sainsbury's supply chain case study

SCM Insight

Supply chain analysis of sainsbury’s.

Sainsbury’s Plc is a retail chain British supermarket brand. John James Sainsbury founded the retail chain supermarket brand in 1869. The company has established a network of approximately 1442 retail supermarket stores in various countries across the globe. Today, we’ll discuss the supply chain analysis of Sainsbury’s; it focuses on various SCM elements like procurement planning, inventory management, warehousing, automation, transportation, and distribution.

Let’s discuss the main elements of the supply chain analysis of Sainsbury’s are as follows;

Sourcing Sustainably

Sainsbury’s is highly careful and cautious about sustainable sourcing and procurement of raw supplies and materials. The retail chain supermarket brand has a strong commitment to the people, planet, customers, and health. The sustainable sourcing and procurement strategic approach helps the company to deliver a positive impact.

• Ensuring the origin of materials and supplies with positive impact on humans and the environment
• Well-developed systems and processes to effectively analyze the impact
• Managing the sourcing practices to ensure their compliance with the legal and regulatory requirements

Sustainable Procurement

Sainsbury’s has made a strong commitment to decrease the carbon emission rate and carbon footprint by 30% in 2030. Sainsbury’s is collaborating with various suppliers and vendors toward achieving its target of a net zero carbon emission rate. In fact, the retail chain supermarket brand is following the pro-nature sustainable business and supply chain strategy comprising of the following;

• Not changing the land and the production area directly or indirectly
• Making sure no deforestation and conversion-free
• Sustainable sourcing of raw materials and supplies
• Sourcing animal-based ingredients from the suppliers to ensure the health and wellbeing of animals
• Complying with human rights standards and ensuring the fair treatment of workers in the supply chain network
• Transparent and visible supply chain network

Tech Integration & Demand Forecasting

Sainsbury’s is upgrading its existing system and tech processes with AI and machine learning ML solutions to improve demand forecasting and stock replenishment capabilities. Blue Yonder is the warehousing software that the company has been using for a very long term and the company has upgraded it with the new on-premise system to improve its SaaS capabilities. However, the new ML technology helps the company to improve demand forecasting automatically and accurately generating the store orders. The tech integration helps the company in the following ways;

• Better and improved inventory and stockholding capabilities
• Transforming the company’s architecture and processes that are easy to comprehend, scale, and facilitate future business changes
• Decreasing the number of key systems to improve the user experience and decrease the technological risks
• Standardized workflow and automated user experience improve overall productivity

Collaborating with Farmers

Sainsbury’s is closely collaborating and coordinating with various farmers for the restoration of renowned cattle breeds. The retail chain supermarket brand has an integrated supply chain with beef and dairy farmers for the growth and nurturing of cattle farmers. It ensures customers that the retail chain brand is paying fair and market-competitive prices to the farmers; with complete transparency and not exploiting the hard work of farmers.

The close collaboration with farmers would help the company to ensure a smooth supply of chicken, beef, pork, and various other top-quality products. It helps the retail chain supermarket brand to promote sustainability and derive demand in the supply chain network.

Suppliers Network and Relationship

Sainsbury’s has established a very large supplier network ranging over 60 countries across the globe. The supermarket chain brand deals with a wide range of suppliers in clothing, food, GM, and various other general merchandising categories. The large and worldwide supplier network and better supplier relationships would help the company to ensure the smooth availability of raw supplies, materials, and products (food, clothing, and others) on time without any delays and disruption.

Transparency Supply Chain Network

Sainsbury’s puts a great emphasis on supply chain transparency, environmental sustainability, ethical sourcing, and addressing social issues. The retail chain brand publishes a long list of suppliers and partners involved in its supply chain network. However, ethical sourcing of raw supplies, and engaging with the right socially and environmentally sustainable practices help the company to build a better brand image.

Logistics and Distributions

Sainsbury’s employs various transportation and 3rdparty logistics service providers for the transportation and distribution of products and goods. The large distribution network plays a key role in delivering raw supplies and materials from the suppliers to the production and manufacturing facilities, packaging units, warehouses, and distribution centers, and then to the retail chain stores and the end consumers of the brand.

Conclusion: Sainsbury’s Supply Chain Analysis | Sainsbury’s Supply Chain Management

After an in-depth study of the supply chain analysis of Sainsbury’s; we have realized that Sainsbury’s is the world’s leading retail chain supermarket brand. If you are learning about Sainsbury’s supply chain analysis; then you should keep in mind the abovementioned SCM elements; procurement, planning, transportation, automation, inventory management, and sortation.

Ahsan is an accomplished researcher and has a deep insight in worldly life affairs. He goes Live 3 days a week on various social media platforms. Other than research writing, he’s a very interesting person.

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Creating a Sustainable Supply Chain with Sainsbury’s

Land App, Sainsbury’s and UK Centre for Ecology & Hydrology have formed an exciting partnership leading the way in the transition to sustainable food production and resilient supply chains.

This week, Land App announced a new and exciting partnership with Sainsbury’s – one of the UK’s leading food suppliers – to work towards a more resilient and sustainable supply chain. The project makes the most of Land App’s cutting-edge technology to highlight areas where biodiversity and habitat connectivity can be improved or restored, whilst targeting key interventions such as soil erosion and water pollution. By providing the tools for Sainsbury’s to monitor and track the environmental impact it has within their supply chain, the partnership will empower suppliers to make more informed decisions about farming with nature in mind. Increasingly, insight into land-use is recognised as critical for meeting biodiversity and net zero targets, and Sainsbury’s joining forces with Land App represents a significant step in this direction. 

Making a “Digital Twin” 

A key part of this process is to accurately map all of the farms that make up the Sainsbury’s suppliers, allowing for insight on the state of nature to be derived. Understanding key metrics such as the location of cropland, woodland and peatland – data which the farmers themselves own securely – as well as watercourse flow is critical to form what’s called the “baseline”. Once the “baseline”, or currently existing, contributions to biodiversity, connectivity and water quality are accurately mapped, then key steps to retain or improve them can be mapped out in a “land management plan” right across the supply chain. By creating access to a “digital twin” of the land that Sainsbury’s influences, not only can live habitat data be used to assess impact, but the pathway to a sustainable future can be precisely mapped before implementation. 

