Case Study Presentation

Management Practices

Presented By
Seema Patel Vinesh Yadav. Prithivish
Chakarborthy Dilip Thakur Jaya Anikhindhi
Shivshankar Reddy. KahanGufran
 Case Introduction
 It is US based company formed in 1886 by Richard Sears and Alvah C. Roebuck.

 It started the business of mail order in US.

 R.Wood President of Sears started opening retail stores to compete with chain
stores which affected its Mail-Order business.

 In late 1930 the number of stores increased to 400.In 1941 Sears was operating
more than 600 retail stores in US.

 In 1942 Sears opened its first out let outside US in Havana, Cuba.

 In 1953 Sears entered in Canada through joint venture with

Canadian Merchandising company.

 The venture was Known as Simpsons-Sears Limited and later it was renamed
Sears Canada.
 Case Introduction
 In 1970 Sears was having tough competitors like Wal-Mart and Kmart.

 In late 1980 Sears also entered into financial service business.

 In 1989 in an attempt to compete more effectively with its rivals, Sears

turned to new ‘one-price strategy’. But it did not work.

 In 1990 Sears experienced decline in revenue because of inefficient logistics

management system in its Merchandise division

 In August1992 Martinez, Vice-Chairman of Tony Saks Fifth Avenue, joined

Sears as president of the merchandise division.

 Martinez felt to improve Sears Logistics and inventory management

practice in significant manner.
Revamping the logistics Mgt. system.
 Martinez appointed Pagonis former General and Chief of US military
as Executive Vice-President of logistics.

 Pagonis made responsible for supervising the logistics system and

synergization of IT systems.

 In 1993 he implemented a set of military logistics practices at Sears.

 He modeled Sears logistics chain into four unique independent

logistics channel- full line store logistics, Off –mall logistics, direct
delivery and specialized channel –to serve three customer, namely
Sears stores, retail consumer and business customer.

 Pagonis also implemented the three ups and three downs rule.
According to the rule every week executive had to list three positive
and negatives, for which executive had to offer a possible solution.
Revamping the logistics Mgt. system.
 One major initiative Pagonis took in order to make the logistics system
at the merchandise division more efficient was ‘Cross- docking’.

 In ‘cross – docking’ Sears placed a purchase order with vendors

through Electronic Data Interchange(EDI).After fulfilling the order the
vendor forwarded an electronic advance shipment Notice to Sears.

 The goods were labeled with bar-code and contained other detail such
as the size, order number, etc.

 On the arrival of goods at the distribution center, the bar-code labels

were thoroughly inspected and receipt were generated ,these were later
cross-checked with the electronic ASN. The entire process take only 15
min.

 In 1995 Sears was able to reduce its logistics costs by US 45 million

annuly. In that year Sears made a profit of US 1.8 billion.
IT tools and internet to manage logistics
 In 1995 Sears had implemented an electronic ordering system which
connects the company ordering system with every individual suppliers
ordering system.
 Sears also introduced a Strategic Performance Reporting System(SPRS).
SPRS traced product flow starting from the distribution centers to the
stock keeping unit at various location.
 In 1997 Sears introduced Enhanced Home delivery system(EHDS)This
enabled the company to determine the shipment date for customer at the
point-of-sale.
 Sears also traced the information of drivers with help of Voice Response
Unit(VRU).
 In this drivers rang up a standardized number-800 and reported their
arrival and departure time to an electronic routine computer. When
driver was getting late and was about to reach the deliver destination, the
consignment getting delayed turned yellow on the monitor's screen ,
signifying the warning.
IT tools and internet to manage logistics
• Sears was again in forefront of applying the latest IT tools for
managed logistics when it adopted the Sophisticated Logistics
Algorithm(SLA) system1997 to expedite home deliveries.

• The SLA system contained delivery status charts which closely tracked
home deliveries, suppliers shipment and loaded trucks.

• In september2001 pagoins established a Disaster Operation

Center(DOC). DOC designed ‘contingency plan’ for the company’s
logistics management team.

• The first phase of disaster planning program comprised setting up of

an operational contingency cell (OCC). Which include two employees
who acted as a hub for effective and speedy communication during
disaster.
 Mobile System to Manage logistics
• In late 2001 Sears felt the need to manage its logistics at the RRC more
effectively to derive the best possible result from its nearly 4500
suppliers. The company got Wireless Mobile System (WMS).

• WMS enhanced the authenticity of inventory information and

shipment details at the RRC and retail stores.

• The installation of WMS in the RRC improved the RRC productivity

by over 30 %.

• One of the major benefit of WMS was in slotting operations. Before

the WNS were installed. Slotters received the pallet from the product
manufacture through truck and had to put them in a specified place in
the RRC .

• WMS enabled easy location of goods for delivery and reduced

paperwork significantly.
 Implementation of CPFR
• To over come the problem of high inventory Sears embarked on the
implementation of the of the Collaborative Planning Forecasting and
Replenishment(CPFR) System in 2002.

• The execution of CPFR comprised four stages, First is ‘Cross-

functional’, team of both the companies were trained in the best
practices in CPFR. Second, the IT division of both the companies
tracked product information flow and recorded data pattern that
product sales history, demand estimation and inventory levels. Third ,
the two sides collaborated in selling only private label tires. Fourth, the
companies broadened CPFR implementation to accommodate the
complete range of product.

• The CPFR system allowed access to information through the internet on

a spreadsheet that was tailor-made to notify information on each
product.
 Conclusion

• IT tools and Internet can be used to manage logistics more efficiently.

• Mobile systems helped managers to exact and real time information of

inventory level of any type of good.

• Because of CPFR Sears Logistics were able to avoid high level of

Inventory problem.