Sainsbury's Seeks Supply Chain Success

Sainsbury is using a Manhattan/Sun solution, which also incorporates Oracle software, as a key part of their strategic supply chain renewal program.

When a review conducted by leading UK grocer Sainsbury's found that the company "lacked the functionality to compete effectively," it swung into action with a supply chain solution developed by Manhattan Associates, using technology from Sun Microsystems. The Manhattan/Sun solution, which also incorporates Oracle software, is now being rolled out as a key part of Sainsbury's strategic supply chain renewal program.

"Sainsbury's is a business undergoing transformation," says Andy Banks, the company's supply chain development director. Demands on the company's supply chain included the need to increase its range, improve availability, handle new formats, deliver fresher products, adapt to an increased pace of change—and reduce costs simultaneously.

The company therefore embarked on a major "re-platforming" initiative, whose goals were to reduce the cost of system ownership and enhance its supply chain capability through improvements in efficiency, integration, and control. These improvements were deemed "essential for Sainsbury's fulfillment factories," says Banks. The company also needed to ensure that it was paving an upgrade and development path with its initiative.

Sainsbury's business has the enormous customer base common to retailers, and as Banks says, its "11 million different customers equals 11 million different needs." The company's supply chain encompasses 2,000 suppliers, more than 35,000 SKUs, approximately 500 stores, more than 6 million stock points, and around 800 million cases moved annually.

Simple Strategy for Complex System

To meet the challenge of achieving dramatic improvement in this complex environment, the company settled on a simple overall strategy: having great employees deliver excellent service at unbeatable cost.

Operational excellence was to be delivered through

• Network renewal
• Integrated systems and responses
• Supplier development
• A focus on the company's people and culture

Sainsbury's network is characterized as "a supplier-facing network linked to store-facing facilities." In its drive to improve, or "renew," it, the company invested in new facilities and pursued a program to achieve numerous benefits. Many of these benefits—including overall accuracy, simplified paperwork, product-friendly deliveries, and a closer relationship with depot managers—were of a general nature, whereas others—including faster shelf replenishment, faster vehicle turnaround, delivery from a maximum of three depots, timely delivery and notification, improvements in inventory accuracy, and an easy return of crates and roll cages—were specific.

The integrated systems and processes plan incorporated internal integration with respect to planning and operations as well as external integration with suppliers, product development functionality, and inbound shipments to warehouse operations. The major challenges for its suppliers were capability, compliance, and measurement. The company has several key requirements for delivery standards, including the ability to deliver products with readable codes and pallet labels, meet delivery times, meet pallet standards, transmit electronic delivery notes over the Web, and meet data integrity standards.

The fourth area, described by Sainsbury's as "challenges for colleagues [employees]," involved not only "teaching old dogs new tricks but also teaching new dogs new tricks," according to Banks. The process involved "driving behavioral change through measurement, development, and partnership" and was itself driven by several bedrock principles. These included a recognition that "leadership is critical" and that communications must be kept "simple, clear, and frequent," Banks says. "Tell people what you are going to do and how you are going to do it."

Sainsbury's has been committed not only to using the best technology but also to "getting the best people on the job, hoping for the best but planning for the worst," Banks says. The company's philosophy also embraces "making the most of the highs, because there will be lows," he explains.

Taking all this into consideration, Sainsbury's has been able to migrate from a custom-built, centralized legacy environment that was paper-based and used a batch-oriented mainframe and plain green-screen monitors to a new paperless system that operates in real time through a Web browser and has been integrated into key points in the supply chain.

The company has seen an improvement in underlying profit and has achieved a best-in-class cost per case with an in-store availability of 97 percent. There have been several "short-term wins," according to Banks, with a corresponding "confidence in the long-term strategy." Sun and Manhattan Associates were able to deliver the goods for Sainsbury's, to the benefit of the company's bottom line and its 11 million customers.