Supply Chain Restructuring at Sainsbury' Supermarkets Limited

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Case Details:

Case Code : OPER094
Case Length : 18 Pages
Period : 2000-09
Organization : Sainsbury's Supermarkets Limited
Pub Date : 2010
Teaching Note :Not Available
Countries : UK
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Realizing that the company had been operating with the same supply chain and IT systems for over two decades, Davis immediately took up the task of sprucing up the supply chain. He introduced highly automated systems. The company did well during the initial years of Davis's tenure, but after four years, problems cropped up. While the backrooms and the storage areas of the stores were full of stock, the products were not available on the store shelves.

Due to its dismal performance, Sainsbury's board replaced Davis with Justin King (King) as the retailer's new CEO in March 2004. King reviewed the retailer's supply chain and replaced the fully automated systems with semi-automated systems and ensured on-time availability of stock.

According to him, "The first priority was a short-term fix to ensure the right goods were on the shelves at the right time for our customers. We've stabilized the performance of our automated depots by over-riding some of the systems with manual solutions."3

This move started showing results soon and Sainsbury's revenues, which had been at 16,573 million in the fiscal 2005, increased to 20,383 million by the fiscal 2009.

Background Note

Sainsbury's first store was opened by John James Sainsbury (John) and his wife Mary Ann Sainsbury in 1869 at their home in Drury Lane, London. The store offered high quality food at reasonable prices. Initially, only fresh food was sold. Later, the store started to stock some packaged grocery items like tea and sugar...

Excerpts >>

3] Sainsbury's Annual Report, 2007.


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