Target eyes new logistics needs
Logistics professionals at Target Stores are studying ways to support the company's plans to expand the perishable food side of its business, as well as enter the Hawaii and Alaska markets, said Steve Carter, director of transportation planning.
Food sales are a key part of Target's growth strategy and the company is evaluating how best to take more direct control of sourcing and reduce the number of wholesalers used, he said in Atlanta during the Transcomp conference and expo jointly held by the National Industrial Transportation League, Intermodal Association of North America and the Transportation Intermediaries Association.
The nation's second-largest retailer relies on a network of wholesale food distributors because it doesn't have any temperature-controlled distribution centers.
Selection of refrigerated carriers and cold storage facilities are among the decisions Target must make to take some cold chain logistics in-house, Carter said. But the company already contracts with carriers that its distributors are required to use for deliveries.
Target is interested in using 53-foot multi-temperature trailers to start, but is considering all options, including refrigerated less-than-truckload, and reefer pup trailers, Carter added.
A pup trailer is shorter and can be hauled as part of a trailer tandem by a single tractor that can drop separate loads at store sites.
'The question is, when we get into the refrigerated world we have to look at whether the carrier provides the trailers or we get them,' he said.
Target owns most of the branded trailers that carry its dry merchandise and contracts with trucking fleets for dedicated tractors to haul them to its stores.
The Minneapolis-based company is expanding its perishables presence as a way to drive more frequent customer visits and to offer more convenience, Carter explained.
Studies show that people who buy food like milk and bread come into stores more often.
Rival Wal-Mart has placed great emphasis on food in its stores and warehouse clubs, and operates some cold storage facilities.
Target is scheduled to open its first two stores in Alaska next year and will open a store in Hawaii in 2009, giving Target its first challenge dealing with long lead-time logistics at the store level, Carter said.
Merchandise will likely move through Target's domestic network, meaning imports from Asia and elsewhere will be shipped to the U.S. mainland and then repacked in separate containers for ocean moves to the two states, he said.
The Target.com operation also plans in 2009 to build in the Tucson-Phoenix area its second fulfillment center, although no decision has been finalized, he added. The online store operates a distribution center in Woodbury, Minn.
Carter's job was created about a year ago as part of a five-year Target plan to take a longer-term view of its transportation and logistics needs, and he moved over from the food division in March to help with the strategic planning. ' Eric Kulisch