资源描述
Obstacles to supply chain management implementation of Sainsbury’s re-engineering programmer
1.0 Project Aim
The aim of this research project is to analyze the reasons why Sainsbury’s has made a radical change of the supply chain, more importantly, to examine the obstacles of implementation of the new supply chain.
2.0 Project Objectives
l To briefly describe the importance of the supply chain in the industry of the supermarket.
l To examine the reason of the fall of the Sainsbury’s old supply chain strategy.
l To analyze Sainsbury’s new supply chain activities in implementation, and to assess the possible obstacles to Sainsbury’s SCM (supply chain management) implementation.
l To put forward recommendations of how to overcome the barriers of implementation SCM in Sainsbury’s.
3.0 Context
In order to have a clear understanding of this research it is essential to outline the basic theory of the supply chain and in addition give an overview Sainsbury’s supermarket which has undertaken a new supply chain system to improve its performance.
3.1Area of Research
The SCM is indeed a very broad area. The scope of this research is restricted to supply chains in supermarket industry where the success of logistics processes is largely dependent on how well physical deliveries are integrated into the implementation of a project. More importantly, these research objectives will specifically focus on the obstacles of implementation of SCM in Sainsbury’s.
“Over the past decade, companies have been focusing their competitive strategies on leveraging the competencies and capabilities to be found in the clusters of customers and suppliers constituting their business supply chains” (Ross, 2003). Today’s best enterprises have increasingly looked toward SCM to gain the competitive advantage that is difficult to imitate.
As for the supermarket industry in the UK, the competition among the Sainsbury’s, Tesco and ASDA is fierce and the margin is extremely low. To gain the market share, it is necessary to have an effective supply chain, for the reason that the basic functionality of the retail industry is about how to deliver the goods from the supplier to the end customer in a proper way. Therefore, “supply chain development is a key aspect of retailers' drive towards market domination” (Campbell, 2003).
3.2 Company Overview
Sainsbury's Supermarkets was established in 1869 and is Britain's longest-standing major food retailing chain, employing over 145,000 people.( Sainsbury’s website, 2005).however, by the mid-1990s, it was abundantly clear that Sainbury's could no longer keep up. The grocery giant had already been bested by longtime rival Tesco. Furthermore, Sainsbury's faced increasing pressure from Asda, which was acquired by Wal-Mar.
The reason of Sainsbury’s itself was that the company was using a 30-year-old warehouse management system (WMS), compared to the age of the average Tesco depot—seven years. The consequences were apparent: stock shortages were common, and on one occasion, all of the depot systems crashed when Sainsbury's tried to order goods in a different way. Much of the technology budget was dedicated to maintaining the complex and outdated IT infrastructure; and it was particularly difficult to launch new business initiatives (, 2004).
The change of Sainsbury SCM had begun in the late 1990s with the retailer's adoption of Manhattan Associates' advanced WMS system, which is a global leader in providing supply chain execution and collaborative commerce solutions. But wholesale change came in 2000 when Sainsbury’s outsource the entire IT function to Accenture, which was responsible for the IT transformation program at Sainsbury's, including some of the supply chain systems. The transformation is arguably the largest and most ambitious retail supply chain project in Europe which will be completed in 2005(, 2004).Sainsbury's was confident that the investment in supply chain technology is enabling it to measure stock-levels and sales in real-time rather than the day after, as with the old system, which will make the difference and help it claw back market-share (Campbell, 2003).
Nevertheless, in terms of the financial performance of Sainsbury’s in 2004, the advanced new supply chain was driving Sainsbury's to the worst pre-tax result in its 135-year history. Some analysts argued the failure of Sainbury's supply chain is the result of introducing sophisticated technology too quickly. However, some still believe bad financial performance was temporary and there was nothing wrong with the supply chain (O'Brien, 2004).
Due to the fact that the performance in Sainsbury’s with its re-engineering program was not what Sainsbury’s expected, the purpose of this study is to identify and describe key factors that impeded the implementation of supply chain choices.
4.0 Literature Review
This chapter presents the basic management concepts and theories that are essentially linked to the research problem and questions. The chapter is composed of three sub-chapters. It starts with an introduction to the concept of supply chain management and its main objectives. The purpose is to create a solid base for judging the successful elements of the supply chains. The second sub-chapter deals with the obstacles to SCM implementation.
The literature search has done by making the greatest use of the secondary literature sources, and followed by the primary literature sources. Hence, there is a wide range of literature relating to the broader area of SCM, including business newspapers, books, journals, electronic resources on Internet. There is however far less literature relating particularly to SCM within the retail industry. As for this reason, only half of them were taken into consideration.
4.1 SCM (Supply Chain Management)
Over the past decade, there has been an increasing emphasis on supply chain management through which firms can achieve competitive advantage in markets (Dyer, Cho and Chu, 1998). A large number of examples in the 1990s, both successful and abortive, show how companies have made large investments to streamline their supply chains in order to improve customer satisfaction and increase their internal productivity. As Christopher (1998) states, it is not actually individual companies that compete with each other nowadays; rather, the competition is between rival supply chains. Those supply chains that add the most value for customers with the lowest cost in the chain make up the winning network of individual companies. Therefore, it is now necessary to take a closer look at the concept of supply chain management and its key objectives.
All too often in the literature the term supply chain management is narrowly understood to be the same as logistics management. In fact, the concept of supply chain management has been derived from logistics management and it has a broader scope than tradition logistics within companies.
