SAINSBURY CASE STUDIES

SUMMARY:
The report looks at Sainsbury as a mass process, specifying its main characteristics,
defines its flow and layout, indicates transforming and transformed resources and
identifies recommended changes to the company. Based on the research finds, that
top priority for Sainsbury’s is the quality and the cost is something over which
Sainsbury’s should work.

INTRODUCTION:
The biggest pride of Sainsbury- the longest standing retailer, is its quality and
recognizable brand known for several years since its opening in 1869. Since then
supermarket attracts enormous group of 18.5 millions people every week
(1.03.2010), what generates great profit each year. Financial report for year 2009
shows that total sales for a year went up by 5.7 per cent. Achieving this kind of
success is the result of great operations management.

Due to the relatively high prices, Sainsbury declined to the third position among the
most popular UK’s supermarkets and is just behind Tesco and ASDA but is on its
way to get back on top- partially because introducing new technologies.

REFERENCES:
Greasley, A., 2008.Operations Management. West Sussex: John Wiley and Sons
Ltd.

Shim J.K., Siegel J.G., 1999. Operations Management. New York: Barron’s
Educational Series, Inc.

Slack, N., Chambers, S., Johnston, R., 2007. 5th edition. Operations Management.
New York: Pearson Education.

http://www.j-sainsbury.co.uk/

CHARACTERISTICS OF THE OPERATIONS:

Sainsbury is great example of high volume operation. Sainsbury's shop visits 18.5
million customers and online shop-100.000 buyers every week! Numbers speak for
themselves. Sainsbury copes with such a huge crowd of customers by using modern
technology- the bar code scanners, self checkouts and offers online shopping. The
newest technology was recently introduced to Sainsbury- Scan & Pack or other
words Fast Track Scheme, where customer walks around the shop with a handset,
scans the barcodes of own-selected products and in the end only pays- what saves
him time queuing.
Sainsbury's variety dimension is low. Most operations are standardized and have a
high repetition. Staff has clearly defined tasks and fulfills the routine. Low variety
causes low unit costs and contributes to high efficiency.

Sainsbury’s has mixed- high and low visibility operations. Front office has high
visibility due to direct contact with customers that include: cashiers, restocking staff,
bakers, pharmacist or staff from customer service desk. However customization of
service is very low and usually limited to advice on range of services available. Back
office on the other hand has low visibility with no direct contact with customers, like:
suppliers, cleaners, night staff, night porters or security guards.

Variation in demand is generally low. During the day there is slightly higher
demand in the evening. Variation in demand is mostly based on seasonality - higher
demand around special events- Christmas, Easter, and first day of school.
Sainsbury’s predicts the number of customers which is based on monthly reports.

The foregoing characteristics clearly demonstrate that supermarket is an example of

a mass process. Mass because is producing goods in high volume and relatively
low variety. Mass process also conduct many transactions per day with little
customization.

THE LAYOUT AND PROCESS FLOW:

Layout considers how much space we have, how to arrange this space, what
services to put in each area, how to organize a flow and minimize movements.
Taking all of above problems into consideration, Sainsbury chose the best option for
its operations- using product layout.

Figure 1: Layout of Sainsbury’s

From figure 1 we can observe a well-thought-out strategy of distribution of all
products. They have been chosen in a similar group which ensures maximum
efficiency.

Within the product layout there is a special order which defines how products are
distributed all around the store. “Product layout involves locating the transforming
resources entirely for the convenience of the transformed resources.” (Slack, 2007
p. 193) It provides convenience for the movement of products and customers.
Product layout requires a specific product distribution, in order to help customers find
them. Constant arrangement improves the speed of processes, both: fast loading of
products on the shelves by employees and purchases by customers. Therefore
checkouts are located near the exit and next to the entrance are small counters with
ready-made sandwiches and snacks-for those in a hurry. Above the shelves are
large subtitles, to help customers easily find the needed products. Wide aisles
between shelves make it easier to move between the aisles- what improves flow,
and make products more visible. Flowers, fruits and vegetables are displayed on the
entrance what is providing nice, welcoming and attractive atmosphere but also
signals freshness of the products. KVI- known value items (pasta, rice, sugar, etc.)
are located at the back, to make customer pass through all aisles (pick up more
things). However, the routes are not predetermined, which allows for maximum
flexibility to customers and does not restrict their movements.