“The demand for balancing food production with environmental recovery has never been so pressing. Land App is delighted to partner with Sainsbury’s to help drive environmental regeneration across our landscapes, whilst promoting sustainable food production” – Dan Geerah, Innovation and Partnerships, Land App

The UK Centre for Ecology & Hydrology

However, Land App is not working alone. Partnering with UKCEH – the leading scientific research centre for Hydrology and Ecology – we are providing the suppliers with key information to ensure that nature-positive interventions not only happen, but are placed in the most ecologically beneficial position. We are now hosting the E-Planner datasets from UKCEH, which provides key information on the best place to create five habitat types, including plant pollinator mixes and wet grassland. This aims to empower farmers to identify areas on the farm where they can maximise the benefit for nature, and the farm as a whole. E-Planner supports and streamlines decision making by presenting complex environmental data in an easy to interpret way. To learn more about E-Planner, please visit the E-Planner Tool here .

“It’s really important for us as environmental scientists to find ways to ensure that our research can make a difference on the ground. We designed E-Planner to place our research data in the hands of farmers, in a way that helps them find opportunities to manage their land in more environmentally sustainable ways. It’s been great to work with Sainsbury’s, with its broad range of suppliers, and with the Land App’s widely used digital mapping tool ,  to widen the reach of E-Planner and help integrate it into farm decision making”. – Dr John Redhead, Spatial Ecologist, UK Centre for Ecology & Hydrology

Growing Food for the Future  

As policy makers and land managers start to think in broader terms of nature recovery at the landscape scale, and government schemes promoting soil health and biodiversity wait just around the corner, the drive to improve “Scope 3 Emissions” is all the more pressing. This means there is a greater need to understand the environmental impact from the individual field level in specific farms, to right across the supply chain. Improving biodiversity, soil carbon and habitat connectivity are all essential stages in transitioning to regenerative and sustainable land use. By using its vast network of suppliers to make genuine improvements to the environment where their products are grown, we hope that our Sainsbury’s partnership will establish them as leading figures in producing food with, and for, the future. 

“The environment is extremely important to Sainsbury’s and our customers, as a business we depend on nature and want to ensure that through our direct operations and wider supply chains we are doing everything we can to protect and preserve it. By collaborating with industry experts and combining it with the wealth of knowledge that our farmers have, together we can play a part in making our food better for the planet.” – Gavin Hodgson, Director of Agriculture, Horticulture & Fisheries, Sainsbury’s

Want to find out more about how you can map your own supply chain with Land App? Get in touch with us at [email protected] . 

Read Sainsbury’s blog here.

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Sainsbury's: Strategic Planning, Budgeting and Forecasting

Utilizing a big data approach to streamline our existing supply chain, the model    .

Our Cost of Production (COP) model is aimed at protecting dairy farm businesses from market volatility, both with respect to the price paid for their milk and the major input costs to the farms. The model moves dairy pricing away from standard market pricing to a financially open book cost based approach, based on data independently collected from the 320 Sainsbury’s Dairy Development Group (SDDG) farms. The COP model took 18 months’ work with the SDDG farmers and an independent dairy accounting specialist. In March 2012, 86% of the SDDG voted in favour of adopting the COP model. Every SDDG farm provides financial data which is then compiled into an average pence per litre for the group. All costs apart from the 3Fs (feed, fuel and fertilizer) are fixed for 12 months. On a quarterly basis, the 3Fs are adjusted to account for the actual market fluctuations.

The role of big data  

As well as collating financial data from the 320 farms in the Group, a significant amount of data is collected on herd health and efficiency. Each of the farms is incentivized to drive continual improvement using our ‘Herd Health and Efficiency Matrix’ which scores farms using a 100 point system. Submitted scores and declarations are subject to independent audit. The matrix scores are then used to reward excellence: the greater the score, the greater the farm's bonus. Data is also collected to support our Bovine Viral Diarrhoea (BVD) Control Scheme, aimed at eradicating BVD from our herds. This covers 250 farms, 20,000 heads of cattle and the results of over 2,500 blood samples. The data collected evidences that despite our cows producing more milk, they are healthier.

Finance team involvement 

The finance and commercial teams have actively led the Cost of Production initiative in conjunction with the agriculture team at Sainsbury’s, who are responsible for the day to day interaction with farmers. There has been a contraction in the British dairy industry with large numbers of farmers going out of business, and there was therefore a clear commercial imperative to safeguard the milk supplies in the UK market. The challenge and opportunity was to give our dairy farmers the stability and confidence to invest in the future of their businesses and protect them from market volatility. In doing so we have ensured consistent, resilient milk supplies whilst also ensuring a sustainable future for the SDDG farmers. The implications that implementing the COP model had for our business and the SDDG farmers was significant. We have decoupled our price negotiation from the market and linked our costs to a different set of volatile inputs beyond our control. Farmers have also decoupled their price negotiation from the market. This required strong buy in from the Operating Board at Sainsbury’s and our SDDG farmers. It was only the quality of the financial model, its data, governance and the processes that underpin it that was able to give the confidence and establish the trust within and across the businesses involved. The independence of our finance team internally and the independent nature of the dairy accounting specialist externally further supported this approach, working closely with SDDG farmers and our commercial, technical and agriculture teams throughout the process. 

The benefits       

The COP model serves to strengthen the long term commitment we have made to the SDDG as it guarantees them a sustained business margin which is something a market price is unable to do. The business margin element is a fundamental part of the model as it encourages investment and profitability. Our business recognizes that the most important part of sustainability is financial sustainability, which this model now secures. Financial certainty gives our farmers the confidence to invest in farm buildings, handling equipment and proactive herd health planning with their vet. These investments have already resulted in improvements to cow comfort which is contributing to us delivering our 2020 commitment to higher animal welfare standards on farm. These improvements ultimately lead to increased production efficiencies, which in the long term will bring the cost of producing a litre of milk down and reducing its environmental impact but, as the model secures a business margin, farms will remain profitable. Since January 2014 our COP price has been below the market milk price. Farmers have accepted this because it is based on data that is derived from their own businesses. The model, its data and governance gives the trust that the farms are still making a business margin. However, the market has now started to take a downward turn from which the SDDG will be protected which in turn will also protect our business from the negative PR that market volatility can generate.

