Analysis of the Warehouse Automation Failure at Sainsbury’s

AbstractAll organizational departments play a collective role in ensuring that the intend goals and targets are achieved. It is snappy that they cogitation together because the whole is greater than the sum of the parts. Because of the connection that exists amongst different departments, adversity in unitary department may have a bad effect to the entire organization. In this regard, this report addresses the case of storage warehouse failure at Sainsburys. It provides an in-depth discussion of the failure and utilizes Porters value chain depth psychology model to explore how failures in primary and financial support activities from the model might have contributed to this.IntroductionOne of the responsibilities of managers is ensuring that all components or departments within the organization work in effect. This is because success in organization is dependent on the contributions made by different departments. There have been several cases where failure in a genius departm ent has adversely moved(p) all operations of the caller-out. This paper seeks to address this focussing issue by focusing on the failures that occurred in the warehouse mechanization strategy at Sainsburys in 2004 (Double Loop, 2013). It is based on the view that there are many operational failures or disasters occur due to managers need of understanding about the whole organization. This leads to problems in the synchronising of different organizational consorts.An Overview of SainsburysSainsburys is one of the largest supermarket chains in the United Kingdom, with a up-to-date market share of 17.7%. Apart from running the supermarket business, the brand too deals in the banking and property industries. Since it was founded in 1869, the corporation has undergone a phenomenal growth. Currently, it runs more than than 1,106 convenience stores and supermarkets, and has more than 150,000 employees. The company operates both as a wholesaler and as a retailer (Sainsburys, 201 4). It has stores that curb of supermarkets, convenience stores, and pharmacies. In the supermarkets category, the company runs Sainsburys cafe and Sainsburys fuel. It also 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. Key among these was the warehouse witness failure in 2004 (OBrien, 2004).Warehouse automation failure at SainsburysThe warehouse automation hold commenced in 2000 and had originally been meant to improve the efficiency of the companys supply chain. The project was under the business conversion programme, whose name planks were Electronic Point Sale (EPOS), supply chain management, and outsourcing of its IT projects to Accenture. The w arehouse automation project was intended to overhaul and improve supply chain management of the company. The company had originally intended to make installations of automated fulfilment dodgings in one of its distribution centres, Waltham Point in Essex. This is the companys biggest depot, and distributes stock around London and southeast England. By implementation of a barcode based fulfilment schema 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 afterward realized that automation system had developed technical issues, mainly errors in reading barcodes. Not only did this failure affect the companys operations, it also caused contractual rows between Sain sburys and Accenture, financial losses and undue attention from media. With reference to OBrien (2004), implementation of this project led to a pre-tax loss of ?39 million in the start-off half of 2004, the worst that the company had ever recorded in its 139 years of operation. This also made the company lose 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 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 being outsourced to might have had a good reputation in implementing such projects, the lack of involvement by parent company managers in the monitor and evaluation of the project can affect the attainment of the intended objective (Alexander & Walker, 2013). The minimal involvement by Sainsburys managemen t in this project explains wherefore 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).Another possible cause, which has also been identified by Double Loop (2013) is that there was insufficient engagement between the companys CEO and its IT suppliers in projecting the possible key business and IT risks. For this reason, no delivery strategy that could tackle these challenges was promptly designed (Chermack, 2011). This can also be considered as the lack of sufficient preparations by the thence CEO (Sir Peter Davis) before the initiation 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 have 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 progress 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). Given 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 part caused by automation challenges. The position 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 identify the primary and supporting activities which contributed to the failure at Sainsburys According to Porter (1985), generic value added activities can be divided into two. These are primary activities and support activities. P rimary activities comprise of inbound and outbound logistics, sales and marketing, services and operations. Supporting activities, on the other hand, comprise of firm infrastructure, senior management roles, internal culture, procurement, outsourcing and scientific nurtures. The model is delineate 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 belowOutbound logistics in the value chain, outbound logistics are referred to as activities that mainly relate to transference of goods to customers through warehousing. The automation of the warehouse at Sainsburys was being done so as to facilitate this primary activity in the organization. The failure of the warehouse automat ion to effectively take place thus 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 information is passed within the organizational precinct (Wright, 2012). The failure was due to the miscommunication by the CEO, where he purported that the project was on the right track and had in fact saved the company a reasonable amount of money. This shows that he was either being giv en 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).ConclusionThis paper has presented a case of warehouse automation failure at Sainsbury s in 2004. With the answer 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 theory perspective. Dublin EUROMA conference.Double Loop, 2013. Sainsburys Warehouse Automation Project. Online Available athttp//www.doubleloopconsulting.com/sainsbury-warehouse-automation Accessed 6 Mar ch 2014.Kardes, I., Ozturk, A., Cavusgil, S.T. & Cavusgil, E., 2013. Managing global megaprojects Complexity and risk management. International Business Review, 22(6), pp.905-17.OBrien, L., 2004. Digital disaster. 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