Quick Facts
- Target built Proxima in-house after vendors could not support the scale and category breadth of its supply chain network.
- Proxima simulated inventory flow at Target’s new Houston Receive Center with 98% accuracy before the facility opened.
- A 63-item fresh food pilot using Proxima improved on-shelf availability by 2.5% by catching inventory flow issues before launch.
Target has developed a digital twin of its middle-mile inventory positioning system. The tool, called Proxima, simulates how goods move between facilities and stores before any changes go live. Target’s supply chain, product, and engineering teams built it internally.
The company chose to build Proxima in-house after finding that outside vendors could not handle the complexity and range of its product categories. Proxima uses the same data and logic as Target’s live inventory platform to run simulations. Teams can test approaches, compare outcomes, and correct problems before touching the real network.
How It Works in Practice
Proxima fits into what Target describes as a sense-simulate-solve framework. The system captures operational events in the supply chain, models responses, and helps teams prevent disruptions or act on opportunities.
“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,” said Sousan Ortega, Target’s senior vice president for field replenishment and supply chain.
Jake Krings, vice president of technology for global supply chain and logistics, said the underlying architecture allowed teams to iterate quickly. “We have patterns in place and an architecture in place that allows us to rapidly scale up capabilities like this,” Krings said.
Houston Receive Center Test
Target’s 1.2 million-square-foot Houston Receive Center, the first facility of its kind for the retailer, became an early proving ground for Proxima. The center stores seasonal, bulky, and hard-to-forecast items and serves six regional distribution centers and a flow center.
Before the facility opened, Target used Proxima to simulate inventory flow in and out of the building. The simulations hit roughly 98% accuracy. Teams were able to reduce inventory flow issues when the center went live.
Fresh Food Pilot Results
Target also tested Proxima on perishables, a category that adds complexity because of expiration dates and tight lead times. In a small-scale pilot covering 63 fresh food items, the tool simulated inventory flow changes and flagged issues before any adjustments went live. On-shelf availability for those products improved by 2.5%.
“What I often tell my team is: We can’t give the guests a great experience if the inventory isn’t available,” Ortega said.
Business Context
Proxima arrives as Target works through a broader operational overhaul. CEO Michael Fiddelke, who took the role in February, has committed to a roughly $6 billion plan to improve inventory, in-store experience, and delivery times. The company previously ran on legacy technology that Fiddelke said last fall no longer meets current needs.
Target recently named former Walmart executive Jeff England as its chief supply chain officer. Nearly 97% of Target’s online orders are fulfilled from its physical stores, which puts pressure on the retailer to manage inventory precisely across more than 2,000 locations.
Inventory stood at $12.9 billion as of Aug. 2, 2025, up from $12.6 billion a year earlier, reflecting higher merchandise costs and investment in high-frequency categories.
What Comes Next
Target plans to scale Proxima across more network functions. The company said insights from the tool could eventually support AI-powered, agentic decision-making capabilities that help teams evaluate options, prioritize actions, and automate operational responses. Teams will continue comparing digital twin outputs against real results and applying what they learn to future decisions.
Read more: Target strengthens inventory management with digital twins
