Sainsburys The purpose of this report is to find out the faults in the recent project of Sainsbury that led to the expensive fiasco by focusing on the supply chain management and outsourcing which has been used by the organization in the past few years.

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TQM

Joey Chan

BA IBA

252RFRFNO03

Semester 4

Summary

The purpose of this report is to find out the faults in the recent project of Sainsbury that led to the expensive fiasco by focusing on the supply chain management and outsourcing which has been used by the organization in the past few years. The main objective of this report is to enable the reader to understand the situation of Sainsbury, what problem that Sainsbury is facing as being  the third largest supermarket in the UK, and what mistakes they have made when applying the IT into its business which eventually caused the supermarket has written off £ 140 million in IT assets, and a further £ 120 million on its distribution system and also reasons of the failed investment which led to a tremendous loss on its sales and market shares will also be stated in this report.

After outlining the faults in the recent project, the management faults will also be identified, and a further discussion on what made the management failings that led the first-ever loss. Besides focusing on the failure investment and management, the report will also outline that if there might have been any other reasons leading the loss of market shares, for example, customer, non food ranges, and availability of stocks, supplier-customer relationship, quality, staff turnover, and strategies and so on.

Finally, various recommendations will be suggested based on the problem, possible remedies to rescue the organization will also be stated at the end of the report, recommendations which should be made to the organization for further work, action and implementation will be covered.

Introduction

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.

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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 ...

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