J. Sainsbury Failed It System
Introduction
In 2005, British food retailer J Sainsbury had to write off $526 million it had invested in an automated supply-chain management system after having poor results. Sainsbury’s is lagging behind its rivals in its sales revenue causing them to be making a loss after a period five years.
Background of the project
Sainsbury as the third largest supermarket in United Kingdom is facing a big problem sustaining their business. They have applied IT into its business which eventually caused the supermarket to write off $140million in IT assets, and a further $120million on its distribution system and also failed investments which led to tremendous loss on its sales and market sales. In 2000, Sainsbury’s began its “business transformation programme”. The main plan was the need to cut costs. However, internal research found that the company’s cost-per-case was significantly higher than its nearest rivals like Tesco. Sainsbury’s had been managing distribution in the same way for more than 40 years which is mainframe-based warehouse management system and its distribution centre was very old. Compared to the age of the average Tesco depot of 7 years, Sainsbury’s depots were nearing the end of their useful life. The old depot systems were 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 day, which was inefficient. The old delivery system was ill suited to change in customer tastes, habits and store locations.
In order to service this need, Sainsbury revamped its supply chain and created a complete end-to-end supply management system. 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. Sainsbury’s uses a number of IT system to manage its supply chain, mostly within the Accenture outsourcing deal deploying a
In 2005, British food retailer J Sainsbury had to write off $526 million it had invested in an automated supply-chain management system after having poor results. Sainsbury’s is lagging behind its rivals in its sales revenue causing them to be making a loss after a period five years.
Background of the project
Sainsbury as the third largest supermarket in United Kingdom is facing a big problem sustaining their business. They have applied IT into its business which eventually caused the supermarket to write off $140million in IT assets, and a further $120million on its distribution system and also failed investments which led to tremendous loss on its sales and market sales. In 2000, Sainsbury’s began its “business transformation programme”. The main plan was the need to cut costs. However, internal research found that the company’s cost-per-case was significantly higher than its nearest rivals like Tesco. Sainsbury’s had been managing distribution in the same way for more than 40 years which is mainframe-based warehouse management system and its distribution centre was very old. Compared to the age of the average Tesco depot of 7 years, Sainsbury’s depots were nearing the end of their useful life. The old depot systems were 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 day, which was inefficient. The old delivery system was ill suited to change in customer tastes, habits and store locations.
In order to service this need, Sainsbury revamped its supply chain and created a complete end-to-end supply management system. 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. Sainsbury’s uses a number of IT system to manage its supply chain, mostly within the Accenture outsourcing deal deploying a
References: http://www.j-sainsbury.co.uk/files/reports/er2003/casestudy_products.htm http://news.bbc.co.uk/1/hi/business/3856725.stm