I could not disagree more. The way to compete with Amazon is to have as many distribution centers as possible in order to get merchandise to the buyer ASAP. Target's biggest asset is it's 2000+ stores around the country that can be converted into miniature DCs. Once inventory management is fixed via E2E and store's backrooms are emptied of replenishment product, they will be filled with SFS items. One store near me has already begun a remodel to increase its backroom size to help grow SFS. SFS is here to stay and must grow in order for Target to remain competitive.
That's not going to work and here is why:
Target does not have the number of products to offer as Amazon. Our market is primarily women, ages 20-40, attended college to earning a degree, either contemplating having a family or have a family. This would have to change.
Amazon benefits greatly from one stop shopping. We can't do that given the market we've chosen serve. Pull up Amazon, Walmart, and Target and start picking items at random. We just don't carry the same things as the other two. Or even worse, what I ran into recently, not being able to pull things up without an extended search. I ran into this looking for a computer router of all things. No problem with the other two, but not with Target.com.
While we do have a competitive edge with the numbers of store locations, these are retail locations not DC's. This does not translate into prime locations for mini DC's given their size and proximity to one another either. Would you add various products to each store location as capacity permits?
This could get expensive as each store would bear additional burden of having to receive inconsistent freight shipments vs one DC that is staffed to receive freight all day long. Your minimal on hand level would have to cover the time it would take to receive the next shipment. This could be a problem depending on the size and turn around time of the product.
With each mini DC, you loose economies of scale which translates in to increased cost. Like I posted, I can see tactical stores added, but insignificant as it relates company wide.
Our biggest problem at the moment is replenishment. Every time an article is published about Target, without fail, you'll find posts about empty shelves and low quantities. E2E offers no answers in how they plan on keeping the supply chain full. It only deals with how we are going to change moving product from the DC to the Stores. It does not address the root cause of the shortages.
I suspect our deficiencies are a result of poor forecasting, turn around times (TAT), and minimal inventory levels set to low. Not once has there been any mention of correcting the inventory replenishment system so that shortages will be a thing of the past. That problem is not going anywhere until we we change the buying/inventory management process first. We have a system that is not being utilized. Correct it and a lot of problems will literally disappear overnight.
The only thing I can say about E2E is that we will be receiving pieces instead of case pack quantities. Imagine a truck full of repacks when the DC is running low on product to ship. That'll be fun.
E2E is not an inventory system. It's a process of handling merchandise. We moved the truck unload from receiving to the sales floor. Not only are we doing that, we're increasing the number of team members needed to carry this out by stretching the process out to an all day multi task function.
Like I mentioned, each time we touch merchandise, it drives up the cost of goods sold and drives down margin. SFS will eventually move out of the stores back into the DC's. The only time is should be utilized is when we can't effectively ship out of the DC's.