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Sainsbury's: Embedding Sustainability in the Supermarket Supply Chain

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Strategic Analysis: The Case of Sainsbury’s Plc

by Amitava Majumdar | Nov 16, 2022 | Business Strategy | 0 comments

Introduction

This paper moves away from providing a theoretical perspective of strategy by engaging in the practical analysis of the corporate and business strategy of Sainsbury’s Plc; currently the second largest chain of supermarkets in the UK.

Sainsbury’s, established in 1869 as a shop in London, soon became the largest grocery retailer in the country and pioneered the concept of self-service retailing (Sainsbury’s Plc, 2018a). It was overtaken by Tesco in 1995 and Asda in 2003 in sales revenues (BBC News, 2003). The company however regained its second position in 2014 and currently has a market share of 15.6% in the UK.

Sainsbury’s long-term vision is to be the most trusted retailer in the UK, where people love to work and shop (Sainsbury’s Plc, 2018c). The firm aims to achieve this by putting customers at the heart of its business and investing in stores, colleagues and channels to offer the best possible shopping experience (Sainsbury’s Plc, 2018c). It has developed specific value systems and is committed to providing nutritious and healthy food for shoppers (Sainsbury’s Plc, 2018d, n.p). Sainsbury’s has 5 specific priorities:

• Further differentiation through food quality
• Engagement of increasing numbers of shoppers through useful advertisement and communication in a more engaging way
• Delivery on value through various means, particularly aimed at helping customers with lower prices
• Development and improvement of online channels
• Integrating Argos, which has recently been acquired by the firm, into the organisation (Sainsbury’s Plc, 2018e).

Notwithstanding the recent success achieved by the organisation, Sainsbury’s has been experiencing major marketplace difficulties on account of the financial crisis of 2008, the Covid 19 Pandemic and the continuing economic downturn (Peston, 2014). The downturn has drained money from shoppers and created great price consciousness; it has affected sales and profits. It has also driven the growth of discounters like Aldi and Lidl, who have been able to achieve significant market share at the cost of large supermarket organisations like Tesco, Sainsbury’s, Asda and Morrison.

Application of Chosen Models

This section analyses Sainsbury’s micro and macro-environment with the help of a combination of three chosen strategic models, the PESTEL Analysis, the Porter’s Five Forces Analysis and the SWOT Analysis.

Evaluation of Strengths and Limitations of Chosen Models

The Five Forces model is widely used for analysis of industries and environments, but suffers from a few limitations. The model assumes that the market is classically perfect and relatively static. It does not take account of strategic alliances and is best applicable for the examination and analysis of comparatively simple market structures. Its application becomes difficult in complex business sectors with multiple interrelationships, by-products and product groups. Technological breakthroughs and aggressive market entrants can alter business models, relationships and entry barriers that are considered in the five forces model (Johnsonet al., 2014, p82). The entry of Aldi and Lidl in the UK supermarket sector has, for example, radically altered the extent of competition within it.

The use of the PESTEL analysis also has some disadvantages and limitations, even though it has proved to be useful in macro-environmental analysis. The PESTEL analysis often does not provide the full picture and leaves gaps. Significant and swift shifts in any of the six factors can result in the irrelevance or obsolescence of the process. The conducting of a PESTEL analysis requires access to substantial data and absence of such information can result in the use of unnecessary assumptions and the generation of wrong outcomes (Ansoff & Nakamura, 2007). The use of the PESTEL and Five Forces tools should be done with care and with the understanding of their limitations.

Porter’s Five Forces Analysis

The application of the Porter’s Five Forces model helps in the assessment of the competitiveness of an organisation’s microenvironment with the help of five specific factors, namely the power of buyers and sellers, the threats from substitutes and new entrants and rivalry between market participants (Porter, 2008).

Power of Buyers

Supermarket shoppers in the UK have several alternatives to choose from for grocery purchases. There are four leading supermarket chains, namely Tesco, Sainsbury’s, Asda and Morrison, apart from discounters like Aldi and Lidl (who have achieved a combined market share of more than 10%). The UK also has approximately 18,000 standalone retailers dealing in groceries and other household items. Whilst organisations like Tesco and Sainsbury have been able to improve customer loyalty through specific schemes, the development of the financial crisis, the Pandemic and the economic downturn has made buyers price conscious and eroded old loyalties. The brand strength and individual benefits of different supermarket chains influence customer purchasing behaviour, but UK customers are increasingly moving towards economically priced products of good quality. The strengths of buyers can be considered to be medium to high.

Power of Suppliers

The major supermarket chains are large buyers and wield substantial purchasing power on account of the scope and volume of their purchasing. Most suppliers to these chains deal in a variety of foodstuffs and are eager to do business The supermarket chains make use of their bargaining power to control the terms of sales and get favourable payment terms. The power of suppliers is considerably low.

Threats from New Entrants

The establishment of a new supermarket chain is likely to involve substantial investment in space, capital and retailing infrastructure (Deloitte, 2014). These barriers are considerable and likely to reduce the possibility of new entrants coming into the market. Notwithstanding such barriers, two major discounting chains, namely Aldi and Lidl have not only entered the UK supermarket space, but have also brought about significant changes in consumer buying patterns through their economically priced goods (The Week, 2017, n.p). Whilst the numbers of individual retailers has reduced significantly over the years, this sector also periodically experiences new openings. The threats from new entrants appears to be medium.

Threats from Substitutes

Supermarket chains are long established in the UK and operate through various formats (Wylie, 2015, n.p). The primary threat from substitutes is likely to occur in the online space with purely online organisations like Amazon, increasing their presence in the market for retailing of groceries and household goods (Redman, 2018, n.p). Most supermarkets are responding to these threats by developing their online sales channel (Wylie, 2015, n.p). Sainsbury’s has invested significantly in online sales (Tan, 2017, n.p). The threat from substitutes can thus be considered to be medium to high.

Rivalry between Market Participants

Whilst the supermarket sector in the UK has traditionally been oligopolistic, this situation has been disturbed by the entry of the discounters (Wylie, 2015, n.p). The sector has become intensely competitive on account of the downturn in the economy, the impact of Brexit and the activities of the discounters (Chu, 2018, n.p). Most organisations in the sector are engaging in fierce competition, including the reduction of rates. The intensity of competition in the sector can thus be considered to be high.

