Sears, Roebuck and Co. wins the 1999 Circle of Excellence Award

The Award was presented to Sears, Roebuck and Co., by DBM, the Distribution, Business Management Association on Tuesday, June 8 at WoF99 in Orlando, Florida during a black tie dinner banquet attended by 500 top industry executives.

Dave Giometti, VP stated as he accepted the award "On behalf of Arthur Martinez, our CEO and Gus Pagonis, Executive VP of Logistics it is my pleasure to accept this prestigious award and I want to thank DBM and the voting members for honoring Sears with this award. It's been a wonderful conference and event and has been very educational. It is something that my company will want to participate in in the future."

The focus of the 1999 Award was on the retail industry. A few of the 1999 nominees were: Best Buy, Dayton Hudson/Target, Dollar General Corporation, Home Depot, K Mart, Lands' End Inc., Procter & Gamble, Revlon, Sony Corp., Staples, Inc.,WalMart Stores, Toys R Us, and Tiffany & Co.

Sears was chosen by a panel of international judges from the top Universities and Associations in Distribution, Logistics and Supply Chain Management. As a recognized symbol of quality, the Circle of Excellence Award is presented by the Distribution, Business, Management Association (DBM) to leading companies in various industries, who represent the highest standards of quality and technology, providing a model and goal for all businesses. Moreover, it signifies the important attributes and characteristics of Consistency, Integrity, Responsibility, Commitment to the environment, Leadership and Excellence which the people in the organization exhibit and uphold.

DBM, the Distribution, Business, Management Association presents this award to one company each year that represents excellence and a strong commitment to the environment.

Prior to 1994, Sears, Roebuck and Co. had no formal program to deal with defective products returned by the customer. While there were policies in place, there was no way to manage 800 plus stores handling hundreds of thousands of items being returned to thousands of vendors. In most cases, this merchandise was disposed of in a landfill. Putting defective merchandise in the landfill was not only costly, but bad for the environment. It also put Sears at risk of having the merchandise recovered and returned a second time. There was no information on what items or which vendors had quality problems. And finally, there was no accountability of financial penalty to a manufacturer for producing defective merchandise. Through the insight of Dave Giometti, VP of Vendor Relations, Gus Pagonis, Executive V.P. of Logistics and Arthur Martinez, CEO, a decision was made to centralize the processing of defective merchandise. As a result Sears created central return centers. Three central return centers (CRCs) were opened by the end of 1994 with the short term goal of returning defective merchandise to the responsible vendor for credit. The long-term goal was to use the data collected to improve product quality.

The centralized processing of defective merchandise proved to be very effective in recovering costs from vendors. In addition to merchandise cost, vendors were charged fees to cover the cost of transportation and consolidating defective merchandise. Merchandise that could not be sent back to a vendor for credit was sold into the secondary market or donated to charity. A third goal of the CRC operation was to cover all the costs of running the CRCs through fees and salvage income. These goals were achieved and the entire program was a major contributor to improving Sears' financial performance.

Sears has expanded the services that have been added to the CRC operations to form what is today a full-service Reverse Logistics program. Originally the CRCs serviced only Sears full-line stores. Today the CRCs also provide service to Sears dealer stores, Sears Hardware Stores, Orchard Supply Hardware, The Great Indoors, Sears Direct, Sears Auto Centers and the National Tire and Battery stores use the same infrastructure and same three CRCs .

Today the CRCs are working with vendors on programs designed to improve product quality and streamline the processing of defective merchandise. This is taking out costs for both the retailer and the manufacturer as well as improving customer service.