Executive Briefings

How Sears Holding Company Optimized Online Fulfillment

Sears Holding Company needed to improve service to online shoppers, to stay competitive with both traditional and e-commerce rivals. Chief supply chain officer Bill Hutchinson and vice president Jeff Starecheski tell how it was done. A finalist in the SupplyChainBrain/CSCMP Supply Chain Innovation Award for 2014.

Sears’s challenge was to create a different customer experience, says Starecheski. It had built a ship-from-store model, but wanted to transition from promising delivery within five to seven days to naming a specific date. It also wanted to address the issue of capacity in the network, to enable the growth of its dotcom business without having to invest large amounts of capital.

Hutchinson says the retailer needed to design a flexible network that drew on distributed order-management capability, so that it could drop orders into stores or distribution centers, and be able to “dynamically toggle that on an order-by-order basis.”

Sears and Kmart had maintained “a separation of church and state” in managing dotcom and store fulfillment. Step one, says Starecheski, was reconfiguring and optimizing the system, and deciding where it could maintain ship-from-store locations. The retailer chose a limited number of geographic points to provide a maximum of one-day delivery coverage to nearly 80 percent of customers through the use of ground transport.

It was dubbed the “Cheetah Network,” consisting of stores from which online orders could be fulfilled by picking directly from shelves. By bringing stores into the network quickly, the retailer could better manage peak season demand, Starecheski says.

Hutchinson says Sears adopted algorithms and fulfillment logic to ensure order completeness, while minimizing transportation costs and streamlining delivery. The calculation looks at inventory levels and location, logistics requirements, picking cost and proximity to the customer.

The project took 75 days from concept to pilot, and nine months to build out the network. Starecheski says he was “pleasantly surprised” by the company’s ability to add stores to the Cheetah Network quickly. In addition, Sears drew on propriety, in-house software to speed up implementation, allowing it to integrate with legacy execution systems.

Sears used to require an average of three and a half to four days to deliver online orders. The average today is just two days, with reliance on premium transportation cut to just 10 percent of its previous level, Starecheski says.

To view the video in its entirety, click here

Sears’s challenge was to create a different customer experience, says Starecheski. It had built a ship-from-store model, but wanted to transition from promising delivery within five to seven days to naming a specific date. It also wanted to address the issue of capacity in the network, to enable the growth of its dotcom business without having to invest large amounts of capital.

Hutchinson says the retailer needed to design a flexible network that drew on distributed order-management capability, so that it could drop orders into stores or distribution centers, and be able to “dynamically toggle that on an order-by-order basis.”

Sears and Kmart had maintained “a separation of church and state” in managing dotcom and store fulfillment. Step one, says Starecheski, was reconfiguring and optimizing the system, and deciding where it could maintain ship-from-store locations. The retailer chose a limited number of geographic points to provide a maximum of one-day delivery coverage to nearly 80 percent of customers through the use of ground transport.

It was dubbed the “Cheetah Network,” consisting of stores from which online orders could be fulfilled by picking directly from shelves. By bringing stores into the network quickly, the retailer could better manage peak season demand, Starecheski says.

Hutchinson says Sears adopted algorithms and fulfillment logic to ensure order completeness, while minimizing transportation costs and streamlining delivery. The calculation looks at inventory levels and location, logistics requirements, picking cost and proximity to the customer.

The project took 75 days from concept to pilot, and nine months to build out the network. Starecheski says he was “pleasantly surprised” by the company’s ability to add stores to the Cheetah Network quickly. In addition, Sears drew on propriety, in-house software to speed up implementation, allowing it to integrate with legacy execution systems.

Sears used to require an average of three and a half to four days to deliver online orders. The average today is just two days, with reliance on premium transportation cut to just 10 percent of its previous level, Starecheski says.

To view the video in its entirety, click here