Analysis of the Warehouse Automation Failure at Sainsbury’s

AbstractAll ecesisal departments play a joint role in ensuring that the intend goals and targets argon achieved. It is vital that they work unitedly because the strong is greater than the sum of the parts. Because of the connection that exists amongst opposite departments, ill in single department may conduct a detrimental number to the entire organization. In this regard, this report addresses the case of warehouse give outure at Sainsburys. It provides an in-depth discussion of the failure and utilizes ostiarys determine kitchen range analytic thinking model to explore how failures in old and supporting activities from the model mogul have contributed to this.IntroductionOne of the responsibilities of managers is ensuring that tout ensemble components or departments within the organization work effectively. This is because success in organization is dependent on the contributions make by different departments. There have been s eeral cases where failure in a singl e department has adversely affected all operations of the association. This paper seeks to address this concern issue by focusing on the failures that occurred in the warehouse automation strategy at Sainsburys in 2004 (Double Loop, 2013). It is based on the view that thither are many guidening(a) failures or disasters occur due to managers omit of beneathstanding about the on the whole organization. This leads to problems in the synchronization of different organizational functions.An Overview of SainsburysSainsburys is one of the largest supermarket chains in the United Kingdom, with a current market circumstances of 17.7%. Apart from running the supermarket business, the brand similarly deals in the banking and property industries. Since it was founded in 1869, the high society has undergone a phenomenal growth. Currently, it runs more than 1,106 convenience stores and supermarkets, and has more than 150,000 employees. The caller-up operates both as a wholesaler a nd as a retailer (Sainsburys, 2014). It has stores that comprise of supermarkets, convenience stores, and pharmacies. In the supermarkets category, the company runs Sainsburys cafe and Sainsburys fuel. It in any case has an online business referred to as Sainsburys online, and comprises of Sainsburys Energy, Entertainment, Compare and Save, and Sainsburys gift cards. There are also banking and mobile businesses that are run by the company. Even with this level of success that the company presently enjoys, it has also undergone a number of challenges, some of which have led to heavy losses. name among these was the warehouse final cause failure in 2004 (OBrien, 2004).Warehouse automation failure at SainsburysThe warehouse automation project commenced in 2000 and had to begin with been meant to improve the efficiency of the companys supply chain. The project was under the business transubstantiation programme, whose key planks were Electronic contingent exchange (EPOS), supply c hain management, and outsourcing of its IT projects to Accenture. The warehouse automation project was intended to take place and improve supply chain management of the company. The company had originally intended to make installations of automated fulfilment systems in one of its distribution centres, Waltham Point in Essex. This is the companys biggest depot, and distributes stock around London and atomic number 34 England. By writ of execution of a barcode based fulfilment system though this project, it was projected that it could make the companys warehousing operations more streamlined and efficient (Double Loop, 2013).Three years into the launch of the business transformation programme, the CEO who had launched the project reported that it was on the right track, and had saved the whole organization a total amount of ?700 million. However, it was later derived that automation system had developed technical issues, mainly errors in reading barcodes. non only did this failu re affect the companys operations, it also caused contractual rows between Sainsburys and Accenture, financial losses and undue attention from media. With name and address to OBrien (2004), implementation of this project led to a pre-tax loss of ?39 million in the first half of 2004, the worst that the company had ever recorded in its 139 years of operation. This also made the company have ground to its competitors in the market, which included Asda and Tesco (Double Loop, 2013).Causes of the failureThis failure can be attributed to several(prenominal) management issues in the company. One of these was the situation on which IT projects, which were to facilitate the automation project, were outsourced to another company (Abdullah & Verner, 2012). Even though the company beingness outsourced to magnate have had a good reputation in implementing such projects, the neediness of involvement by parent company managers in the monitoring and rating of the project can affect the attai nment of the intended objective (Alexander & Walker, 2013). The stripped involvement by Sainsburys management in this project explains why it took three years and a change in leadership to realize that the project was not likely to attain its set objectives (Alexander & Walker, 2013). some other realizable cause, which has also been identified by Double Loop (2013) is that on that point was scant(predicate) engagement between the companys CEO and its IT suppliers in project the possible key business and IT risks. For this reason, no delivery strategy that could play these challenges was cursorily designed (Chermack, 2011). This can also be considered as the lack of sufficient preparations by the then CEO (Sir Peter Davis) before the inception of the project. Insufficient preparation exposes projects to the risk of possible failure and over-expenditure (Kardes et al., 2013).There was also a communication problem, which can be mainly blamed on Sir Peter Davis. Whereas it must h ave been known to him that the project could probably fail to serve its intended objective, his presentation about the