The report gives an overview of logistics and operations management of a company. The company chosen here is Sainsbury that is the second largest supermarket chain of United Kingdom with market share of close to 16.9 %. The report here identifies the supply and demand side of Sainsbury supply chain. There is also a critical evaluation of the performance of supply chain of Sainsbury based on the activities of the organization. The report also identifies and discusses the importance of the both the internal and external supply chain. The report ends provide recommendations on how the company can undertake necessary steps for improving ensuring better supply chain management.
Sainsbury is operational based and therefore analysis of its supply chain requires consideration of varied number of strategic tools. Smooth running of a supermarket chain ensures adopting appropriate design processes for ensuring even flow throughout supply chain. An effective supply chain management is thus necessary for efficiently carrying out operations of the company.
Supply chain refers to the activities of business or organizations in presenting certain goods and services to the consumers. On the other hand, supply chain management refers to the management of business, activities or organizations to ensure that the consumer get proper return on their money (Christopher 2016). Sainsbury has put in place methods of supply chain management on the basis of certain operational aspects that ensured efficient supply chain utilization. The methods of supply chain management designed for Sainsbury included information technology, logistics and storage, procurement and warehousing.
The diversity of operation at Sainsbury has resulted in separate operations for each department. This resulted in interdependence of areas related to design and procurement. In this context, Kraljic procurement matrix is used for analysis of Sainsbury. This matrix thus makes it clear that procurement options are vital for cost reduction while satisfying and delivering the areas of customer demand with differentiation level in respect to generic strategy of Porter.
The supply method adopted by Sainsbury ensures the security of supplies and a safe inventory amount with any compromise on the cost. The adoption of the Krajlic procurement matrix makes the process of procurement a strategic one for Sainsbury. The first step ensures classification of purchases that involves indexing of the purchases based on supply risk and profit impact of the item (Padhi, Wagner and Aggarwal 2012). The second step deals with the analysis of the market which involves knowing the purchasing power of consumers along with suppliers. The third step refers to the strategic positioning which involves the high profit to the strategic positioning. This refers to the fact that the item with high profit impact purchased while simultaneously while mitigating higher risk of supply shortage of the inventory. The fourth step of the procurement model focuses on actions plans. This helps in determining the how the application of the strategic positioning and purchasing power helps in determining the proper mix of items to be purchased for Sainsbury operations. Sainsbury has also properly planned the logistical issue for proper management of supply chain by properly rail linking the warehouse with its flight terminals. This helped the company in better serving the customers in the general business segment (Wagner, Padhi and Bode 2013).
To ensure proper management of supply chain, the company has focused on the creation of proper warehouses and depots for the products. Thus, Sainsbury maintains an inventory stock that acts like a buffer for the supply chain (Mall and Mishra 2012). The company also took a move of automating the warehouses for ensuring ease of its activities. Sainsbury has also makes sure that the agents involved help in creating desired results. The company also makes use of information technology that helps in giving it a competitive edge. Sainsbury also make use of latest technology in terms in the areas concerning trade, finance, human resource and procurement. Through this Sainsbury has been able to generate customer satisfaction and efficiency at all time.
Sainsbury also focuses on synchronizing the various processes and business of supply chain so that they are able to share information. The information related to stock, logistics, demand details, forecasts and estimates are shared when required (Fernie and Sparks 2014). Sainsbury also makes sure that the inventory stock does not reach critical levels of the supply chain.
Sainsbury ensures proper planning of logistics for managing an effective supply chain. Therefore, the company went into contract with the players of the logistics sector, one of them being iForce. The contract not only includes the orders placed online but also the returns on the non food items (Farahani et.al 2014). One aspect of the contract has been the click and collects service that became quite successful during the Christmas. Sainsbury success in the effective management of logistics throughout supply chain lies in creating proper linkage of its warehouse between rail and flight terminals. Through setting up convenient depots the company has been able to improve its logistics. For efficient management of the supply chain, the company has ensured the creation of proper warehousing and its management.
One of the major components of the methods of supply chain represents the issue of stock. Therefore, it is important to identify the location and the amount of inventory in the organization within its supply chain (Chkanikova and Mont 2015). This prevents product stock of the company from reaching unfavorable levels within supply chain. Implementing the best methods for supply chain management ensures boosting the value of the firm through increased sale of the goods and service of the organization.
