Forging true QR partnerships - Quick Response - Dayton Hudson Corp. Target Stores; Growth Retailer of the '90s

Discount Store News, Sept 17, 1990

Forging True QR Partnerships

Technology over the years has played a quiet but key role in Target's success.

Today, as Target enters the '90s, it is a leading edge retailer in its use of the full range of technologies that comprise QuickResponse. Late last year, it concentrated its efforts on a new program, the QuickResponse Partnership (QRP), headed by Linda Ahlers, senior vice president, merchandise planning and control.

Target's goal in deploying technology is to achieve a 100% in-stock situation in all its stores.

The start-up phase of QRP saw the formation of a QR team and the implementation of pilot programs with a number of vendors. This core team has remained in place as QR continues to be implemented with other manufacturers; merchants involved in a resource's category are co-opted to the core team as needed.

The discounter has established "true" QR relationships with 12 manufacturers and projects adding another 50 vendors to its program this year. The relationship involved using electronic data interchange (EDI) for all documents as well as sharing inventory and sales information and providing sales forecast, so the vendors can better plan and schedule their own purchasing and manufacturing activities.

Apart from the in-depth QR partnership, Target has an EDI program transmitting and/or receiving purchase orders and invoices electronically - VICS ANSI X12 is the favored format - with over 550 manufacturers, with the number due to grow to 800, or over 80% of its major resources, by the end of 1990.

When the 800 vendors are on board, Target projects it will be buying goods accounting for 50% of its total sales through electronic purchase orders.

Target executives declined to detail the cost of QRP, but noted that it has cut in half the average restocking time of goods from the dozen vendors.

The close retail vendor relationship that makes QRP work is evident from Target's partnership with Procter & Gamble (which is similar to the vendor's arrangement with other discounters). The manufacturer has stationed a team in Minneapolis assigned just to work with the retailer on all merchandising and operating functions that affect QR. This has resulted in such moves as Procter & Gamble now packing and shipping merchandise to Target's distribution centers in pack sizes and counts that fit the DCs' material handling system.

The program has also affected Target in other important ways. The discounter has begun to fuse sales results with demographic information for various markets to determine what merchandise sells in which areas. The result is the development of target merchandising programs for markets and even specific stores.

Target built its QR structure on a technology foundation laid down in the past that includes: * POS scanning. Originally tested in 1986, Target became the first major discounter to achieve chainwide scanning with the complete installation of pistol scanners in 1988. * Shelf pricing. Installing POS scanning chainwide resulted in Target being able to phase in shelf pricing as a labor saving alternative to item marking. The year-long conversion to shelf pricing for hard lines was completed in late 1988. * Carton scanning. The discounter began scanning cartons as part of its sorting system in its Pueblo, Colo., DC opened in 1986 and has extended this technology to all seven DCs. Right now its using its own shipping label format but plans to migrate to VICS SCC format as use of this standard grows. * Satellite communication. A Hughes Network System satellite communication network, used for data and two-way voice communications, was installed last year. The network, which includes a shared Hub station in Minneapolis, replaces land-line phone service and provides real time credit card and check authorization. Sales data is polled via the satellite at night.