Sears Logistics Management Practices
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Case Details:
Case Code : OPER026
Case Length : 13 Pages
Period : 1993 - 2003
Organization : Sears, Roebuck & Company
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Retail
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"For retailers, getting the right merchandise into the
store at the right time is critical to customer satisfaction and our success."1
- Dave Giometti, Vice-President, Vendor Relations, Sears,
Roebuck & Company.
Introduction
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The US retailing giant - Sears, Roebuck & Company (Sears) was in deep trouble
during the early 1990s. The company had experienced a declining trend in
revenues since the early 1980s. The extent of the problem became apparent when
Sears registered its biggest ever loss of $3.9 billion in the company's 100 year
history in fiscal 1992. In the same year, Sears' merchandise division,
contributing more than 90% of the company's total revenues, reported a loss of
$1.7 billion.
In the course of fiscal 1992, Sears hired an outsider - Arthur Martinez
(Martinez) to head its merchandise division.
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Martinez initiated drastic changes in the merchandise division, with the result
that the division was able to make a profit in the very next year. Among
other restructuring measures, Martinez focused on streamlining the logistics
management practices at Sears by consolidating distribution centers,
increasing warehouse automation and reducing transportation costs. Sears was
also able to shorten the distribution cycle, improve logistics service
levels, and centralize merchandise returns.
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Martinez
efforts to make Sears' logistics management system more efficient were
carried forward by William Gus Pagonis (Pagonis), Executive
Vice-President, Logistics who tightened the company's logistics through
the 1990s and into the early years of the new millennium. Under Pagonis,
Sears became one of the few retailing companies which applied military
logistics strategies in practice. Sears had always been among the first
movers to adopt modern IT tools and Internet-enabled technologies in
logistics management. In 2001, when it installed Wireless Mobile Systems
in its Retail Replenishment Centers (RRCs), Sears emerged once again as
one of the first retailing companies to use mobile systems for managing
logistics. |
Commenting about logistics management, Pagonis remarked,
"Logistics is reaching a new plateau. The supply chain is the last frontier -
the last place where you can take out cost, improve service, and tip the balance
on a P&L statement."2
Sears Logistics Management Practices
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