With the strength of buyers, the threat from substitutes and market rivalry between participants being high, it can be concluded that the supermarket sector in the UK is extremely competitive. Strategic responses from organisations have to take this fact into account.

PESTEL Analysis

The conducting of a PESTEL Analysis involves the examination of the Political, Economic, Social, Technological, Environmental and Legal elements of the organisational environment and its various strategic implications (Ansoff & Nakamura, 2007, p72).

The political environment of an organisation has immense strategic implications. Whilst multinational corporations frequently have to deal with the political dispensations of their various host markets, The political environment in the UK has by and large been stable and pro-business, even though the contemporary environment appears to be volatile on account of Brexit and the fallout of the Covid 19 Pandemic. Sainsbury’s organisational management has to absorb the implications of these political changes and take appropriate strategic decisions.

The economic environment of the UK has been difficult since the development of the financial crisis in 2008 and the consequent economic recession. The Covid Pandemic increased unemployment, reduced spending power and subdued customer activity. It helped to drive the sales and market share of discounters like Aldi and Lidl, even as long time customers of chains like Tesco and Sainsbury’s switched loyalties and started patronising discount stores; driven by their more economically priced goods and services. The economic environment was further impacted by the sharp decline in the value of the pound, increased costs of imports, especially from the European Union and very little of export gains. Such developments have increased the pressure on supermarket chains like Sainsbury and motivated them to reduce their prices, which in turn has adversely affected their profitability.

Consumer buying behaviour has been impacted substantially by social changes and the Covid 19 Pandemic. Whilst the UK has in the past been affected by the breakdown of the joint family, the growth of nuclear homes and increases in the number of single-parent families, it is currently experiencing an ageing process. The average age of the UK population is increasing steadily. The proportion of people in the age group 65 and above is growing with every passing year and the elderly segment is increasing in importance for supermarket operators. UK supermarkets have to bring about changes in their product range and their internal environment to attract people from older age segments. Recent years have also witnessed significant changes in consumer lifestyle and an increasing preference for online transactions and healthy, organic and natural foods.

Technological

Technological advances have impacted practically all business sectors. Whilst modern supermarkets have adopted modern technology in supply chain management, logistics, transportation and in-store operations, supermarket operations have been fundamentally affected by the growth in online sales and the entry of online suppliers like Amazon. The online segment is growing rapidly, especially after the Covid 19 Pandemic; as customers increasingly prefer to order from their homes and receive deliveries at preferred places. Supermarkets have to respond to such changes in the marketplace.

Environmental

Modern customers prefer to patronise organisations with sustainable business models. Environmental laws, rules and regulations are being tightened to enhance the safety, security and protection of the environment. Supermarket leaders sector are taking several initiatives in areas like reduction of waste, conservation of energy and assistance to the community in order to improve the sustainability of their operations.

All business organisations must work within the ambit of the law. Organisational managements must take cognisance of the various laws, rules and regulations of their operational and business environment and carefully adhere to them. The failure to do so can result in significant penalties, fines and other adverse repercussions.

SWOT Analysis

The conduct of a SWOT analysis helps in the identification of organisational strengths, weaknesses, opportunities and threats. The SWOT analysis of Sainsbury’s is provided below.

Table 2: SWOT Analysis

(Source: Sainsbury’s Plc, 2018a, n.p; The Week, 2017, n.p; Partington, 2018, n.p; Chu, 2018, n.p)

Identification of Significant Strategic Issues

The examination of the organisation’s environment has helped in the identification of organisational strengths, weaknesses, opportunities and threats. The emergence of Aldi and Lidl has increased the competitive threats faced by the organisation. Such an examination has resulted in the identification of two specific and significant strategic issues, which are taken up for elaboration in this section.

The first important issue that needs to be addressed is the organisational capability for reduction of costs and development of cost leadership in order to respond to the various threats posed by the Covid 19 Pandemic, economically difficult conditions, lower purchasing power with customers, and continued intensely competitive activity from the discounters. Sainsbury’s operations in recent years have witnessed significant reduction in profitability on account of organisational limitations and inadequate cost control. The organisational management has to look at various options and take specific strategic decisions in order to generate cost efficiencies and establish cost leadership.

The second area of strategic significance is online sales. Online sales are increasing with every passing day and the online segment has become the fastest growing segment in the supermarket sector. Pure online grocery retailers like Amazon are increasing their activity and consumers are increasingly displaying tendencies to engage in the online purchase of groceries and other items. It is in this context essential for modern supermarkets to treat online sales as a critical strategic imperative and increase online business.

Implementation of Strategy

Sainsbury’s has been trying to improve cost reduction and achieve cost leadership through the identification of high-cost areas and their subsequent control. The organisation has initiated action for cost identification, minimisation and elimination; especially in areas of supply chain management. It is suggested that the firm should make strenuous and intense efforts to identify various areas of cost reduction and reduce costs. Sainsbury’s has taken initiatives to reduce and close unproductive retail outlets. Care should be taken to ensure that closure of such outlets does not result in a harmful reduction in retailing capacity.

Sainsbury’s merger with Asda, the third largest supermarket chain in the will generate considerable cost savings, which will enable the firm to reduce its prices, compete effectively with the discounters, increase sales and improved profitability. The firm should realise all the merger synergies as effectively as possible to ensure high levels of cost-effectiveness.

Sainsbury’s must draw out and implement strategic plans for increasing its presence in the online space across the country. This will help the organisation in enhancing its market share and its profitability.

Ansoff, I., & Nakamura, I. G., (2007), Strategic Management Classic Edition, 1 st edition, UK: Palgrave Macmillan.

BBC News, (2003), “ Asda overtakes Sainsbury’s ”, Available at: http://news.bbc.co.uk/2/hi/business/3112689.stm (accessed December 04, 2018).

BBC News, (2013), “ UK economy: The story of the downturn ”, Available at: https://www.bbc.com/news/business-22283940 (accessed December 04, 2018).

