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Supply Chain

Sears Holdings SVP: Supply chain fulfills the promise of integrated retail

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After more than two decades managing supply chain organizations, you could say Rajan Penkar, SVP & President, Supply Chain, Sears Holdings Corporation, knows more than a little bit about the business. So we were thrilled when he agreed to be our keynote speaker at the upcoming NRF Global Supply Chain Summit, May 6 to 8 in Atlanta. The NRF Global Supply Chain Summit is a focused event that invites the world's top retail supply chain executives to come together, build connections and discuss complex issues facing the industry. Raj will join senior executives from retailers such as The TJX Companies, Inc., Kohl's Corporation, Office Depot and others. To learn more about Raj and what's on deck for the Supply Chain Summit, I asked him about his long experience with UPS, the biggest challenges facing the industry, and how to nurture the next generation of retail supply chain leaders.

You joined Sears Holdings last September after more than 20 years at UPS. How does your background with a provider like UPS influence your role now working for a retailer?

I spent almost 25 years at UPS, and most of that time, I was in some form of a customer-facing role. I led the team that developed solutions for UPS customers and optimized their supply chains. So from that experience, I developed a core belief that the supply chain is an enabler of business strategy, and I bring that with me to Sears Holdings. I believe that as a retail supply chain organization we need to be completely and totally customer focused. What that means from a retailer's perspective is that we focus on our business units, our stores, and our customers, especially our SHOP YOUR WAY REWARDS™ Members.

What do you think are the biggest challenges for retail supply chains in 2012?

For supply chains within retail, especially retailers like us who have both a brick-and-mortar presence and a strong online presence, the challenge and opportunity is to fulfill the promise of omnichannel, or what we call integrated retail. Our customers want to be able to shop anytime, anywhere, across any channel. They want an experience that is simple, seamless, relevant and rewarding. We retailers are spending a lot of money to enhance the customer experience and enable our customers to shop their way. So we also need a flexible supply chain that can actually fulfill that promise. That leads to the need for flexibility and agility because many supply chains have typically been designed for either store-based or online models, but not both at the same time. But now we have to think about how our customers view purchasing and how they make purchasing decisions whether online, in the stores, or on their phones. We also need a relentless focus on cost optimization. This is about profitability and value, not just cost reduction. When customers purchase online, they expect delivery in a short amount of time with quick and easy returns. That means supply chains have to be both flexible, and perhaps a little bit more expensive for retailers in order to deliver on that promise.

What's your take on the role of the supply chain in the areas of corporate social responsibility or environmental sustainability?

I think supply chains in general have a very strong impact on this area. And as you can see from what UPS and Sears have done in this area, it clearly is a huge area of focus for us. Sears recently won the U.S. Environmental Protection Agency's (EPA) ENERGY STAR® program's highest honor: the ENERGY STAR "Corporate Commitment Award." Environmental stewardship is a natural extension of what supply chain professionals do. When we optimize supply chains, it leads to a lower fuel expense, very often a lower carbon footprint, and a lower energy use, which all works toward social responsibility and environmental sustainability goals.

What technologies do you believe will have a significant impact on the future of the supply chain field in the coming years?

Technology in general, including social media and devices like iPhones and iPads, are changing how we interact with customers and members. It's also changing how we run a globally distributed workforce. Sears runs a large supply chain that spans the globe, and we use social media internally to communicate better. We have internal technology that lets us communicate effortlessly across our globally distributed workforce. So although we're not face-to-face, our people are in regular contact with each other so that improvements in one of our distribution center can quickly spread to other distribution centers. If issues come up, they become globally apparent very quickly.

You'll be discussing the supply chain implications of an integrated retail model at the NRF Global Supply Chain Summit. Tell us about your own experience with that subject and what you'd like the attendees to take away from your presentation.

At this stage of the game, I think all supply chain leaders in the retail industry have a tremendous opportunity to enable an integrated retail supply chain. We are essential to fulfilling the customer promise made by integrated retail – improving people's lives by allowing them to shop when, where and how they want to, pay how they want to, etc. A supply chain that is appropriately implemented and executed will provide a true sustainable competitive advantage in our fiercely competitive business. I hope to encourage my peers to think about their own company's strategy and how their supply chains enable that strategy.

The success of a retailer's supply chain can have far-reaching effects on the company's bottom line. How important is collaboration within the supply chain to this success?

Internal and external collaboration is critical. Internally, we work with our business units, stores, and internal partners to answer the challenge of getting products to our customers faster and in new ways. Often, it is the Logistics team who suggests new innovations to improve our customers' retail experience. Externally, we collaborate closely with our transportation providers, third-party logistics providers, suppliers, and vendors who provide the products we sell in our stores to make sure we have the right product at the right time and at the right price.

What advice would you give to a future retail supply chain leader?

We need to be looked at not just as supply chain leaders, but as business leaders. We need to contribute to developing the business strategy and earn a seat at the highest levels of management in our organizations. Current supply chain leaders need to give young supply chain employees a broad view of the business. At Sears, we make sure our supply chain folks have rotations not just in the traditional elements of supply chain such as distribution and transportation, but also in inventory management or the buying organization and sourcing organizations—all of the areas that really make someone understand what the retail business is and what the drivers are. This is critical to growing the next generation of supply chain leaders.

What are you most looking forward to at the NRF Global Supply Chain Summit in May?

Given the nature of the Supply Chain Summit, I'm looking forward to networking with my peers and learning from their experiences. From a professional perspective we're all in this together. As companies we may compete in the market, but, at the same time, as individuals we certainly can learn from each other and help each other complete our professional goals.