The aim is to pare what Target calls its replenishment cycle from days to hours and reduce inventory at stores, especially at the retailer’s new small-format stores and locations in denser urban areas. The approach, now in pilot mode at a warehouse in Perth Amboy, N.J., also uses the same pool of inventory to replenish stores and fulfill online orders, a departure from Target’s existing supply chain.

Under the operation Target is testing at the New Jersey facility, called a “flow center,” the company sends shipments to stores more frequently and in smaller lots tailored more precisely to demand rather than shipping big cases of products, Preston Mosier, Target’s senior vice president of global supply chain and logistics field operations, said last week at an industry conference in New York.

That could mean shipping “five bottles of shampoo, a case of ketchup, two polo shirts on hangers and a pallet of water, all prepared to move out directly to the sales floor,” Mosier said. “Or it could mean sending similar items prepared to move directly to a pack station to later go out to a guest in the neighborhood.”

The retailer is also creating a new warehouse management system intended to better integrate its distribution and fulfillment operations, which now use separate systems even when they share the same building, Mosier said.

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