project to the public was that its pass along was as planned and that by 2003, it had saved the company ?700 million. Had the issues been frankly and promptly pointed out, necessary measures could have been undertaken to avert the heavy loss that was later incurred (Aula & Siira, 2010). precondition that this failure was associated with the warehouse automation exercise at Sainsburys warehouse automation project, it is also worth noting that the failure might have been partially caused by automation challenges. The fact that automated system failed to operate as it was intended to, indicates that all the inputs in terms of time, money and resources were lost (Kardes et al., 2013). porters Value chain Analysis of the FailurePorters value chain model can be used to cite the primary and supporting activities which contributed to the failure at Sainsburys According t o Porter (1985), generic value added activities can be divided into two. These are primary activities and support activities. Primary activities comprise of inbound and outbound logistics, sales and marketing, operate and operations. Supporting activities, on the other hand, comprise of firm infrastructure, senior management roles, internal culture, procurement, outsourcing and technical developments. The model is represented in the diagram below, in which the functions that contributed to the failure at Sainsburys have been marked.Fig. 1 Sainsburys value chain components that contributed to the failure in warehouse automationThe functions marked in the value chain model above have been identified as the contributors towards the identified failure. They are explained in more detail below outgoing logistics in the value chain, outbound logistics are referred to as activities that mainly advert to transference of goods to customers through warehousing. The automation of the warehou se at Sainsburys was being done so as to facilitate this primary activity in the organization. The failure of the warehouse automation to effectively take place and so affected the activities in outbound logistics (Zott et al., 2011).Senior management Roles There was a failure by the senior management, led by the companys CEO to effectively make an exhaustive plan of the warehouse automation project, which could have identified the potential risks and contributed to the formulation of possible strategies to overcome these challenges (Kardes et al., 2013). Another failure by the management was in terms of their involvement in the implementation of the project, only to identify issues three years after implementation of the project (Double Loop, 2013).Internal Communications This function refers to how effectively and accurately schooling is passed within the organizational precinct (Wright, 2012). The failure was due to the miscommunication by the CEO, where he purported that the p roject was on the right track and had in fact saved the company a reasonable amount of money. This shows that he was either being disposed(p) the wrong information by the contractor company or he was presenting wrong information about the project.Technology developments It has to be acknowledged that the companys agenda was to improve its service delivery to its customers through technological innovation. However, given that the entire automation project failed to materialize, it can be argued that there was a technological development failure. According to Porters (1985) model, technological development comprises of all activities that relate to the processing and management of information. It also involves the activities undertaken in ensuring that the organization keeps up with the latest technological changes.Outsourcing The IT automation project was undertaken by Accenture, an outsourced IT company, which failed to deliver the intended automation results, and ultimately led to the cancellation of the contract (Double Loop, 2013). ratiocinationThis paper has presented a case of warehouse automation failure at Sainsburys in 2004. With the help of the Porters value chain model, several primary and supporting activities that might have contributed to the failure have been identified. The identified primary activities are inbound logistics and outbound logistics. Supporting activities are outsourcing, technology developments, internal communications and senior management roles. The fact that all these activities affected and were also affected by the warehouse automation failure at Sainsburys proves that many operational failures or disasters that occur because there is lack of understanding of the whole organization, resulting in problems in the synchronization of different organizational functions.ReferencesAlexander, A. & Walker, H., 2013. Sustainable supply chain management towards a systems guess perspective. Dublin EUROMA conference.Double Loop, 2013. Sainsburys Warehouse Automation Project. Online Available athttp//www.doubleloopconsulting.com/sainsbury-warehouse-automation Accessed 6 bound 2014.Kardes, I., Ozturk, A., Cavusgil, S.T. & Cavusgil, E., 2013. Managing global megaprojects Complexity and risk management. International short letter Review, 22(6), pp.905-17.OBrien, L., 2004. Digital disaster. Online Available athttp//www.supplymanagement.com/analysis/features/2004/digital-disaster/ Accessed 6 March 2014.Porter, M., 1985. Competitive Advantage. New York Free Press.Sainsburys, 2014. About us. Online Available at http//www.j-sainsbury.co.uk/about-us/ Accessed 6 March 2014.Zott, C., Amit, R. & Massa, L., 2011. The business model recent developments and future research. Journal of guidance , 37(4), pp.1019-42.Abdullah, L.M. & Verner, J.M., 2012. Analysis and application of an outsourcing risk framework. Journal of Systems and Software, 85(8), pp.1930-52.Aula, P. & Siira, K., 2010. Organizational Communication and betr othal Management Systems A Social Complexity Approach. Nordicom Review, 31, pp.125-41.Chermack, T.J., 2011. Scenario Planning in Organizations. atomic number 20 Berrett-Koehler.Wright, M., 2012. Gower Handbook of Internal Communication. Burlington Gower Publishing.