Leveraging JDA technology to support a Shelf Connected Supply Chain Amy Higgins VP, Space Management & Analytics Sears Holdings Corporation 1

Introduction to Sears and Kmart Our Shelf Connected Supply Chain Strategy Implementation Roadmap Benefits Realized Lessons Learned Agenda

Sears Holdings Corporation is a leading integrated retailer in the USA  Over $40B in revenue  Over 3,900 full-line and specialty retail stores in the United States and Canada.  The primary retail formats consist of Kmart and Sears  Several proprietary brands including Kenmore, Diehard, and Craftsman Introduction to Sears Holdings Corporation

Kmart 1,261 stores account for approximately 37% of Sears Holdings revenue

Sears 803 stores account for approximately 52% of Sears Holdings revenue

Floor & Space Planning Our Shelf Connected Supply Chain Strategy By leveraging data and analytics, we are able to take action on consumer demand signals at several points in the retail process. Within the space planning solutions specifically, we can respond as part of the category review cycle or more rapidly through individual item review processes. Several integration points of space, demand, and forecast data are necessary to support this level of responsiveness. Category & Item Review Forecast & Replenishment Store Receipt & Execution Store/Item Consumer Demand Data Store/Item Forecast Data

SHC Space Management Transformation Several gaps existed between our current state and a shelf connected supply chain  Store floor plans were out of date, space analytics were not accurate.  Store planogram assignments were not reliable and store execution compliance was not measured.  Space productivity analytics were not a regular input to the planning/category review process  Planogram/item space data provided to downstream processes was fragmented and not consistently utilized  Space Management data was not available in a database In 2007, Sears Holdings began a transformation of the Space Management area  Leverage best in class technology solutions to improve return on space  Deliver improvements to store inventory productivity  Drive workflow efficiencies to support analytics

JDA Space Planning JDA Intactix Knowledge Base Master data integration Business process re- engineering JDA Floor Planning integration Item space productivity Floor plan category space productivity Business process re- engineering Technology Advancements  From we deployed several modules including JDA Space Planning, JDA Floor Planning, JDA Planogram Generator and the JDA Intactix Knowledge Base. These applications allowed us to eliminate several manual activities, support store specific space plans, and made the overall space management processes more efficient.  These efficiency gains allowed us to pursue more advanced analytics to improve return on space and inventory. Closing the data gaps  In 2009, we began incorporating store/item demand data to our processes allowing us to bring data driven decision making capabilities to our business clients during category and item reviews.  In , we completed the capture of space data for each store giving us visibility to the unique sales floor layout. We now have the ability to make store specific decisions to fully optimize our space. Our Space Management Roadmap Foundational systems Business process and data efficiencies Workflow enablers Foundation Integration JDA Planogram Generator pilot Store specific floor plan maintenance Store/floor plan process integration Certification Programs Rules based mass planogram generation Ability to execute customer segmentation Elimination of manual handoffs Item & category level productivity analysis Business process & data efficiencies Workflow enablers Benefits Initiatives Foundation/Data Integration/Leveraging JDA Planogram Generator expansion Store space capture Store/planogram assignment advancements Optimization advancements Store space data accuracy Standardized integration of all space data elements Improvements to optimization methods Business Process Efficiencies Analyzing/Strategizing  Space Productivity Dashboards/On demand reporting  Integration of assortment plans and JDA Demand forecast data  Continual space optimization advancements  Store space productivity top- down/bottom-up  Integration of planning and execution throughout process.  Advanced reporting & analytics  Workflow efficiencies  Planogram Generator advancements

Integration with category & item review Space Planning leverages key performance indicators to support analytics  Store department and category productivity optimized during store projects/remodels  Store specific floor plans ensure optimal flow and adjacency for each store/fixture configuration  Item level KPIs support optimal shelf space allocation Future plans  Space aware assortment planning Category & Item Review

Integration with demand & replenishment Space Planning data supports inventory management processes  Store item authorization  Store level item lifecycle management  Store item minimum presentation quantities  Store item shelf capacity  Presentation in-stock reporting Future plans  Store item forecast data will be leveraged to support space optimization Demand Forecast & Replenishment

Integration with store receipt & execution Space Planning data supports store item receipt, execution, and replenishment  Planogram reset labor estimates  Planogram and floor plan PDF available via web  DC case label provides store location information  Item location integrated to all store systems  Item location on shelf labels supports  In store automated shelf replenishment notification Store Receipt & Execution

Lessons Learned Business Process  Depending on the organization, business process may be well established or difficult to change. Allow time in the project to fully understand where business processes need to be redesigned Technology & Data  The JDA Intactix suite is highly configurable. Take time to document future state business processes in detail and determine those areas where a tailored interfaces & workflow are required.  Identify data gaps early and develop a plan to gather. Lack of required data to support business processes will impede progress. People  Identifying the right talent and ensuring they are properly trained is critical to success.  Throughout our roadmap, education and certification was necessary for the team. This is an ongoing area of development as we continue or journey.

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