Mainly due to the oil crises in the 1970s, when both transportation costs and interest rates – and thus also inventory carrying costs - rose at the same time, the importance of logistics to a company’s profits was really understood by top management (Ballou, 1992). It was then soon realized that optimization of physical distribution alone was not good enough, but rather purchasing and material handling should be integrated very tightly into it. This integration process was leading to an evolution of logistics management that according to many sources (e.g., Langley and Holcomb, 1992; Ballou, 1992; Gattorna & Walters, 1996) can be considered to be the combination of two management disciples: physical distribution and materials management. Gradually, logistics management was understood as a cross-functional activity affecting the whole organization, instead of optimizing logistics separately in each functional column (Christopher, 1998). Christopher (1998) has defined supply chain management as follows:
“The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.”
In recent years the term supply chain management was confronted with some criticism that the notion does not describe its customer-oriented focus well enough (e.g., Christopher, 1998; Vollmann and Berry; 2000). Therefore, the term demand chain management has been used alongside supply chain management in the literature to stress the importance of customer-oriented thinking. However, this work maintains that a demand chain is not the same as a supply chain, and therefore demand chain management and supply chain management are not synonymous. According to
Eloranta (1999), a demand chain transfers demand information from end customer markets to suppliers, whereas a supply chain creates products and services that are transferred from suppliers to end customers. Working together, the demand and supply chains create the demand-supply chain. A demand-supply chain is an end-to-end network where demand knowledge is passed from markets to supply sources and value offerings are passed from supply sources to consumers (Eloranta, 1999).
Figure 1: Demand-supply chain (Eloranta, 1999)
4.2 Obstacles to SCM implementation
Change was the hot management topic of the 1980s and 1990s. It seemed that every organization was doing it and every author was talking about it. The strategic change was cited as the only way to survive the accelerating cycle of product and process innovation (burgess, 2001). By 1994 over 40% of major US companies had had 11 or more major change programmers in the previous years (Filipczak, 1994). Achieving a step change of SCM can provide organization with a significant competitive advantage if it produces the right results. But, accomplishing this level of change is never easy. Indeed, “by most estimates 50% to 70% of SCM change initiatives launched in the past 20 years failed to achieve their objectives”(burgess, 2001).
After 20 years of sustained change management theory and practice, and almost ten years of supply chain management, a successful implementation can still provide a competitive advantage. In 1996, Donlon stated that the ‘main barriers to full SCM literature also fails to raise the obstacles that may be faced by those implementation SCM. Unfortunately, the author did not explain what these familiar barriers are. Similarly, a survey be Ernst and Young identifies that organizations place excessive emphasis on IT, and not enough upon the real problems associated with SCM (Baxter, 1994).
In 2002, research by Burgess has shown that there are six main obstacles to implementing SCM (see Figure 2). Each of these obstacles could severely limit or totally prevent the success of the SCM programmer. The figure below illustrates the six major obstacles that companies implementing SCM have faced on their paths to achieving SCM.
Figure 2 Major obstacles to SCM implementation
5.0 Methodology
This chapter describes the different research approaches of the study and provides a comprehensive analysis. According to Saunders (2000), these approaches and strategies obviously do not exist in isolation and therefore can be ‘mixed and matched’. Therefore, this research will combine quantitative and qualitative methods and to use primary and secondary data.
The different methods of this study will be put forward by three parts. The first part is desk based research, using both quantitative and qualitative methods to collect secondary data; the second part is field based research, using qualitative method to collect primary data; the last part is preparation of the case study, using both quantitative and qualitative to combine data and research.
5.1 Desk Based Research
To have a clear understanding of current theory practice in the research area, it is important to consider initially the possibility of secondary data. “Secondary data include both quantitative and qualitative data, and they can be used in both descriptive and explanatory research.” (Kervin, 1999).
To locate the secondary data, the first step will be ascertaining whether the data of the study are available. There are a number of clues to find the secondary data. As part of the literature review, the researcher has already read books and journal articles on chosen topic. In addition, these books and articles also provided references to the sources of the data. In formal discussions is a useful source. When doing this study, the researcher found helpful guides after a discussion with a PHD student who was doing a project in the same area.
The next step will be finding the located data. A large number of books, journals, and newspapers about SCM have been found in the Aston University’s library. Another very important part was the Internet. Large amounts of information about the sainsbury’s reports and statistics have been collected on the Internet. Furthermore, many useful electronic resources about implementation of business re-engineering have gathered by the electronic database on the Internet.
However, secondary data for a specific purpose that differs from the research question or objectives (Denscombe, 1998). One reason is that books researcher found are a few years earlier and so are not current. In additional, although there are many of the electronic resources available, not all of them are high quality and relevant.
5.2 Field Based Research
With analyzing all the available data collecting methods and to best find answers to the research questions, there is two main methods have been selected:
Firstly, a self-administered questionnaire will sent out on-line and delivery by hands
to different age group people. Saunders (2003) stated that questionnaires can be used for descriptive or explanatory research, which will enable you to examine and explain between variables, in particular cause-and-effect relationships. The researcher’s intention of the questionnaire is to find what Sainsbury’s difference is after re-engineering and how much the customer’s confidence for Sainsbury’s future.
Secondly, the researcher is planning to have five unstructured interviews with employees and two semi-structured interviews with managers working in the supply department. The purpose of this interview is to combine the views of senior mangers with more junior team members. For the unstructured interviews, it is given the opportunity to talk freely about event, behavior and beliefs in relation to the topic area. Whilst as for the semi-structured interviews, it is more focus on specific context although the researcher could omit some questions. Both of interviews require the interviewer have a clear idea. However, the consideration must be given to the quality of data collected. Saunders (2003) noted that researchers must consider r
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