Target exec talks transformation on day 2 of CSCMP EDGE 2020
Arthur Valdez Jr., executive vice president and chief supply chain and logistics officer for Target, discusses the retailer’s evolution from traditional to omnichannel business, focusing on authenticity, engagement, and problem solving.
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
Day 2 of the Council of Supply Chain Management Professionals’ (CSCMP) EDGE 2020 conference opened with a one-on-one talk with Target executive Arthur Valdez Jr., covering the retailer’s transformation from a brick-and-mortar company with an e-commerce side business into a fully integrated omnichannel business leader.
CSCMP President and CEO Rick Blasgen interviewed Valdez about Target’s efforts to transform local stores into fulfillment hubs designed to serve customers no matter how they want to purchase from Target, as well as the corporation’s focus on authenticity, engagement, and problem-solving, especially during the coronavirus pandemic. The wide-ranging interview also touched on Valdez’ background as the son of Mexican-American and Cuban parents and the first in his family to attend college, and how that experience continues to shape the way he approaches his work at Target and beyond. Valdez said he and his wife sponsor a scholarship for minority students at his alma mater, Colorado State University, and he described diversity and inclusion as one of his passions.
“My Hispanic Latinx roots are very important to me,” Valdez told Blasgen, emphasizing the value of inclusion programs within Target and in the broader business community. “Helping mentor others around [those issues] is important [as well].”
The half hour interview tied those themes to broader issues of supply chain transformation, transition, the “guest experience,” and the opportunities available to supply chain professionals as a result of a newfound focus on and appreciation of the discipline.
Valdez said Target team members have worked hard to transform the company and to keep it running successfully during the pandemic. He praised both the company’s in-person and remote team members and cited Target’s focus on authenticity and engagement as guiding principles during the shift. He said Target transformed from a traditional to a fully integrated omnichannel retail format by focusing on four key areas:
Inventory management—effectively, figuring out how to manage with one inventory for multiple buying experiences.
Transportation—particularly, focusing on the speed of its logistics operations.
Automation and robotics.
And operational excellence.
He also talked about the need to focus on employee health and well-being during the pandemic, likening the experience to managing people during the 9/11 tragedy in 2001. Staying in contact with team members and making sure they “were okay” was job one, he explained. He also cited three lessons he learned during 9/11 that serve as guiding principles for managing supply chains now:
Control the situation, don’t let the situation control you.
Go as far upstream as you can to manage the business, looking for signals that may create supply chain problems.
Don’t relax your standards; he cautioned that supply chain operations must execute to the same or higher standards during times of crisis to keep things running smoothly.
Those issues tie directly to Target’s focus on the “guest experience.” Valdez put it this way: “We work from the guest backwards,” again emphasizing the retailer’s shift to using stores as a hub for the local experience, where customers can shop in person, via curbside pickup, or home delivery.
The interview ended with a nod toward the growing importance of the supply chain profession and a look at the opportunities ahead for industry professionals. The pandemic is shining a light on the vital role logistics and the supply chain play in daily life, Valdez said, and he predicted a greater need for supply chain skills at the highest corporate levels going forward.
“Many more CEOs will come from supply chain [and] logistics backgrounds,” he said, adding that professionals from across the discipline will “continue to rise to the top.”
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.