Target builds digital-twin platform to improve inventory availability

Proxima uses the same data and logic as Target’s live inventory platform to test how decisions could play out before applying them in practice, the company said. Target said this helps teams improve product availability for guests, reduce potential disruptions across the supply chain and test and modernize complex supply chain processes with more certainty.

Target is following the lead of other retailers such as Walmart and Lowe’s who have previously used digital twins — digital replicas of stores, warehouses or even products — to predict issues, to build out new spaces or even as a marketing tool on their e-commerce platforms, Modern Retail previously reported.

It’s the latest in many moves Target has made in hopes of improving inventory availability over the past year, including hiring a new supply chain leader, opening an experimental new supply chain facility, and reevaluating which stores it uses to fulfill online orders in place of distribution centers.

“Proxima creates faster feedback loops and helps us see around corners so we can modernize complex supply chain processes with confidence while continuing to deliver for guests,” Sousan Ortega, svp of field replenishment, supply chain for Target said in a statement.

The company decided to develop a system in house after finding that a lot of vendors didn’t have the ability to support the company’s breadth of categories, Jake Krings, vp of technology, global supply chain and logistics for Target, told Chain Store Age. He said the company also needed to understand how the new receive center would affect inventory flows.

“We have patterns in place and an architecture in place that allows us to rapidly scale up capabilities like this, and so it allowed us to iterate, test a simulation, see how accurate it was, and ultimately realize that this has been a real unlock for Target, which we have continued to scale for different activations,” Krings said.

Through one small-scale pilot of the platform with 63 fresh food items, Target was able to improve on-shelf availability by 2.5% by simulating changes to inventory flow and correct issues before launch, according to the web post.

Proxima also helped Target launch its new “receive center” in Houston by emulating how inventory would move in and out of the building. As Modern Retail previously reported, the receive center focuses on storing seasonal, bulky or hard-to-forecast items and is a test to understand how such facilities could work for Target moving forward.

The new platform comes after CEO Michael Fiddelke said last fall that the company had been working with legacy technology that doesn’t meet today’s needs and that the company would make technology investments across its supply chain as well as stores, headquarters and digital operations.

Lisa Roath, evp and chief operating officer, said on the company’s first-quarter earnings call in May that it made significant progress on improving in-stocks during the quarter despite stronger sales than expected.

“We cannot deliver a great experience if the right product isn’t on the shelf, whenever, wherever and however our guests choose to shop with us,” Roath said. “Notably, top-item availability improved meaningfully year over year, and we’re moving with urgency to chase into the additional inventory we need, given our elevated top-line expectations for the balance of the year.”

Target said Proxima will generate insights that could also inform future AI capabilities, “helping our teams evaluate options, prioritize actions and automate operational responses.”

“At Target, we’re focusing on connecting signals, systems and decisions so our teams can move faster and solve increasingly complex problems,” said Siobhán McFeeny, svp of technology for Target, in a statement. “Proxima is a powerful example of that vision in action. The result is a more resilient operation and an even more reliable experience for guests.”