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Supply Chain

How Sears adjusts the supply chain model for an omnichannel reality

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It might have taken a week of scouring online reviews to finally decide which refrigerator to buy, but once you place your order at, you’ll have it in your home the very next day. That’s what Raj Penkar, SVP and President, Supply Chain of Sears Holdings Corporation is working hard each day to make a reality.

In front of a packed room at the NRF Global Supply Chain Summitthis morning, Raj described how Sears adjusted its supply chain model to better deliver on its marketing promises – that no matter how, when or where you shop, you’ll get the same great experience and the goods in hand quickly. Fulfilling that promise is the task of the supply chain, Raj says, but to do it effectively, supply chain professionals have to be a little innovative.

Sears has piloted a few new supply chain models that leverage existing inventory and existing retail distribution centers, meaning a small number of store locations now fulfill online orders. More than 90 percent of online orders for big-ticket items are delivered the next day using a network of nearly a dozen of what Sears calls direct delivery centers and marketing delivery operations across the nation. So even if an order comes in at 5 p.m., a direct delivery center (DDC) ships the item to the marketing delivery operation (MDO) in the customer’s neck of the woods, and by the next morning, a trained technician is delivering and installing your fridge.

For smaller items, Sears checks the nearest store capable of shipping first. Though Raj said stores can’t reach the same level of efficiency as a DC, with a few adjustments and some trained staff members, a small number of Sears’ stores include a sort of “mini-DC” that allows the store personnel to fulfill orders. Online orders from the region go first to this fully equipped store for fulfillment and to a DC if the inventory isn’t available from the store.

The model has been successful for Sears, along with other strategies to leverage existing inventory, assets and real estate, such as modifying retail distribution centers to fulfill online orders as well.

When fielding questions from the audience, Penkar stressed the importance of selecting a small number of stores that fulfill a large number of online orders, and then equipping those stores with the resources and staff needed to do the job well. After all, the goal is to provide a seamless customer experience regardless of where an order comes from. That’s the challenge of the integrated, or omnichannel, retail supply chain of today.