Case Study: Analyzing the Failure of Sainsbury's Automation Project

This case study delves into the failure of Sainsbury's warehouse automation project, a key component of its Business Transformation Programme aimed at improving supply chain management. Initiated in 2000, the project, involving the implementation of a barcode-based fulfillment system, ultimately resulted in significant financial losses and strained relationships with IT outsourcing partner Accenture. The analysis identifies several contributing factors, including inadequate communication, lack of management involvement, insufficient risk preparation, and continuous leadership changes. The study proposes solutions such as enhanced communication strategies, active project monitoring, and greater management participation to prevent similar failures in future endeavors. The failure led to a pre-tax loss of £39 million, highlighting the critical importance of effective project management and risk mitigation in large-scale technology implementations.

ASSIGNMENT 1- BUSINESS CASE

Table of Contents
Introduction................................................................................................................................3
Background of company............................................................................................................3
Business case..............................................................................................................................3
Problem (Failure of project- Warehouse Automation)...............................................................4
Failure of the project..................................................................................................................5
Causes of failure of the project..................................................................................................5
Solutions.....................................................................................................................................6
Conclusion..................................................................................................................................9
References................................................................................................................................10

Introduction
Business case is defined as logic for reasoning the initiated study of project. Main purpose of
business case is that whenever resources like, effort or money are consumed in support
specific business requirement (Schaltegger and Wagner, 2017). Business case is developed
mainly to lead the decision makers in ensuring that whether the purposed initiative has
relative priority on comparison to alternative initiatives based on expected benefits and
business objectives. Business case also enables the decision makers to identify the
performance indicators and thereby lead to proactive realization of business and behavioral
change. This essay will mainly focus on business case study of organization Sainsbury. The
reader will easily be able to identify the issues faced by the organization while carrying out
business project and along with this, the reader will also identify hoe this issue or risks might
be mitigated by the organization.
Background of company
The organization Sainsbury is one of the second largest chains of supermarkets in United
Kingdom having an approximate 16.9% share (Sainsburys.co.uk, 2018). John James founded
the organization Sainsbury in 1869 having only one shop in Dury Lane, London. In 1869, the
shop was started for selling of fresh foods and later, it expanded into packaged groceries
(Sainsburys.co.uk, 2018). In 1922, it was announced as the largest grocery retailer in United
Kingdom. The organization Sainsbury was split into three divisions that are, Sainsbury
Argos, Sainsbury's Supermarkets Ltd, and Sainsbury's Bank. The main philosophy of this
organization was to provide high quality grocery products at cheaper rates. As per record of
2015, this organization has 598 supermarkets, and 714 convenient stores (Sainsburys.co.uk,
2018). This organization has property portfolio of worth £8.6 billion as per record until 2007.
The overall revenue of this organization is £23.506 billion and has 162700 number of
employees all over the world as per recorded until 2016 (Sainsburys.co.uk, 2018).
Business case
The organization Sainsbury has effective management principles for carrying out
organizational operations in an appropriate manner. With continuous growth in technology,
every entrepreneur prefers to implement the most effective technology for carrying out
business operations effectively (Fazal et al., 2017). Similarly, the organization Sainsbury

identified importance of implementation of Warehouse Automation system. This would
directly support and optimize distribution of center management and thereby lead in
facilitating the management for their daily planning, staffing, organizing, directing, and
controlling the overall utilization of resources. Warehouse automated tools are the automated
tools that are used for varied business operations and thereby lead in attaining customer
requirements and demands. Warehouse automation tools directly lead the organization to
improve its overall efficiency and results in increasing its overall productivity.
The organization Sainsbury has selected Warehouse Automation project in order to improve
its overall efficiency and performance of supply chain. This project was under Business
Transformation Programme, whose key planks include supply chain management, electronic
point of sale, and outsourcing all its projects related to Information Technology to Accenture
(Doubleloopconsulting.com, 2018). This project was intended for improvement of overall
supply chain management of the organization. In one of its distribution centers, the
organization Sainsbury has planned for installation of an automated fulfillment systems and
thereby lead to easily attain the requirements and demands of customers. As per report, it is
been identified that the organization planned to install its automated fulfillment system in one
of its biggest depots that is, Waltham Point of Essex (Sainsburys.co.uk, 2018). The
organization has projected to make company’s warehouse operations efficient and
streamlined by implementation of Barcode based fulfillment system. This project of
Sainsbury has cost approximately £3 billion (Macalister, 2018).
Problem (Failure of project- Warehouse Automation)
The project of Warehouse Automation was commenced in the year 2000 and mainly focused
for improvement in efficiency of supply chain (theregister.co.uk, 2018). As stated in the
report of Macalister (2018) the CEO of Sainsbury had launched this project under business
transformation programme. As per planning, Barcode based payment would enable in
increasing the overall efficiency of performance. The organization Sainsbury was unable to
manage the operations effectively with installation of Barcode based fulfillment and EPOS
system. The transformed system was also unable to track down stock market and effectively
proceed in managing supply chain. Duration of Warehouse Automation project completion
was of 4 years (writepass.com, 2018). After three years from its installation, the CEO of
Sainsbury who launched the project commented that the project is one right track and thereby
effectively leading to attain the required project goals and objectives. CEO of Warehouse

