Supply Chain Management (Case Study : Sainsbury's Supply Chain Strategies )

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Supply Chain Management (ENGM078)

Sainsbury’s Supply Chain Strategies

Arghavan Keivani 6150405

March 2011

A brief introduction to Sainsbury’s and its background J Sainsbury plc (Sainsbury’s) was founded in 1869 and is considered as a top UK-based food retailer having around 150,000 employees. It drives a chain consist of 500 supermarkets and 290 smaller format stores through the country which offer groceries, electricals, clothing, homewares, DVD rentals and financial services. There is an Online-channel making customers able to shop online, which is nearly 3% of the grocer's sales. [1] By having almost 150,000 employees in the United Kingdom, Sainsbury’s is providing customer-facing team, having members in 785 stores backed up by a network of logistics and other support staff. To make the employee engagement and motivation task a special challenge, 60% of these people work part-time. [2] Competitive strategy describes the set of needs of the customer which the company looks for in order to satisfy. Competitive strategy (mission) can be defined as an area of primary concern to managers, critically depending on a delicate understanding of industries and competitors. It is a combination of ends (goals/objectives) for which the firm is attempting and the means (policies) by which it is seeking to get there. [3] The spirit of creating competitive strategy is relating a company to its environment. Even though the related environment is very wide surrounding social as well as economic forces, the main element of the firm’s environment is the industry formatting the competitive rules of the games in addition to tactics likely available to the firm. [3]

Sainsbury’s Supply Chain

In 2004, Justin King started on a new strategy focused on supply-chain service to attempt stock availability, increased competitiveness on price and improving customer relationships. By dividing the customer base into 10 sectors, Sainsbury’s is focusing on customer/market sector and it is one of the key aspects of its actions. By analysis of Nectar Card purchases, the company is gathering customer cleverness (launched in autumn 2002 in conjunction with Debenhams, Barclaycard and BP), by making use of this information; Sainsbury’s can fit its offerings to suitable market sectors. In April 1994 a deep price war involved all the supermarkets including Sainsbury's. The management wanted stores to reduce the costs significantly because the financial return was low. Sainsbury’s chose the strategy of increasing the size of the sales area each year to keep its share prices. Not only working as a group was a way to decrease the costs but also it improved the relationships with the suppliers. Sainsbury’s has a very good relationship with its suppliers and manufacturers to make sure that each product which is supplied by a specific supplier is always available. So, there is no need for new contracts with new suppliers or manufacturers and also new and a higher price for sure. By this way, Sainsbury’s is making sure that it can keep the price down. Sainsbury’s needs some transportation in order to ship the products from the warehouses to Sainsbury’s itself. Although customers can pick the products by going to the stores, Sainsbury’s is providing a good service in delivery which is called Last Mile Delivery. [4]

Providing excellent availability of product in store, at the best possible cost, is the overruling objective of Sainsbury's Supply Chain. This indicates that Sainsbury's must get the right product in the right place, in the right condition, at the right time, as they believe that this is what their customers expect and deserve. The supply chain strategy meets the actual expected customer demand; not only focusing on the number of products sold.

Here, Supply Chain process needs the effective management over 2,000 suppliers at one end of the Supply Chain and 12 million stocking points in the stores, at the other end of the chain. By means...
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