Department store Target has revealed plans for a supply chain facelift estimated to cost the company up to $40 million
Department store Target has released details of a supply chain facelift estimated to cost the company up to $40 million.
At Wesfarmers’ strategy day in Sydney yesterday, Target Managing Director Dene Rogers announced the company would spend $30-40 million reengineering its supply chain.
“This is a big deal for us,” Rogers says
“Being in fashion, competing on style and on trend, we need to be able to stay on style and on trend as we move to direct import.”
“Right now, our current capabilities would constrain us, in that we would have to buy 100 percent of our season’s needs up front and then pretty much flow it to the stores all at once.”
The restructure will include a new distribution hub in Indonesia for stock from Asia, and also three new distribution centres (DCs) in Australia in addition to the company’s Sydney DC.
“We will have consolidation capabilities in Asia to enable us to go to regional distribution centres,” Rogers says.
Rogers says the restructure will allow Target to design products ‘on trend’, manufacture them, and have them available for sale within the season.
“We are looking to move from a push replenishment system to a pull replenishment system,” Rogers says.
“Right now we can only replenish about 18 percent of our SKUs (stock keeping units).”
“So if we have a very good two weeks in sales in a particular category, then we will be out of stock as a consequence.”
“As we move to direct import the lead times extend to six or so months – that will put a lot of pressure on us in terms of our in stock capabilities and not disappointing customers.”
Dene says the current lead time from the Victorian DC to Western Australia is about two to three weeks.