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Crowe, E., (2018), “ How technology is shaping the future of food retail ”, Available at: https://www.smartbrief.com/original/2018/04/how-technology-shaping-future-food-retail (accessed December 04, 2018).

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This appendix contains details about the three analytical models chosen for this exercise, namely the PESTEL analysis, Porter’s Five Forces model and the SWOT analysis. The PESTEL analysis is a widely used tool for the examination of an organisation’s macro environment (Johnson et al., 2014, p38). It involves the examination of the political, economic, social, technological, environmental and legal elements of an organisation’s macro environment. It is widely acknowledged that the macro environment of an organisation can play an extremely strong role in the formulation of an organisation’s strategies and objectives because the activities of a business can be influenced by various environmental trends and developments (Ansoff & Nakamura, 2007, p72). It is thus critically important to examine environmental factors in order to assess and examine their organisational implications from different perspectives. The financial crisis of 2008, for example, hurt the operations of most retailers in the UK and resulted in reduction of customer footfalls and greater interest in economically priced goods (Smithers, 2017, n.p).

The ongoing uncertainty about Brexit has also resulted in adverse business implications for most UK retailers (Partington, 2018, n.p). Continuous technological developments also have substantial implications for the working of supermarkets (Chen, 2017, n.p). The enormous spread of the Internet has resulted in enormous increase in e-commerce activities and has opened up an entirely new channel for modern organisations, including supermarkets (Crowe, 2018, n.p). Online sales are now the fastest growing sales channel and provide enormous opportunities to supermarket chains to access and service customers (Chen, 2017, n.p). It is, however, important to keep in mind that all macro-environmental factors may not be equally important and relevant for all business organisations. It is thus important for strategic managers to carry out a PESTEL analysis with care and identify the relevant and important macro-environmental factors, rather than concentrating equally on all of them.

The application of the Porter’s Five Forces model on the other hand helps in the examination and analysis of the microenvironment of an organisation through the analysis of five specific forces, namely the power of buyers, the power of sellers, threats from new entrants, threats from substitutes and the extent of market rivalry between market participants (Grant, 2010, p50). There is wide agreement on the fact that the various elements of an organisations micro-environment differ from each other in various ways (Ansoff & Nakamura, 2007, p77). The power of buyers can for example be extremely strong where choice is extensive and a number of organisations operate in the market (Wylie, 2015, n.p). It can, on the other hand, be very low where the market is monopolistic or oligopolistic in nature and customers do not have much choice in the selection of their suppliers (Deloitte, 2014, p5). The threats from new entrants are likely to be low, when there are several entry barriers, like in the case of capital-intensive or technology-intensive business areas. The threat from new entrants may, on the other hand, be quite high in business areas like restaurants, where entry does not require high technology or capital investment (Deloitte, 2014, p6). It is thus important to consider the various facets of an organisation’s microenvironment in order to determine the extent of its competitiveness.

The Porter’s Five Forces model has, however, been subjected to substantial critique by experts, who feel that its primary weakness results from the historical context in which it was developed (Grant, 2010, p49). The model assumes a classic perfect market and becomes less effective with greater regulation of industry (Ansoff & Nakamura, 2007, p80). It is also useful for the analysis of simple market structure and a comprehensive description of all the five forces becomes quite difficult in complex industries with multiple inter-relationships (Porter, 2008). It is thus important to use the five forces model carefully and in conjunction with other analytical tools like the PESTEL analysis and the SWOT analysis to develop a comprehensive situational analysis of an organisation.

A SWOT analysis is a comprehensive analytical tool that focuses on the identification and examination of four inter-related environmental factors, two of which, namely strengths and weaknesses are internal, whereas the other two, namely threats and opportunities are external (Grant, 2010, p52). The conduct of a SWOT analysis can help organisational managers in the identification of various environmental opportunities and the ways in which they can be exploited with the help of organisational strengths (Johnson et al., 2014, p40). It can be considered to be a foundational assessment model that engages in the measurement of what can and cannot be done by an organisation, as well as its potential threats and opportunities. It can help in the identification of organisational weaknesses and threats, as also their implications for the success of organisational implementation of the strategy. It helps in the discussion of an organisation’s core strengths and weaknesses and thereafter in defining opportunities and threats. It can be used for the evaluation of strategies, as well as investments (Ansoff & Nakamura, 2007, p83). A SWOT analysis, however, does have some specific limitations. A SWOT analysis focuses on only four primary functions and substantially more information is required for the making of business decisions (Grant, 2010, p52). It also does not help in the prioritisation of issues and can become extremely subjective without the right information. It is thus extremely important to refrain from depending upon only one of these analytical tools. It is important to make use of all of them in totality and thereafter arrive at a reasonably comprehensive understanding of the total organisational situation in order to form, assess and evaluate strategies.

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Sainsbury's (B): Transforming the Supply Chain (Japanese)

Case A: In 2000, under increasing competitive pressure from other major UK retailers J. Sainsbury's Supermarkets embarked on a radical transformation of its supply chain. The case study describes the challenges involved in rejuvenating the firm's supply chain infrastructure, systems, processes, and skill sets as part of an "all-or-nothing" strategy to regain a leadership position in the marketplace.

The teaching objectives are, first, to learn about recent developments in supply chain configuration and information systems in the retail industry, and second, to assess the opportunities and risks associated with major investments in supply chain restructuring. Case B The (B) case focuses on the performance measurement tools that Sainsbury's has implemented to improve the efficiency and effectiveness of its supplier relations. It describes the internal information system that provides up-to-date performance data on suppliers as well as an Internet-enabled system aimed at sharing daily supply chain information with suppliers. The case also demonstrates how a performance assessment tool called the Global Scorecard helps Sainsbury's and its suppliers identify opportunities for jointly improving their interface. Pedagogical Objectives: The teaching objectives are, first, to illustrate state-of-the-art information systems aimed at measuring and managing supplier performance in a retail context and, second, to discuss how retailers and suppliers can work together to improve the efficiency of their interface and strengthen their relationship.

