Total Quality Plan Implementation

October 21, 2004

Total Quality Plan Implementation

What happened to Sears is not that uncommon. History has been witness to the rise and fall of many great empires. Most businesses go bankrupt on the way up, not on the way down. Sears failed to remain the top retailer for two reasons (1) a lack of focus on operating strategies and, (2) a lack of long-term vision from top management. The retail industry is very competitive and requires a flexible management team able to adapt and adjust to changes in competition and changes in consumer tastes.

Sears has no inventory controls and electronic data interchange with manufacturers therefore the logistic and inventory management are fared worse. Employees not only perform the inventory count, but also the order taking, and the restocking. Furthermore, Sears' work force has been unsatisfied for many years. Half time employees do not have any benefits and employee satisfaction was low. Employees do not have broad training nor are they involved in decision-making.

In order for Sears to successfully implement a turnaround strategy, it should use Benchmarking. Sears can use Benchmarking to take a look at what the competition has done to excel. Walmart, for example, has built a huge data warehouse capable of storing information on point-of-sale, products-in-transit, market statistics, customer demographics, finance, product returns, and supplier performance (Foley 1996). It uses the Internet to identify any trends, seasonal changes or potential problems as they occur. The web-based system has allowed Walmart to focus on gathering "real time" information.

Sears has outlined a marketing strategy similar to Walmart. Therefore, relying solely on the online ordering service would not be the most beneficial option. The Internet alone will not create more market share, especially in big-ticket items that people want to "test" before they buy. The small-store format would probably not be a feasible option if Sears continues a strategy of being a giant retailer. Sears has the potential to reach sixty million households. Therefore, scaling back its "physical" presence in the marketplace would be a step in the wrong direction.

Sears plans to use customer service in the new strategy. Integrating their customer database with suppliers and service contractors, Sears would immediately manage arguably the most valuable data warehouse in the retail industry. Sears' long-term goals for improved operating strategies and improved vision from top management, the following steps must be followed accordingly:

Ð'* Web- based training of employees.

Ð'* Integration of logistic systems within the retail operation, its suppliers and customers. (Internet)

Ð'* Implementation of a Web-based information system for all the major departments. (Intranet)

Ð'* Decentralization of the management structure.

The first step involves the re-training of employees. Many lower level employees may not be very efficient using computer technology. Therefore, Sears should focus on training before any technology is introduced on the sales floor or in the warehouse. All employees will need to learn how to browse the Internet. Sears will need to retrain thousands of employees in very distant locations. Online training can be the answer when there are time, distance, and budget constraints (Savoina 2000,49). Many employees can be on-line simultaneously, using "real time". This is much more efficient than having a trainer come to each store and train a handful of people at a time.

The sales staff will be shown how to use palm pilots and carry these with them throughout the store. The palm pilot will tap into the store's server allowing the salesperson to make decisions on the floor that can better serve the customer. The sales staff will be able to make decisions that were once the responsibility of department managers. The palm pilots will store knowledge about the different products being sold.

Salespeople will be cross-trained to know the products of one or two departments, besides the one they work in, to allow managers to rotate employees from one department to another. The palm pilot will decrease the amount of information a salesperson will need to remember because it will all be at the click of a button. As a result, sales staff can be easily placed into different departments as the demands shift between product categories due to seasonal trends, advertised sales, or employee emergencies.

The second step is the longest and most detailed. The creation of a web-based supply chain will be created and carried on a mainframe computer located at the head office. Sears will have access to customer information, sales trends, supplier conditions, employee records, single-store demographics, and product information. The data will be shared between the warehouses, the stores, the suppliers, and the customers.

The logistics and IT departments will head this stage of the process. The objective will be to speed the flow of information to the various users while reducing costs, especially in inventory. The system will be online, making it accessible on a "real time" basis and will connect the mainframe to an Internet service provider where anyone anywhere in the world can log on. Customers will benefit from the new system the most. They will be able to check on product information such as prices, sizes, colors, availability, and even upcoming sales.

The Internet site will receive information from a copy invoice located outside the firewall protecting the mainframe. The mainframe computer will update the copy invoice on a daily basis. Data, such as customer accounts and addresses or anything considered high risk, would not be kept on the web site. The mainframe will not be part of the Internet. It will, however, serve as the hub for all Intranet transactions.

The third step is an integration of the various departments to suppliers and each other. Users will dial into the mainframe to receive information. Users will include all major departments and suppliers. Customers will not be allowed to enter the Intranet.

The credit, marketing and sales departments will have to form closer relationships in order to serve the customer with valuable products. For example, Sears should send marketing executives to the sales floor to see what people really want. Questionnaires and surveys do not tell the full story. The people making the product selections are not the ones who deal with customers.

The credit department will play a major role as one of the main disseminators of information