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Global Logistics Focus Sept.19, 2016

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2016 GLOBAL LOGISTICS FOCUS SPECIAL REPORT THE JOURNAL OF COMMERCE 22A THE JOURNAL OF COMMERCE SEPTEMBER 19.2016 Census Bureau data released on Aug. 12. Bloated inventories actually may make it more difficult for retailers to get the right products to the customers, with older, less-in-demand products taking up valu- able supply-chain space. "By cleaning up our store back rooms, leveraging tech- nology and changing certain processes, we're improving product availability," said Brett Biggs, Wal-Mart's executive vice president and chief financial officer. As Wal-Mart sweeps out those back rooms, however, it's also adding new stock-keeping units to store shelves and its e-commerce basket. Wa l-Ma r t 's e- com merce sa les increased 11.8 percent year-over-year in the quarter, while net sales in the US increased 3.1 percent to $76.2 billion. Order online, pickup in store grocery business contributed to the increase. "We added grocery pickup to 30 more markets this quarter bringing our total to more than 60 markets and nearly 400 locations," McMillon said. "We are growing our marketplace offering at a strong pace. Since the beginning of the year, we've added about 7 million new items to the assortment and today offer approximately 15 million SKUs." Wal-Mart on Aug. 8 made its big- gest bid for online business by agreeing to acquire e-commerce startup for $3 billion in cash and $300 million in stock. "Operating and will allow us to reach even more customers and drive a higher level of growth more quickly," McMillon said. makes it easier for customers to build a basket of goods, he noted. "When customers build a basket of goods online rather than ordering one item at a time, shipping economics are in their favor and ours," McMillon said., only a year old, already offers 12 million SKUs, and an average of 25,000 orders processed daily, Wal-Mart noted. The company's technology was a key pur- chasing point, however. If the acquisition gets regulatory approval, Wal-Mart will operate and sepa- rately but leverage technology from both to keep customers clicking on their bas- kets and keep goods moving. JOC Contact William B. Cassidy at and follow him on Twitter: @wbcassidy _joc. TARGETING A TIGHTER INBOUND SUPPLY CHAIN US RETAILER TARGET is taking aim at so-called stock-outs, those dreaded moments when a toy, clothing or elec- tronics a customer wants isn't on the shelf, by tightening its inbound distribu- tion schedule. Reducing variability in its distribution centers, especially when scheduling deliveries, is a key step toward reducing stock-outs, company executives told Wall Street analysts recently. "An unacceptable number of vendor shipments were received by our DCs either too early or too late," John Mulligan, chief operating officer of the Minneapolis- based company, said in an earnings confer- ence call transcribed by Seeking Alpha. "We have been collabo- rating with our vendors to increase the percent of shipments that arrive on the correct date and we have already seen meaningful progress." That means working closely with transportation companies and suppli- ers to propel goods through DCs more quickly. Also critical: resolving bottle- necks at warehouses to speed goods inland. Target is the second-largest US importer of containerized freight, import- ing 537,000 20-foot-equivalent container units in 2015, according to The Journal of Commerce's ranking of Top 100 U.S. Importers. "We have made changes to the priori- tization of inbound processing, which have already cut the time to unload trailers by more than 50 percent, and we believe we can cut that time even further," Mulligan said. "We have improved process flow between our import warehouses and our regional DCs," cutting the time needed to get goods to store shelves by more than half. Mulligan and other executives on the call didn't say how big a problems stock- outs are for Target, but retailers in general are struggling with inbound supply issues as e-commerce rapidly transforms their businesses. A 2015 survey by GT Nexus found 75 percent of shoppers had expe- rienced an "out-of-stock" moment at a store in the preceding 12 months. Out-of-stock no longer only means "off-the-shelf." Stock-outs occur online, too, and with almost as much frequency, the GT Nexus survey found. Sixty-three percent of its survey respondents had suf- fered an "out-of-stock" experience online. Making improvements while the market is soft — Target's comparable sales declined 1.1 percent in the second quarter — will put the company in a better position when retail heats up this fall. In addition to working on its inbound supply chain, Target is building out its fulfillment services, offering in-store pickup for online shoppers and more home deliver- ies from stores. In-store pickups have increased 50 percent in 2016, on top of a 60 percent increase in 2015, Mulligan said. Ninety percent of those pickup orders are ready in one hour. "We have implemented process improvements to reduce wait times in stores," Mulligan said. That also requires more stock-keeping units on hand and faster delivery from DCs to stores. More space also is needed. "To pre- pare for this holiday season surge, we are investing to ensure our stores can con- tinue to deliver a great pickup experience in the face of rapidly increasing demand," Mulligan said. "In 75 of our highest vol- ume stores, we are increasing holding capacity to allow our team to retrieve items more quickly" during peak times. "We are rolling out new guidance on how our stores can optimize their storage space to enhance speed and efficiency," he said. "I am also energized by the opportuni- ties still ahead of us to further increase the speed, flexibility and reliability of our supply chain to drive unnecessary workload out of our stores." — William B. Cassidy

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