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Keywords: Supply chain management, Retailing, Automation, Supermarkets
Louis Grestner Junior once said that everything starts with the customer; and while few would argue with the former IBM CEO, ensuring that the right products end up with the customer is arguably even more important. However, this will only occur if the supply chain is efficient enough to make the journey from factory to shelf as smooth as possible.
You would be forgiven for assuming that such a task should pose few problems. However, customers are notoriously strange creatures and habits can be short lived. Throw in the fact that trends inevitably come and go - some much quicker than others - and it becomes obvious that the success of any organization will depend heavily on its ability to meet demands and respond quickly to fluctuations and change.
Sainsbury's and the bare necessities
Get it wrong and the consequences can be painful - as Sainsbury's discovered to its considerable cost. Only a decade or so after being the UK's leading supermarket, a lack of investment had already left the company trailing in the wake of rivals Tesco and Asda. It goes without saying that the last thing Sainsbury's needed was for its new, automated supply chain to fail.
However, empty shelves in its stores were testimony that it did. Any supermarket knows that poor stock availability is a cardinal sin and even the slickest marketing becomes impotent when the products involved are buried away in some depot instead of being at the end of the supply chain that matters. In this case, some Sainsbury outlets struggled to even provide an acceptable percentage of staple products. Dissatisfied customers understandably went elsewhere and, in late 2004, the company posted its first ever loss. Rather ironic since many retailers believe that modifying the supply chain is one way of dramatically trimming expenses.
So where did Sainsbury's go so badly wrong? Perhaps at least part of the answer lies in the old saying that "great haste makes great waste". Haste was certainly the name of the game here because the company:
* introduced technology more quickly than initially planned - cutting the timescale from seven years down to three; and
* launched much of the automation simultaneously instead of going...