The circle now goes around with Target hiring expertise from Amazon on logistics and supply chain. The key with the hire I think is to instill the culture of integrating best-of-class logistics on customer delivery which is Amazon’s competitive advantage in the omnichannel world. For Target to win in the long run, they need to be better in stock availability and better on home delivery. The Amazon hire gives them an opportunity for the latter.

Herb Sorensen
Guest
1 year 10 months ago

There is a fundamental reason that click-and-collect (BOPIS) is stumbling around the world. Walmart in the van, brick-and-mortar retailers have built super efficiency into delivering PALLETS OF MERCHANDISE to stores where unpaid stock-pickers, aka shoppers, complete the final mile of delivery.

Amazon, on he other hand, has a global supply chain, heavily automated, to deliver SINGLE ITEMS to single shoppers, increasingly anywhere in the world.

Adding click-and-collect to an existing brick-and-mortar retailer is staggeringly complex. Especially if anything like the historical efficiency of “Walmart” is to remain relevant — NOT! It’s a whole new world of items; not pallets.

I’m thinking the Amazon/Morrisons partnership, in an environment already conducive to click-and-collect, is the most promising. And even if it is effective for a few thousands of SKUs, there will be a serious challenge to incorporating “The Everything Store” into the brick-and-mortar world.

It’s time to stop cheering thin, superficial results papering over underlying disaster. We don’t need another “smartphone shopping” fad.

Kai Clarke
Guest
1 year 10 months ago

Target should start focusing on better inventory control, JIT fulfillment, enhanced customer service and delivery and fewer out-of-stocks. Target should already have a LEAN relationship managed throughout their organization, and it seems this is not clear.

Robert DiPietro
Guest
1 year 10 months ago

Target will most likely want to know how to handle e-commerce logistics and balance that with a brick-and-mortar footprint. The interesting thing to see is whether the number of brick-and-mortar stores helps or hurts in e-commerce delivery. Can you use a store as a mini warehouse and cut delivery costs for online orders?

The other thing will be Amazon Prime and economics — whether that model is better than free shipping on orders over a certain dollar amount. I’m sure a few other retailers will be looking to hire some logistics talent as well as it has been mentioned as a reason for lost sales.

vic gallese
Guest
1 year 10 months ago

I hope for Target’s sake that Mr. Valdez focuses on the brick-and-mortar portion of their business first. There are major issues and opportunities on the supply chain side for the stores, so Mr. Valdez may have to lean more on his Walmart experience than Amazon.
Wish him the best. Love my Target.

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Braintrust
"Target has had supply chain issues for many years, based on its seeming inability to keep its shelves and pegs full. If I were Mr. Valdez, this is the first issue I would tackle as a sales and reputational problem for Target."
"I say this with all due respect to supply chain practitioners. The objective is to get the assortment right and get the products to the right stores. These are my thoughts for today. I hope he surprises me!"

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