FORT LAUDERDALE, Fla. -- Sears, Roebuck and Co. may be minus a catalog, but cataloging the company's day-to-day operations is the heart of its five-year plan to improve profitability.
"We will do 1998's business on fewer dollars than 1994's, but we also want to double inventory turnover in that same period, " Arthur Martinez, chairman of the Sears Merchandise Group, said at the National Retail Federation's recent Logistics and Inventory Management Conference here.
Martinez said improved logistics is the backbone of the plan. "We've come to recognize that we are just as much in the distribution business as we are in the merchandising business," he said. "Our logistics system can create significant competitive advantages for us. Information is power here, and we hope to use it to accomplish dramatic reductions in costs."
The company is developing a base line from which logistics can be improved.
"We are bench marking ourselves by channel to understand cost issues, speed issues, throughput issues and productivity issues so that we can set objectives for our logistics organization that are consistent with best-demonstrated practices in the industry," Martinez said. "We want to be better, faster and cheaper than the competition, but underlying all of this is the need for excellent technology."
Though economies of scale have made the company relatively successful in the past, Martinez said Sears cannot rely on volume alone to drive its business. Efficient operations are equally important, he stressed.
"The power of volume is not to be ignored, but we also have to take dollars out of the system," he said. "In our systems area, we have a high expenditures level without the kind of benefit we are looking for in terms of supporting our business. In supply-chain management, we have a cost base in this area in excess of $1 billion, but what we want to achieve is a continuous improvement in cycle time in order to bring unit costs down."
Martinez outlined several of the company's goals. Sears wants 90 percent of the merchandise arriving at its stores to be "floor ready," it wants to have a 95 percent in-stock ratio on basic items and a 98 percent in-stock ratio on promotional items, and to raise customer satisfaction percentages of its home-delivery system to 97 percent. "That last link in the distribution chain is often the weakest," he said.
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