The Faults in the Recent Project of Sainsbury

The Faults in the Recent Project of Sainsbury

In 2000, Sainsbury’s began its “business transformation programme”.

The grand plan includes what is arguably the largest and most

ambitious retail supply chain project in Europe. The main driver was

the need to cut costs. However, internal research found that the

company’s cost-per-case was significantly higher than its nearest

rivals.

Sainsbury‘s had been managing distribution in the same way for more

than 40 years, which is mainframe-based warehouse management system,

Its typical distribution center was almost as old. Compared to the age

of the average Tesco depot—seven years—Sainsbury's depots were nearing

the end of their useful life. The old system of depots was designed

for the purposes, such as packing for meat and own-brand goods.

However, it means that one store could be receiving goods from five or

six different depots in any one day, which was highly inefficient.

The old delivery system was also ill-suited to changes in customer

tastes, habits and store locations. Supermarkets have to offer a wider

range of products, in smaller volumes and at lower prices, than in the

past, to people who shop when they need to rather than stocking up

once a week.

“Today, Sainsbury’s carries 2.5 million cases per week from around

2,000 suppliers. It also has to deliver them to 500 outlets every day,

ranging from traditional large stores to smaller shops on previously

untapped territories, such as railway terminals and Shell petrol

stations. Given this diversity, daily “waves” of restocking are

required from 5am onwards.” (http://www.supplymanagement.com/archiveitem.asp?id=8784,

4/4/2005)

In order to service this need, Sainsbury revamped its supply chain and

created a complete end to end supply management system.

“The initial timeline for the project was seven years, as the

struggling chain set about pruning a network of 25 distribution

centres to just nine facilities in eight regions around the UK.

Another part of the plan was to build four giant warehouses, two of

them fully automated, for £400 million each."

(http://www.supplymanagement.com/archiveitem.asp?id=8784, 4/4/2005)

Sainsbury did it in three years, to catch up with, in some cases, and

some cases overtake its rivals. Sainsbury's uses a number of IT

systems to manage its supply chain, mostly within the Accenture

outsourcing deal. Distribution warehouse management systems are

provided by Manhattan Associates. Eqos has built an alerts system to

improve stock availability in store, based on Microsoft .net

technology. And Retek has supplied software to forecast product demand

in Sainsbury's stores. By implementing automation, Sainsbury was

hoping also to avoid human errors so that errors were right at the

first time Although, Sainsbury has been working hard to improve its

supply chain, however, the operation of its four new automated depots