Target has introduced a groundbreaking in-house digital twin technology, known as Proxima, to bolster its inventory management capabilities across stores. Announced by the company on Thursday, this virtual replica of Target’s inventory positioning system is designed to simulate product movement from regional distribution centres to retail outlets.
Utilising data and logic identical to Target’s live inventory systems, Proxima enables the retailer to experiment and evaluate potential impacts of inventory decisions before implementation. This innovation aims to enhance product availability, minimise supply chain disruptions, and refine complex processes within the supply chain with greater reliability.
This initiative follows a broader industry trend where companies like Walmart and Lowe’s have employed digital twins for strategic purposes such as predicting operational issues and facilitating e-commerce initiatives.
Target’s Efforts to Optimise Supply Chain
Over the past year, Target has taken several steps to improve inventory efficiency, including the appointment of a new supply chain leader, the establishment of a new experimental supply chain facility, and the optimisation of retail outlets used for fulfilling online orders instead of relying solely on distribution centres.
Sousan Ortega, Target’s Senior Vice President for Field Replenishment and Supply Chain, noted that Proxima creates accelerated feedback mechanisms, which help modernise intricate supply chain operations while maintaining delivery commitments to customers.
According to Jake Krings, Vice President of Technology for Target’s Global Supply Chain and Logistics, the decision to develop Proxima internally stemmed from the lack of vendor solutions capable of addressing Target’s diverse product categories. This new system also helps Target assess the impact of new receive centres on inventory flows.
Proxima’s Impact and Future Potential
A pilot programme using Proxima, involving 63 fresh food items, resulted in a 2.5% increase in on-shelf availability by simulating and addressing inventory flow changes prior to launch. Additionally, the technology supported the launch of a new receive centre in Houston by modelling inventory movement within the facility. This centre is tasked with handling seasonal, large-scale, or unpredictable items, serving as a live trial for similar operations in the future.
Target’s CEO, Michael Fiddelke, previously acknowledged the company’s dependency on outdated technology and declared plans to make significant technological investments throughout its supply chain and operational infrastructure.
On a recent earnings call, Lisa Roath, Executive Vice President and COO, reported substantial progress in maintaining stock levels, despite exceeding sales expectations. Proxima is set to further enhance these efforts by offering insights and potentially guiding AI capabilities to streamline operations and automate responses.
Siobhán McFeeny, Target’s Senior Vice President of Technology, emphasized the importance of integrating signals, systems, and decisions to enable quicker and more comprehensive problem-solving. Proxima exemplifies this strategic approach, reinforcing Target’s resilience and enhancing the customer experience.
Reporting based on coverage first published by modernretail.co.