• Supply chain management
• Consumer goods
• Performance management
• Global scorecard
• Supplier relations
• Supply chain organisation
• Efficient consumer response

Sainsbury's (A): Transforming the Supply Chain (Japanese)

By   Regine Slagmulder ,  Daniel Corsten

Sainsbury's : Supply Chain Performance Measurement (B)

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Evidence Case Study: Sainsbury’s  

The following case study was provided as part of the evidence for the effectiveness of employee engagement strategies in improving performance, productivity and, in the private sector profitability.  It has been used cumulatively with other submissions compiled by many leading companies and organisations to leave little room for doubt about the statistical importance of engaging employees.

This particular case study is an additional support to The Evidence Paper

Background:

Founded in 1869, Sainsbury’s is the third largest supermarket chain in the UK with over 150,000 colleagues and 1000 stores and depots.

Sainsbury’s complete an internal engagement survey, Talkback, where they measure their colleagues’ engagement with the business and then seek links between highly engaged stores and the stores’ performance.

Every colleague completes the survey at least once a year but they complete it on a rolling basis every quarter so that they are able to keep a temperature check on engagement and identify any peaks or troughs quickly. This also allows them to pull together sufficient data to make the results meaningful and gives them time to act on the feedback.

Sainsbury’s received consistently high colleague engagement scores, however they felt there was more they could do; specifically understanding the impact it was having on the business.

In 2011, supported by Engage, Sainsbury’s re-engineered the survey to ensure that they were not only measuring what was really important to colleagues, but also that the survey was more aligned with what they were trying to achieve as a business. Looking at the linkage between engagement and key business metrics so that they could better understand the impact that engagement has.

They did this by looking at two things simultaneously: analysing patterns between engagement and business metrics to see if there were any signs of correlation. At the same time they checked all other information to see if there were any others factors impacting these patterns – store size for example.

They found that colleague engagement had a positive and significant impact on sales growth, believing that the level of engagement can contribute up to 15% of a store’s year on year growth.

The statistical modelling has convinced a number of their leaders who have a mathematical and statistical bias, however they believe the real proof internally has been the internal case studies, which demonstrate the point.

‘Our 150,000 colleagues are the key to the success of our business, which is why we work hard to build and maintain high levels of trust with our colleagues. Great two-way communication and a high degree of involvement has meant that we have been able to consistently improve our levels of engagement, even against a challenging economic backdrop. And we can see a clear link between these higher levels of engagement and our sales performance.’                                       

Justin King, Sainsbury’s CEO

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I am reading some of these your interesting case studies and they a worthy materials to refer to in scholarly articles. Are these case studies contained in a book you publishhed in 2021 and if yes what is the name of the book and how can I get an e-copy. I am a M.Sc student.

The case study was a support to The Evidence here

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Case Study: Ulta Beauty and VARGO

Are you curious about how Ulta Beauty, the largest beauty retailer in the U.S., revolutionized their distribution centers?

Read this case study to uncover how Ulta Beauty partnered with VARGO® to implement Locus Robotics’ LocusBots and improve their supply chain operations. By listening to their associates and addressing key challenges, Ulta Beauty enhanced efficiency and productivity across their facilities.

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The Morning

The changing supply chain.

We explore why commerce has changed — and how companies and governments are reacting.

By Peter S. Goodman

I cover the global economy.

For decades, major companies have behaved as if geographic distance were almost irrelevant. A factory in China was the same as a factory in Michigan. The internet, container shipping and international trading arrangements had supposedly shrunk the globe.

No longer. The pandemic and geopolitical upheavals have exposed the risks of depending on faraway industry to make critical things like computer chips, protective gear and medicines.

I recently wrote a book on this topic, “How the World Ran Out of Everything.” I’ll use today’s newsletter to help you understand why commerce has changed — and how companies and governments are reacting.

The pandemic shock

The emergence of Covid in China ended the previous version of globalization. Quarantines shut Chinese factories at the same time that Western consumers, stuck in lockdown, ordered more manufactured goods like exercise equipment and electronic gadgets.

This combination of reduced supply and surging demand made other countries realize that they had become heavily dependent on a single nation — China — for many items, including medical supplies. Covid eventually faded from the headlines, but policymakers and business executives in the United States and Europe faced pressure to diminish their reliance on China.

A central reason for concern was the rise of geopolitical tensions. China wasn’t merely the world’s factory; it is also an autocracy that, under President Xi Jinping, has become more aggressive in asserting global influence. Xi, for instance, has been vocal about bringing Taiwan under China’s control, using force if necessary. Taiwan is the dominant manufacturer of the most advanced varieties of computer chips.

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A bi-objective model for the multi-period inventory-based reverse logistics network: a case study from an automobile component distribution network.

1. Introduction

• To optimize the transportation system in the ISACO company.
• To cut down transportation costs.
• To increase customer satisfaction by increasing the supply of customer demands.
• To allow the customers to return unused parts (which are not used by customers due to seasonal variations or environmental changes and market fluctuations.
• To collect and dispose or recycle the stock parts.

2. Literature Review

2.1. a review of the literature on distribution systems in supply chain management, 2.2. a review of the literature on green logistics in supply chain management, 3. materials and methods.

• Very high transportation costs induced by long round-trip distances.
• High costs imposed on the company as a result of vehicle breakdown.
• Frequent troubles related to timely goods delivery (e.g., the cities located far from Tehran, the chances are high that the goods do not reach on time).
• To benefit from the full capacity of cars, it is required that the amount of the ordered goods reach a certain quantity and then the goods be delivered to the representatives, which leads to dissatisfaction among the representatives and losing the competitive market.
• The lack of order and prioritization in the current system.
• Not considering different scenarios in decision making.
• Not being able to return unused or low-use parts by the representatives.
• The lack of an integrated system for receiving scrap parts.
• Not able to implement strategic planning.
• Some of the expected merits of the new system are the following:
• Reducing the costs resulting from redundant transportation.
• Increasing the representatives’ satisfaction level due to goods’ timely delivery and increasing the power to supply the demanded goods and the possibility of returning low-use parts to the representative.
• Systematizing transportation system which curbs other nuisances.
• Increasing the flexibility of the system.
• Decreasing the risks such as the sensitive parts becoming faulty during long transportation or the possibility of vehicle breakdowns that impose losses on the company.
• Building regional warehouses and reducing the heavy costs of the central warehouse.
• Controlling the system better and the potential to constantly improve.

