Sainsbury's can't just blame technology
Published: 20 Oct 2004 12:15 BST
They say a bad craftsman always blames his tools. Well, it's as true of grocers as is it of carpenters or plasterers and it's particularly easy to do when those tools have something of a bad reputation to begin with.
So we shouldn't be surprised when Sainsbury's blames technology for its misfortunes, which have their roots in the late 1990s when the company tried to jump on the dot-com bandwagon -- only to end up on a barrow that any self-respecting hawker would have been ashamed of.
While the likes of Tesco took an organic growth approach to their e-commerce operations, rolling out local online services a branch at a time and making use of existing infrastructure, for Sainsbury's it was GM all the way. Competitors looked on in disbelief as the supermarket giant built new food distribution centres around the country seemingly oblivious to the fact that it already had a few dotted around the place called, oh yes, supermarkets.
That was Sainsbury's first big flirtation with technology, and it cost the company dearly. Now, Sainsbury's has had its second brush with technology, and this time the list of damaged goods is longer and a whole lot more costly: the write-off of redundant IT assets will cost £140m; the write-off of automated equipment in the new fulfilment depots, £120m; and stock losses due to the disruption caused by the new depots reaching £30m. The remedial and completion capital spend in IT systems and the supply chain over the next two years is estimated at an additional £200m. And then there's that £1.8bn IT outsourcing deal with Accenture which needs to be renegotiated. You can bet that the lawyers' fees alone for this will be enough to feed a small town for a month.
Chief executive Justin King says the IT systems failed to deliver, and that the company will 'go back to basics' by simplifying existing IT systems. In some areas this means manual processes will be reintroduced where systems are failing.
This embarrassing U-turn says more about the company than it does about the technology concerned. It is the company's basic strategy, and its inability to execute on its project management goals, that are the real culprits, and the blame for both lies with senior management. Tesco, Asda, Iceland and the other supermarkets that have successfully implemented tech projects have not done so because they used fresher PCs, or more tender network cables; they have done so because they had the right vision and they managed to successfully implement that vision.
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