Constantly we are dealing with the flow of transforming and transformed resources.
On the entrance, shop/ trolley patrol (transforming resource) is providing us with
trolley (process) and with a trolley (transformed resource) we are starting our
shopping. We are informed about special bargains and available discounts (process)
where leaflets and posters are transformed resources and advertisement specialist is
transforming resource. When we are shopping (process) shop assistant
(transforming resource) is helping us to find needed products (transformed resource).
When we are done with our shopping, we need to pay (process) at the checkout
point, where scanning machine (transforming resource) is scanning our products
(transformed resource). In case we do not have enough cash (transformed resource)
we can always withdraw it (process) from ATM (transforming resource) available in
Sainsbury.

In many of above processes, technology is highly involved. “Technology is an

important aspect of operations as it has led t a large growth in productivity”
(Greasley, 2008, p.39). Use of technologies is extensive and helps with transforming
various information and processes. Technology is used in retail scanners, bar code
scanners, credit card machines, self checkout machines, ATMs and security
cameras. Process technology improves the speed of the processes, saves time,
often is reducing costs, increases flexibility and improves effectiveness and thus- the
customer satisfaction!

THE FIVE PERFORMANCE OBJECTIVES:

Five basic operations performance objectives are: quality, cost, speed, dependability
and flexibility. These five characteristics are used to measure the production
efficiency of the company.

On many different levels Sainsbury maintain high quality of its services, for example
by keeping up high quality of its products-including fair trade products, through well-
kept rooms with an attractive appearance to a fast service and a friendly-oriented
staff. Sainsbury ensure that all suppliers have been evaluated by the Quality Attribute
System (QAS) in order to provide constant quality of the products throughout the
store.

Sainsbury has different prices, which are suited to different kinds of customers.
Through the implementation of high quality products, Sainsbury have high prices,
however to adapt to the needs of less wealthy clients also offers a wide selection of
'basic' products at low prices. Therefore I would describe Sainsbury’s prices, as fair
prices.

Another key performance objective is speed. I would describe the speed of

Sainsbury's as a moderately- high. Still we can come across queues, especially in
the evenings, during the peak time, but Sainsbury has undertaken major steps to
solve this problem. Sainsbury's team is trying to reduce queues through the recent
introduction of baskets tills, self checkouts as well as the introduction of the newest
Scan and Pack system. In order to improve the speed, Sainsbury also offers home
delivery which can be obtained for the very next day.

Dependability is about keeping the word to customers. This is one of the main
objectives of Sainsbury. They are providing customers with quality products at fair
prices; they go out to meet the expectations of customers for a healthy, safe, fresh
and tasty food. Sainsbury respects environment by using environmentally friendly
packaging. Goods are kept in magazines in case of necessity of quick restocking.
Queuing time is reasonable and deliveries are on time. Online Shopping at
Sainsbury's is also a great advantage. All the above provide a high level of
dependability and are the reason why the Sainsbury's brand remains on the market
for 141 years, and this makes the Sainsbury differs from its competitors.

“Flexibility refers to the ability of a company to offer a wide variety of products to its
customers” (Shim, 1999, p. 7) and this is what Sainsbury's is doing, since 141 years!
What else, if not a great flexibility allowed Sainsbury's to survive so long on the
market? During this time, there was a huge technological revolution-Sainsbury had to
adapt. On the market have appeared newer and newer products- Sainsbury's had to
adapt. Sainsbury also took into account the recent change the behavior of
customers, who eat less at restaurants and eat more at home. They launched a wide
range of new products and new sections to its stores such as electronics and
household goods. They also introduced many attractive promotions and also suggest
to customers interesting ideas for tasty and healthy meals in their cookery book -all in
order to reach greater number of customers and to meet needs of every one of them.

RECOMMENDED CHANGES:
As a significant change I would suggest to a Sainsbury's to introduce some products
which will give to a company a comparative advantage over their competitors.

My second recommendation to Sainsbury's would be an opening of local shops

located in the city center rather than on the outskirts of the city. Customers often if do
not need to do large purchases are choosing local shops rather than supermarkets to
save time and money, because undoubtedly in large stores often they acquire more
than actually have planned.
Good idea, which would attract additional customers to the Sainsbury's would be the
introduction of pay point or post office to the store, where the customers immediately
after purchase could pay their bills without spending extra time to reach these places
elsewhere in the city.

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