Sainsbury uses a complex Enterprise Resource Planning system (ERP). The ERP systems helps in the integration of business process and data related to transaction through the organization (Fernie, J., 2014). The software based system helps in employing a demand system dependent on push strategy. This helps in avoiding discontinuity of proper supply and any kind of bottle neck situations. The company also believes in proper compilation of the accurate data for avoiding any kind of mishaps due to data errors. Sainsbury in order to avoid such mishaps have automated the warehousing systems through the system of Global Data Synchronization (GDS). This has proved to be instrumental in dealing with the data related problems thereby ensuring success of the company. In Sainsbury, the agents of the supply chain management played a proactive role in ensuring that the system helps in creating desired results (Styles, Schoenberger and Galvez-Martos 2012). The constant use of information technology has ensured a competitive advantage of Sainsbury.
The management also seeks expert service on the efficiency of operation on the process of procurement and supply chain management. According to Correia et.al (2013), it is necessary for every company to improve its procurement systems and methods. Sainsbury also makes sure that the people responsible for managing the processes and the systems are well trained for ensuring performance as per expectations. This will not only help in applying but also discovering one of the best methods of supply chain management that will enable the company to yield optimal results(Stanger et.al 2012). Sainsbury however faces a problem of cash flow which the company is striving to address and solve thereby ensuring creation of space for making the payments. Sainsbury in order to ensure effectiveness in supply chain management implements a varied range of innovative systems like logistic operation, e-commerce and point of sale systems in the areas involving human resource, trade, finance and procurement supported by the software and hardware departments of Sainsbury.
The external supply chain of Sainsbury represents the network of activities occurring outside the company including the environmental factors and transportation that either directly or indirectly effects the operations such as supplier failure, natural disasters and changes in laws (Stadtler 2015). The activities occurring externally believed to have greater impact on the supply chain of Sainsbury. Compared to the external supply chain, the internal supply chain also has a huge impact on the final product and the delivery to the consumers. This is because; Sainsbury could do nothing without the supply of raw materials from its suppliers. The internal good goings determines whether the product is ready for delivery and sell. The primary factors responsible for determining the success of the internal supply chain involves in-depth planning (Monczka et.al 2015). This helps in optimization of the operations thereby leading to the success of Sainsbury. The optimization process of the internal supply chain not only helps in ensuring production on time but also happier employees through improved ability and comprehensive management for effectively dealing with sudden circumstances.
Implementation of an effective supply chain, be it external or internal, Sainsbury will be able to reduce waste, reduce shipping delays and overhead cost in a scientific manner (Rushton, Croucher and Baker 2014). The benefits of the systematic approach help in impacting product quality and turnaround time for Sainsbury. These are as follows:
Conclusion:
The report ends in the light by discussing the reasons for inclusion of supply chain management by Sainsbury. There is also a critical evaluation of the performance of supply chain of Sainsbury. The report also helps in the identification of the supply and demand side of the supply chain of the company. Thus, Sainsbury being the second largest retail chain in the United Kingdom focuses on supply change management distribution of goods and services at a global level. Through the report, one knows that the methods of supply chain management for Sainsbury based on aspects of procurement, logistics, information technology and warehousing.
Sainsbury makes use of the concept of ‘we supply’ solutions for monitoring the order status across the entire network and hence manage the availability of the products. This initiative undertaken by the company helps in improving the supply chain performance visibility. However, in recent times a new solution known as Radio-frequency Identification (RFID) when implemented can further improve the accuracy of the inventory. Thus, if Sainsbury incorporates the RFID it will also allow the company in reducing cost and gain wireless mobility through flexibility. Competitors like Tesco, Asda, Marks and Spencers have incorporated this new system into the operations. So it is highly recommended that Sainsbury too adopts it.
References:
Chkanikova, O. and Mont, O., 2015. Corporate supply chain responsibility: drivers and barriers for sustainable food retailing. Corporate Social Responsibility and Environmental Management, 22(2), pp.65-82.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Correia, F., Howard, M., Hawkins, B., Pye, A. and Lamming, R., 2013. Low carbon procurement: An emerging agenda. Journal of Purchasing and Supply Management, 19(1), pp.58-64.
Farahani, R.Z., Rezapour, S., Drezner, T. and Fallah, S., 2014. Competitive supply chain network design: An overview of classifications, models, solution techniques and applications. Omega, 45, pp.92-118.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Fernie, J., 2014. 02 Relationships in the supply chain. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.35.
Mall, S. and Mishra, S., 2012. RFID and Supply Chain Management: A Brief Outline. IUP Journal of Supply Chain Management, 9(3), p.52.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.
Padhi, S.S., Wagner, S.M. and Aggarwal, V., 2012. Positioning of commodities using the Kraljic Portfolio Matrix. Journal of Purchasing and Supply Management, 18(1), pp.1-8.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.
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