Target has made a bold move to refashion its supply chain in the era of matrix commerce with the hiring of Arthur Valdez, who spent 16 years at Amazon in top supply chain and logistics leadership roles, as the Wall Street Journal reports:
Valdez is joining Target amid top-down reviews of its supply chain and grocery operations. The discount chain is moving from a largely one-size-fits-all model toward one giving each of its 1,800 stores tailored layouts, product selections and ordering patterns. The approach is being stitched onto a distribution system designed before e-commerce demanded that stores also become local distribution centers and showrooms for online customers. Because of Target’s scale, other retailers will watch the results for suggestions of where to take their own supply chain strategies.
Analysis: Valdez Hiring Offers Many Possibilities
At Target, Valdez will hold the title of executive vice president, chief supply chain and logistics officer. In his most recent role at Amazon, Valdez oversaw Amazon's international supply chain expansion efforts.
The growth in online shopping and in-store product pickups has put a strain on Target's existing supply chain. It remains to be seen how much power Valdez has to transform those operations, there's certainly great potential in his hiring, says Constellation Research VP and principal analyst Guy-Frederic Courtin.
"You're taking someone who's got in-depth supply chain knowledge from what you could argue is the premier e-commerce leader and putting him into a classic brick-and-mortar play," Courtin says. "It opens up a whole new world of possibilities for Target."
In particular, "as places like Target and Wal-Mart start offering more fresh food and perishables, having someone with the knowledge of Mr. Valdez to manage that is going to be huge," Courtin adds. "It is not an easy problem to solve. Grocery stores themselves have a lot of issues with some of those things. If I ship you a crate of T-shirts, it's a lot different than a crate of strawberries."
Target's plans to shake up its store layouts and product mix also has potential makes a lot of sense, but the challenge will be to avoid making stores so individualized that the strategic advantages are outweighed by added costs, Courtin adds. Grocer Whole Foods is going in the other direction, with the intent to increase the amount of centralized planning and purchasing it does. Whole Foods had differentiated itself by giving local store managers ample amounts of control over purchasing. [See our full report here.]
Meanwhile, Valdez's hiring somewhat reflects a trend in recent years, which has seen retailers making strategic hires from across verticals in hopes of shaking things up and improving customer experience, Courtin notes. One prominent example of this was Apple's hiring of former Burberry CEO Angela Ahrendts to run its retail stores. "Savvy retailers understand the cross-pollination," Courtin says. "It all goes back to the importance of servicing the customer at a high level."
Reprints
Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.