5. Discussion and Conclusions

• Employing a multi-period model along with the power of inventory management so that it leads to reduced costs and increased revenue.
• With respect to the variety of available products, the number of product groups should be increased and included in the proposed model.
• Reducing the time of ordering periods to better use the multi-period model, supplying faster and more up-to-date customer demands in the year, and removing the barriers of the inventory cost increase through modeling and making decisions at the tactical and operational level.
• Raising the number of customers and applying the proposed model to the actual number of customers. It is worth mentioning that in this model, they were integrated into the provincial centers to facilitate the modeling of customer demand.
• Constructing regional warehouses in the locations suggested by the model outputs considering the construction cost and setting up and storing the goods in these warehouses.
• Launching the central warehouse number 2 when its effectiveness gets approved in all the models to properly benefit from it.
• Regularly controlling the proposed performance evaluation indices considering the possibility of changing the supply or demand pattern and making suitable decisions accordingly.
• Investigating the demand pattern in various time periods and the possibility of presenting a supplementary model for the probability mode of demand.
• Investigating the profit from waste recycling.
• Investigating the benefits of the brand’s mental image in terms of compliance with environmental issues.
• Considering production issues in the supply chain and distribution system.
• Including the demand of the different classes of customers in the distribution system and locating facilities; accordingly, in other words, assessing the effect of marketing decisions on the strategic macro-decisions of facility location.
• Considering other location benchmarks.
• Determining the order supply deadline for all sorts of goods orders and programming to supply them within the deadline and its effect on facility location problems.
• Considering other objective functions like social aspects, employment rates, and environmental impacts according to the priorities of managers and decision-makers.

Author Contributions

Data availability statement, conflicts of interest.

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Share and Cite

Khalilzadeh, M.; Antucheviciene, J.; Božanić, D. A Bi-Objective Model for the Multi-Period Inventory-Based Reverse Logistics Network: A Case Study from an Automobile Component Distribution Network. Systems 2024 , 12 , 299. https://doi.org/10.3390/systems12080299

Khalilzadeh M, Antucheviciene J, Božanić D. A Bi-Objective Model for the Multi-Period Inventory-Based Reverse Logistics Network: A Case Study from an Automobile Component Distribution Network. Systems . 2024; 12(8):299. https://doi.org/10.3390/systems12080299

Khalilzadeh, Mohammad, Jurgita Antucheviciene, and Darko Božanić. 2024. "A Bi-Objective Model for the Multi-Period Inventory-Based Reverse Logistics Network: A Case Study from an Automobile Component Distribution Network" Systems 12, no. 8: 299. https://doi.org/10.3390/systems12080299

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Money blog: Aldi axes click and collect - as Tesco 'digital passport' plan revealed

Welcome to the Money blog, a hub of personal finance and consumer news/tips. This morning's posts include Aldi axing click and collect and Tesco launching digital passports. Leave a comment on any of the stories we're covering in the box below - we round them up every Saturday.

Thursday 15 August 2024 07:41, UK

• Aldi axes click and collect
• Tesco launching 'passports' for its clothing
• UK inflation rises for first time since December - analysis

Essential reads

• Is this the end of the British pub?
• What's gone wrong at Asda?
• Best of the Money blog - an archive of features

Tips and advice

• TV chef picks best cheap eats in London
• Savings Guide : Why you should now be checking T&Cs
• 'I cancelled swimming with weeks of notice - can they keep my money?'

Ask a question or make a comment

If you are a regular reader of the Money blog, you will have seen us cover the topic of security tags before. 

We've noticed them on meat, cheese and baby milk , and now some chocolate treats are also getting the yellow security sticker treatment. 

We spotted the tags below at an Asda in Twickenham earlier this week. 

They were placed on a £2.50 box of Celebrations and Lindt Salted Caramel Lindors costing £5.

Also tagged were a £9.30 box of Maltesers Truffles, a £6.55 pack of Raffaello, a £10.50 tray of Ferrero Rocher and an £8.95 Thortons Classic box. 

An Asda spokesperson confirmed to the Money team that "individual stores may tag specific products at their own discretion as a precautionary measure". 

Earlier this year, it was revealed shoplifting had hit its highest level in 20 years. 

The number of offences increased by 37% to 430,104 in the year ending 31 December 2023, compared with 2022, the latest Crime Survey for England and Wales found. 

Several retailers have taken steps to curb the surge, including extra security and body-worn cameras. 

The UK economy grew 0.6% over three months to the end of June, official figures show. 

But there was no growth at all in June, the Office for National Statistics said, as businesses delayed purchases until after the general election.

"In a range of industries across the economy, businesses stated that customers were delaying placing orders until the outcome of the election was known," the ONS said, though added it's difficult to quantify the exact impact.

Gross domestic product (GDP) - the measure of everything produced in the UK - expanded from April to June.

That growth rate was the second highest among the G7 group of industrialised nations, only the United States performed better with 0.7%.

Two G7 countries, however, have yet to publish their GDP data for the period - Japan and Germany.

Follow our breaking story here ...

Aldi is axing its click and collect service within days, according to reports.

Customers will not be able to order groceries online from the supermarket beyond Sunday, said industry magazine The Grocer.

This follows Aldi's withdrawal of its limited home delivery service last year.

The decision was made to keep prices at their lowest possible, a spokesperson said.

"One of the ways we keep our prices low for customers is by running the most efficient supermarket business in Britain," they told The Grocer.

"As a result, we've made the decision to bring our click and collect service to an end so we can focus on doing just that."

Aldi launched the service in September 2020, eventually expanding to more than 200 stores.

Sky News has contacted Aldi for comment.

Tesco is launching "digital passports" across its clothing range ahead of new sustainability rules. 

The digital product passports will allow customers to see information about items in the F&F range, including where its materials were sourced. 

Tesco's Joe Little said the move represented "an important step forward, encouraging and promoting sustainable and circular practices". 

The pilot is being launched with tech company Fabacus, which is run by the founder of Nobody's Child - a sustainable clothing brand that has previously used DPPs on three of its collections. 

CEO and founder Andrew Xeni told the Money team that DPPs provided "a huge opportunity" for retailers to tell their story. 

He said legislation for fashion using DPPs was expected to begin in 2027 so "practical implementation must start immediately". 

What are DPPs and what do they do?  