Automation project also reported that this project has resulted in gaining profit of amount
£700 million (Macalister, 2018).
Failure of the project
Later, CEO realized that there were lot of technical issues in performing business operations
with automation system (Macalister, 2018). The management department of Sainsbury also
identified that the installed automation system was unable to provide outcome as per required
by the user. Therefore, the project was failed. After inspection, it was found that there were
huge number of errors in barcode readers while reading the barcodes. In words of Alami
(2016) failure of this project not only impacted organization’s operations but also affected the
relationship between Accenture and Sainsbury that resulted in causing contractual rows. In
reports of Macalister (2018) failure of this project dragged attention of media and resulted in
bringing huge financial loss. Implementation of this project resulted to pre-tax loss of £39
million in mid of 2004, which was the worst situation that the organization Sainsbury had
faced in last 139 years (Doubleloopconsulting.com, 2018).
Causes of failure of the project
Automation project is one of the most advanced techniques for performing operations with
minimum effort and time. Supervision while installation of such project plays an important
role in its successful installation of such projects. As commented by Alami (2016) failure of
Warehouse Automation project of Sainsbury can be attributed to various managerial issues
within the organization. One of the major reasons behind failure of this project was that the
IT project was outsourced to other organization. As per previous records of Younis et al.
(2013), even though the organization gave its tender to other organization for implementation
of such projects, there was lack of involvement of parent company in the project. As
commented by Macalister (2018) the management department of Sainsbury were least
interested in getting involved in its own project that resulted to lack of monitoring. From this
statement, it can be analyzed that minimal involvement of Sainsbury’s management in the
project leads to explain the reason behind failure of Warehouse Automation project. From the
above statement, it can also be deduced that due to lack of involvement of organization in the
project, completion of Warehouse Automation project took three years. As stated in the
report of Macalister (2018) continuous change in leadership of the organization resulted in

developing of numerous risks and was assumed that the project would not be able to attain its
objectives effectively.
Another possible reason behind failure of Warehouse Automation project was Double Loop
in supply chain. As stated by Macalister (2018) it was identified that there were insufficient
engagement between CEO of the organization and suppliers of IT projecting IT risks and key
business objectives. Due to this reason there were no possible strategy that would be able to
tackle the challenges as per assumed by IT fellows. In words of Macalister (2018), Sir Peter
Davis, CEO of Sainsbury had not prepared any backup plan for mitigating the risks related to
the project due to lack of involvement in the project and thereby resulted in failure of the
project. As reported in writepass.com (2018) Insufficient preparation of risks related to the
project directs the project project to failure or divert the project from its objectives and
thereby results in over expenditure. From this statement, it can be deduced that improper
preparation of project risks exposed the project to its failure.
As per reported, it is also identified that lack of effective communication is also one of the
reasons behind failure of Warehouse Automation project. As stated in writepass.com (2018) a
complete blame can be given to CEO (Sir Peter Davis) as it was his responsibility to monitor
the project operations in order to analyze whether the project is leading to attain its objectives
or not. Peter Davis reported in 2003 that the project is leading to attain the required objectives
and until then the project has saved up to £700 million (Doubleloopconsulting.com, 2018). In
the case, if he had collected proper information regarding the project and analyzed the issues
related to the project then the organization might have been able to develop an effective
backup plan for its mitigation.
Solutions
Warehouse Automation project failed mainly due to three reasons that are improper
communication, lack of involvement in the project, and improper monitoring the project. The
management department of Sainsbury needed to effectively examine and monitor the project
in order to analyze the overall risks involved in project. Following are the solutions that in
case if management department of Sainsbury would have taken for success of the project:
Effective communication

Communication is one of the most important steps for carrying out business operations in the
most appropriate manner. As stated by Collier et al. (2017), an effective communication in
workplace is the major concern that directs the organization to attain target as per required. In
words of Giroldi et al. (2017) many organizations follow certain models and theories in order
to carry out effective communication within the workplace and thereby lead to obtain the
effective outcome. From this statement, importance of communication can easily be
recognized. In case if an effective communication would have been carried out by CEO of
Sainsbury then there was chance that issues related to Warehouse Automation project would
be identified and mitigated. Therefore, there was a scope for success of the project as
effective communication would lead in providing accurate details regarding the project
objectives and goals.
Monitoring and guiding the project team
Monitoring is defined as an activity for checking and observing the progress or quality of
project or task that is been carried out in order to obtain specified objectives and goals. As
commented by Collier et al. (2017) monitoring the team members involved in the project is
one of the most important activities of leader. As argued by Harvey et al. (2017) improper
monitoring in any project leads the team member to divert from its objectives and goals and
therefore, results in failure of the project. From these two statement, it can easily be deduced
that monitoring plays a significant role in attaining the goals and objectives as per required.
As per above business case study of Sainsbury, improper monitoring was one of the reason
behind failure of Warehouse Automation project. This project might have been attained its
objectives in the case if CEO of Sainsbury or its management department would have
effective monitored and observed the project processing report. This would lead the
management department to identify the upcoming issues or risks involved in the project and
an effective action might have been taken. Therefore, by monitoring the management would
be able to direct the involved project team to attain the required target within provided period
of time.
Effective participation in project
Participation in the project enables in identifying the major requirement of materials and
equipments to effectively attain the target and objectives of the project. As stated by Jangland
and Gunningberg (2017) effective participation of managers in project enables the project
team members to understand appropriately the goal and objectives of the project. Similarly,

in the case of failure of Warehouse Automation project, if management department of
Sainsbury would effectively participate in the project then the team members would be able
to identify all major challenges that can be faced while its implementation. Therefore, overall
the project might attain its required objectives effectively.

Conclusion
From the above discussion, it is concluded that the major reasons behind failure of
Warehouse Automation project of Sainsbury was improper communication, lack of
involvement in the project, and improper monitoring the project. the main responsible person
for the project failure was Sir Peter Davis, CEO of Sainsbury as he was unable to identify the
major risks involved in the project due to lack of monitoring. The organization Sainsbury has
selected Warehouse Automation project in order to improve its overall efficiency and
performance of supply chain. This project might attain its goal in the case if actions like,
Effective communication, Monitoring the project team, and Effective participation in project
would be accurately carried out.

References
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