Target deserves credit for new sortation centres move
Target is planning to open four new sortation centres this autumn in the Houston, Dallas, Philadelphia and Lawrenceville, Georgia markets.
Removing the sortation process from the backroom and stores and moving it to a dedicated facility will help free up space and time within retail locations, it says.
The centres, which are powered by technology from Grand Junction and Deliv, will get deliveries from stores and sort them for delivery partners like Shipt.
Target isn’t receiving enough credit for this move, according to Brittain Ladd, a former Amazon exec and supply chain consultant.
It significantly reduces fulfilment and last mile delivery costs by removing the sortation of packages from the back rooms of stores, and moves the process to dedicated facilities, he says in a LinkedIn post.
Software will bundle outbound deliveries on the same vehicle wherever possible to maximise order density and also boost the available capacity in each delivery vehicle.
“A weakness of most last mile delivery programs is that they foolishly leverage a one to one ratio. One order is fulfilled and then immediately assigned to a delivery driver to make the delivery and return to pick up another order. One driver, One delivery,” Ladd writes.
“A better option is to consolidate orders to maximise density and capacity utilisation by leveraging a ‘1 to Many’ ratio. For example, as orders are fulfilled, software identifies orders located in close proximity of each other.”
“Orders are then bundled together and assigned to a driver that will maximise the space available in their vehicle to deliver as many packages as possible to many customers. This is the most efficient model.
Target has an edge when it comes to the actual delivery of its packages as it can leverage vehicles and drivers from Shipt.
“I anticipate that Shipt will become an integral part of the process and increase the size of Shipt and also their value to Target. (My concern is that Shipt’s executive team doesn’t know how to grow Shipt’s non-Target business. Shipt should be a $30B+ company by now, yet they’re not even close).”
He adds: “I anticipate that once Target perfects their sortation centre business model, they’ll sell fulfilment services to other retailers. I also anticipate that Target will launch ‘Target Fulfilment Services’ or something similar. Due to Target’s impeccable reputation, I’m confident that they’ll be successful.”
Ladd believes that Target should accelerate the use of micro-fulfilment centres inside its sortation centres as a way to bypass its stores.
For example, maintain lower inventory inside its stores of the top selling products ordered online and fulfilled at the store, and instead carry that inventory inside MFCs from AutoStore or another vendor like Attabotics, Addverb, Alert Innovation, Berkshire Grey, Exotec, or Geek+, where it will automatically be fulfilled, batched, and assigned to a Shipt driver.
Using MFCs along with additional automation like AMRs and AGVs, eliminates the majority of manual fulfilment processes, further reducing costs. The move would also accelerate Target’s ability to offer retailers and other companies, aka Micro-fulfilment as a Solution.
