This article focuses on the expansion plans that the famous convenience store, Target, plans to make as a result of the changes in supply chain and logistics around the world. Their new strategy is part of an aggressive plan to spend more capital on their warehouse networks' operations. After seeing the demand swings post pandemic and adjusting for supply chain issues, this increase in spending will help to fulfill both e-commerce and in person demand. The analysis phase of the DMAIC six sigma phases is so important here because this is a decision that comes from what their recent data and analytics is showing them. Sales are increasing significantly so Target is planning on getting ahead of the problems they previously encountered while simultaneously preparing to compete with stiff competition.

 

In relation to analytics, this demand comes from a increase of nearly 40% in sales over the last 2 years. E-commerce sales have slightly receded from the pandemic highs but the demand for products remains high in Target stores around the nation. Since capital is now allocated for the warehouse network, this means products need to marketed and available to the prospective customers. Without being able to get the products to customers, the capital allocation to increasing warehouse space and operations will end up being a major misallocation of capital. For Target it is important to recognize that one of their most significant competitors , Walmart, has seen 1% increases in e-commerce sales year over year. Target recognizes this since Walmart is arguably the largest e-commerce distributor, next to Amazon. With nearly 2,000 stores and 49 distribution centers across the United States, the analytics that monitor the progress of distribution need to be monitored heavily. If not, the funding allocated to warehouse networks will be misaligned with projections and customer demand.

 

As supply chain availability around the globe continues to fluctuate, I think its a very smart move for Target to force this expansion. Part of the reason I think this is a great idea is because they are using the data of what they know and expect from current trends to anticipate obstacles in their future sales. I really think the influx of expected demand will be coupled with a plan to outbid their high level of competition. Preparing for future growth is an idea that comes from believing in the information at hand and having the analytics to back it up.

Questions are:

1. What do you think is a smart adjustment for e-commerce companies since supply chain issue don't appear to be getting better?

2. Do you think Target allocating their capital to improving the warehouse network is a premature move or one that is proactive?

3. During this analysis phase, what might be something Target and other major e-commerce companies are overlooking?

Answer rating: 100% (QA)

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