Analysis of the Warehouse Automation Failure at Sainsbury’s The WritePass Journal

Analysis of the Warehouse Automation Failure at Sainsbury’s Abstract Analysis of the Warehouse Automation Failure at Sainsbury’s ). 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 monitoring and evaluation of the project can affect the attainment of the intended objective (Alexander Walker, 2013). The minimal involvement by Sainsbury’s 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). Another possible cause, which has also been identified by Double Loop (2013) is that there was insufficient engagement between the company’s 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 then 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 Sainsbury’s warehouse automation project, it is also worth noting that the failure might have been partly 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). Porter’s Value chain Analysis of the Failure Porters value chain model can be used to identify the primary and supporting activities which contributed to the failure at Sainsbury’s According to 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, services and operations. Supporting activities, on the other hand, comprise of firm infrastructure, senior management roles, internal culture, procurement, outsourcing and technological developments. The model is represented in the diagram below, in which the functions that contributed to the failure at Sainsbury’s have been marked. Fig. 1: Sainsbury’s value chain components that contributed to the failure in warehouse automation The 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: Outbound 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 Sainsbury’s was being done so as to facilitate this primary activity in the organization. The failure of the warehouse automation 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 company’s 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 given 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 company’s 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 Porter’s (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). Conclusion This paper has presented a case of warehouse automation failure at Sainsbury’s in 2004. With the help of the Porter’s 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 Sainsbury’s 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. References Alexander, A. Walker, H., 2013. Sustainable supply chain management: towards a systems theory perspective. Dublin: EUROMA conference. Double Loop, 2013. Sainsbury’s Warehouse Automation Project. 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