Listen: Target Testing New Distribution ‘Flow Center’

Target is testing the old adage that “Sometimes less is more”, with a new distribution model. The retailer is examining a project called a “flow center”. This small-format, quick-response pilot program is being cultivated in the Perth Amboy, N.J. warehouse.

The main goal for this project is to shorten the in-store replenishment cycle from days down to hours. These flow centers, will also use a shared inventory to refill stores, as well as fulfill online orders.

This program will also debut a new inventory management system, which will integrate both the in-store distribution and online fulfillment databases, which currently use separate systems, even when they are in the same building.

The ultimate goal would be to provide stores with a precise amount of product that can be immediately placed on the sales floor, thereby reducing backroom surplus, while increasing the retailer’s flexibility to fulfill online orders directly from their physical stores.

In an increasing trend, Target filled over 70% of its online orders directly from its brick and mortar locations in 2017.