Weigel and Cao’s (1999) article describes the issues with logistics at Sears, Roebuck, and Company. As a large retail company that operates within a chain of department stores, Sears uses software to develop transportation routes for the distribution and delivery of products. The article outlines the problem with the efficacy of a previously used geographic information system (GIS) for timely route decision-making, the solution designed to eliminate the problem, and the benefits the company obtained from the implemented new system.
The problem encountered by Sears, Roebuck, and Company was related to two essential departments of the company, including Sears logistics services and Sears product services. The company’s primary operations depended on the effectiveness and efficacy of these services since they predetermined the speed, time-effectiveness, and cost-effectiveness of transportation of products by delivery vehicles. In particular, in the USA, the corporation manages a “fleet of over 1,000 delivery vehicles that includes contract carriers and Searsowned vehicles” (Weigel & Cao, 1999, p. 113). Within the Sears product services, the company operates as repairing and installing agent managing 12,500 vehicles and responsible technicians. The planning and adjustment of vehicle routs were commonly implemented on the basis of regional subdivisions of offices in accordance with customer location. Vehicle-routing problems with time windows emerged because routes were planned one day before the delivery and were handled mostly manually. It imposed such problematic issues as time, operational, and cost losses. The newly designed software solution had to integrate the core business process and eliminate the problems without high additional costs.
The solution proposed by the creators of the new system was in the implementation of efficient software based on the system of work already existing in the company. In essence, the new system aimed “to enhance Sears’ existing mainframe-based delivery order system (DOS) and national product services (NPS) systems to consolidate operations, improve services, and reduce costs” (Weigel & Cao, 1999, p. 114). Thus, the new algorithms improved the existing systems and generated Enhanced Home Delivery System and the Computer-Aided Routing System (Weigel & Cao, 1999). These solutions utilize the geographical information systems approach to incorporate the spatial features and multiple factors influencing the complex logistics process. A central server and several peripheral servers are integrated to ensure uninterrupted information exchange and processing for choosing the most efficient routes for vehicles. In such a manner, the new software solution allowed for automating the logistical processes by implementing advanced GIS and restructuring the decision-making process. Thus, the outcomes were beneficial for the key stakeholders.
The implemented solution to the problem with logistics at Sears benefited both the company and the customers. After implementing the new system, Sears’ home delivery has become a “core competency” of the company (Weigel & Cao, 1999, p. 124). Sears logistics services and Sears product services improved their management of time windows. It allowed for significant operational improvements, namely decreased routing time, mileage, and delivery time, which caused a more efficient work of the fleet and improved customer service. In addition, prominent cost reductions were observed, including the enhanced resource utilization calculated in miles per stop and annual savings on delivery costs. In particular, geocoding accuracy increased from 55% to 95%, service orders completed by technicians increased by 3%, ultimate annual savings reached $9 million (Weigel & Cao, 1999). Therefore, the new solution was successfully implemented and provided positive results for the company and its customers.
Reference
Weigel, D., & Cao, B. (1999). Applying GIS and OR techniques to solve Sears technician-dispatching and home delivery problems. Interfaces, 29(1), 112–130.