DPPs show key information about what the product is made from, its origin, history and how to dispose of it properly.

They capture data about the environmental impact of an item and are being introduced across the EU to improve sustainability. 

Mr Xeni compared them to the nutritional information we see on food products, saying they will help people to make more informed decisions about what they are buying. 

It's not clear what form Tesco will present them in, but when Nobody's Child launched theirs, they came as a QR code on the clothing's care label that could be scanned with a smartphone.

By 2030, a range of businesses are expected to be required to provide detailed information on the materials used in their products, and their environmental impact. 

According to a  provisional agreement  from December, products with a high environmental impact will be prioritised as having to comply: 

• Batteries 
• Consumer electronics 
• Electronic devices 
• Construction products

"It's going to hold so many companies accountable," said Mr Xeni. 

Last year, the government's European Scrutiny Committee raised concerns that the scheme could conflict with regulations in Northern Ireland because of the Windsor Framework - the post-Brexit legal agreement between the EU and the UK. 

For Savings Guide this week,  Savings Champion   co-founder Anna Bowes looks at the best easy access accounts on the market.

Although variable-rate accounts like easy-access savings are likely to see rate cuts over the following days, weeks and months further to the base rate cut earlier this month, those who can't lock up their funds still need to seek the best rates.

In a rate-falling environment, it's really important to keep an eye on the interest you are earning and switch if you are no longer getting a competitive rate.

With easy access accounts this should be straightforward because, as the name suggests, you can get access to your money immediately.

But remember that a number of accounts may have restricted access, and if you have one of these, make sure you know what effect a further withdrawal will mean to your savings.

Most will simply allow you to close your account, even if you have made the maximum number of penalty-free withdrawals, but there are some that will not let you have any further access.

That's the case with the current top paying account -  Principality Building Society Online Bonus Triple Access Issue 2.

If you have already made three withdrawals, you will be unable to close the account and have access to your money until the following calendar year.

It's important to read all the terms and conditions when opening a savings account, so that you earn the interest and have the access that you are expecting.

Further to this, there is still some £252bn sitting in current accounts earning no interest at all.

Although inflation has ticked up slightly in the 12 months to July 2024 to 2.2%, there are still plenty of accounts, including easy access, paying an interest rate that is beating the current rising cost of living.

A "major breakthrough" which could signal the end of national rail strikes has been made in the long-running pay row involving drivers, according to the Department for Transport (DfT).

The department said the train drivers' union ASLEF had agreed to recommend a new pay proposal to its members after a series of "positive" talks led by the government. 

"The offer made to ASLEF is a 5% pay rise for 2022/23, 4.75% for 23/24, and 4.5% for 24/25," a spokesperson for the DfT said.

"The offer will now be put to ASLEF members in a referendum."

During the two-year pay dispute, drivers have taken 18 days of strike action, as well as refusing to work non-contractual overtime.

Mars is buying the food company Kellanova in a deal worth nearly $30bn (£23.3bn). 

The deal will see the business, which already owns several brands such as M&M's, Snickers and Skittles, take control of a huge portfolio of products, including Pringles, Pop Tarts and Cheez-Its.

Kellanova was created when the Kellogg Co split into three companies in 2022.

Based in Chicago, it had net sales of more than $13bn (£10bn) last year and has around 23,000 employees.

Mars Inc said it will pay $83.50 dollars (£65.02) per share in cash, putting the total value of the transaction at £35.9bn (£27.9bn).

The deal is expected to close in the first half of next year.

"The Kellanova brands significantly expand our snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth," Andrew Clarke, global president of Mars Snacking, said in a statement.

Adverts for nutrition brands Zoe and Huel featuring a Dragons' Den star have been banned for failing to disclose their commercial relationship with the celebrity.

Steven Bartlett is an investor in Zoe and a director at Huel, but the the Advertising Standards Authority (ASA) found ads seen on Facebook in February "omitted material information" about their links to him.

Starbucks has ousted its chief executive Laxman Narasimhan after less than two years at the helm.

The news comes after pressure for management change from hedge fund Elliott Management.

Read more...

Primark is trying to make headway in US markets with an advertising campaign across the pond.

Hoping "That's so Primark" will catch on, the retailer is introducing its budget style via two 30-second videos.

The company aims to open 60 stores in the US by 2026.

John Lewis is looking to cut 153 jobs as part of a staff shake-up across its stores. 

The high street giant claims the proposals are designed to improve customer service, ensuring workers are "in the right place, doing the right tasks at the right time". 

It is hoping the job cuts will be through voluntary redundancy and natural attrition - which covers people leaving through retirement, resignations or moving job. 

Staffing changes will also see currently separate roles for serving front and back of house combined.

John Lewis is also investing £5m in digital headsets for store workers to communicate better with one another - in a bid to improve service.

The changes, which were announced to staff yesterday, follow a similar staffing overhaul at sister business Waitrose.

A spokesman for John Lewis said: "We're seeking to make sure partners are in the right place at the right time to help customers.

"We're also removing unnecessary tasks and introducing new technology to make their roles easier.

"We carried out similar changes in Waitrose earlier this year, with customer and partner feedback increasing significantly since.

"It's since been ranked the number one supermarket for customer satisfaction."

Coca-Cola is launching an Oreo-flavoured drink in collaboration with the biscuit manufacturer.

The limited edition, zero-sugar drink will be released from September in a black and white can containing what Coca-Cola describe as "flavourful hints inspired by Oreo cookies".

At the same time, Oreo will release a Coca-Cola flavoured biscuit.

Eugenia Zalis, global head of marketing for Oreo-maker Mondelez International, said she "cannot wait to see the reaction" from customers - but they're already coming in before the products have even hit the shelves.

Multiple X users were quick to deploy the Jurassic Park meme inspired by Jeff Goldblum's character, Ian Malcolm: "Your scientists were so preoccupied with whether or not they could, they never stopped to think if they should".

Another added: "I will happily eat Oreos while drinking a Coke Zero, but I don't want either of these things."

Others were more enthusiastic, simply writing: "Need."

Ms Zalis was confident about the collaboration, saying: "We have truly upped the ante."

The beverage will be available at major retailers and Pizza Express, Popeyes and Slim Chickens, Coca-Cola said.

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