At 10:30 am on a recent morning, a few dozen cars pulled into the garage of the Target sorting center in northeastern Minneapolis and a countdown began.
The drivers scanned, then waited for the boxes to be transported to each vehicle. With the clock ticking for 30 minutes, some drivers lay down on the floor to arrange the boxes, then stuffed them into trunks and seats. The scene repeats more than a dozen times a day as Target tries to fulfill orders faster and cheaper.
“If you are closer to the guest, you reduce shipping costs,” said John Mulligan, chief operating officer at Target, in an interview. “And now we’re taking it to its next evolution and this is the sorting center where we can sort on a more granular level.”
For years, Target has relied on workers in its 1,900 stores to fulfill the orders it receives on its website and apps. But in October 2020, after digital orders soared at the height of the pandemic blockades, the company opened this sorting center to test a new way of doing business. With it, the company found it could reduce the average cost of carrying the unit by nearly a third.
Now, Target has six sorting centers across the country. And he announced three more this week, two in Chicago and one in Denver. The company also got its first behind-the-scenes look at the Minneapolis sorting center.
Digital orders account for 18% of Target’s overall sales. Over 95% of Target’s digital and store orders are fulfilled from the store, but sorting centers will make this process much easier and cheaper for several metropolitan areas.
Initially, the Minneapolis sorting center only served 12 subway stores and delivered 600 packages per day. It now handles orders and goods from all 43 stores and has the capacity to deliver 50,000 packages per day.
Packages arrive on pallets from stores and are placed on tapes where staff look for a code to determine how far they need to go. Packages traveling a short distance are routed overnight and delivered by drivers from Shipt, Target’s proprietary delivery service. Those that go farther will be delivered by a third party carrier, such as the postal service.
Shipt’s drivers use their own vehicles and are allowed to see their routes before they agree to take them. The driver of the ship Lloyd Abrahams normally operates three or four routes per working day.
“It gives me the freedom to choose the paths,” Abrahams said.
How Target’s sorting centers work
Some Target online orders are arranged and shipped from sorting centers rather than directly from stores. Packages are sorted by zip code, with close deliveries handled by Shipt drivers and more distant deliveries handled by the postal service or others.
1. Shop After a customer places an order online, Target employees pick and pack the items to ship. Instead of employees in the back room sorting the order by carrier and location, items are picked up by trucks and transported to a local sorting center.
2. Sorting center Using the codes, packages are divided into Target Last Mile orders for Shipt’s drivers and other deliveries for transport partners. At night, orders are routed to provide the most efficient way for a Shipt driver to deliver them to each neighborhood.
3. Ship the drivers Shipt drivers using their own cars arrive at the sorting center to collect orders for their routes. These are sent several times a day.
4. Home delivery Packages arrive at the customers’ door.
Source: Target • By Mark Boswell, Star Tribune
Target’s sorting center continues to evolve. The company tests several layouts of its collection garage. In recent weeks Target has also begun testing its first commercial van for a Shipt driver, which would take the place of their own personal vehicle. Vans can hold up to eight times more parcels than rear seats padded to the ceiling.
It is also likely that more automation can be added to sorting facilities in the future to make them more productive.
Store managers say the sorting center model saves their workers time and space in their back rooms, which fill up during the holidays and the start of new seasons.
For example, workers at Edina’s Target store had to be creative to stock enough merchandise for shoppers visiting the store and those nearby requiring delivery or pick-up.
Popular online pickup products, such as food, health and beauty, cleaning products, and paper items, are now picked up from the back before workers search the store for them. Last summer, the Edina store added a walk-in refrigerator to handle an increase in fresh food orders.
Space in the reception area has also been better utilized because, instead of having to sort the packages for each courier to be picked up and delivered from the store, the work is done at the sorting center in Minneapolis.
The target staff of the Edina office only has to take the products from the back room or from the shelves of the shops, possibly prepare them by wrapping them in plastic and then packing them to go to the center to be sorted.
Target, which reported dealing with an unusually high inventory backlog, also tried to save space in its back rooms by storing some of its excess inventory in leased spaces near ports and distribution centers.