Supply chain management on the other hand refers to the management of the activities, businesses or organizations involved in a supply chain to ensure that the consumer gets the optimal value. Due to the importance of the supply chain, Sainsbury's has been able to put in place supply chain management based on certain aspects of its operations. The supply chain management methods have been designed based on the aspects of information technology, procurement, logistics as well as storage or warehousing among others. At Sainsbury's, the nature of operations have been so diverse to the extent of each department operation on its own. This has called for independence in areas such as procurement. At Sainsbury's, the Kraljic procurement model has been very useful in making activities smooth.
This procurement option has been able to help in reducing cost while delivering in all areas of the Sainsbury's towards consumer satisfaction. This supply method has been able to ensure that there is security of the supplies, not compromising on cost. At the end of the day, the Kraljic procurement has ended up making procurement at the Sainsbury's a strategy avenue. To utilize the Kraljic procurement method, the Sainsbury's applies the four steps making this important purchasing model. The first step is ensuring that there is classification of the purchases.
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This first step involves classifying the purchases on the basis of supply risk and profit impact of an item. This issue factors in the issue of scarcity as well as supply quality. The second step is usually concerned with analysis of the market. It involves getting to know your real purchasing power together with the strength of the suppliers. The third step is usually the strategic positioning. This involves making sure that the high profit impact item is purchased while at the high risk of supply. This step also requires the consideration of the purchasing power of both Sainsbury's and the suppliers.
Finally, this procurement model requires the fourth step which is usually concerned with action plans. This step requires that strategies which factor in the purchasing power as well as strategic positioning are applied in determining the best mix of items to purchase for Sainsbury's operations. To manage the Sainsbury's supply chain properly, the logistical issue has been properly planned. There have been very efficient contracts with players in the logistics sector in the supply chain. One of the efficient contracts is that held with the iForce. The contract with this organization involves all the orders done online plus returns of all non-food items.
This has been very successful especially during the Christmas periods with the successful aspect of the contract; the click and collect service. To make the logistical bit of the supply chain management successful, Sainsbury's has been able to plan for a proper rail linking its warehouse to flight terminals. This is with a purpose of serving the customers better in the general business area. The logistical bit of the Sainsbury's has been made better by the setting up of nice convenient depots. Warehousing is the other part of Sainsbury's point of concern.
So that it may operate with efficiency and stamp authority in the supply chain, Sainsbury's has been able to create proper warehouses and depots for its products. The best move has been the automation of the warehouses giving ease in the activities involved. The agents of supply chain management at Sainsbury's have been active in ensuring that automation creates the desired results. To ensure that Sainsbury's has a competitive advantage in the supply chain, there has been continuous utilization of information technology.
As a policy in the company's supply chain management, new technology has been well utilized to ensure that the best of it is utilized. There has been an aggressive use of the best point of sale systems, e-commerce and logistics operations. The latest technology has also been utilized in areas such as trade, human resource, finance as well as procurement among others.Â This has ensured that efficiency and customer satisfaction occurs all the time. This has been supported by the application of the latest hardware s well as software by Sainsbury's information technology department. Sainsbury's supply chain management methods have been put in place to address several issues.
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One of the problems which the supply management at Sunbury's has been striving to address concerns the distribution network arrangement. This has been in an effort to put in order the aspects of distribution networks such as customers, locations, stores, warehouses as well as facilities for production among others. Secondly, the supply chain management has been trying to address the problem of distribution strategy. It is always important to ensure that the best strategy is designed to ensure that all the organizations' moves end up winning.
At Sainsbury's, the supply chain management teams have been able to ensure that competitors do not eat on their market share, thus the goodÂ position in the sector's performance ranking. Handling of information is the other thing that the supply chain management at Sainsbury's has been trying to address. Information is always the backbone of all activities in any aspect of life thus the need to consider it in planning at Sainsbury's. The supply chain management has been able to synchronize all the processes as well as business in the supply chain so that they may share information.
The most important information such as that concerning estimates, forecasts, demand details, stock as well as logistics among others is shared at the right time. The supply chain management at Sainsbury's has also been striving to ensure that the problem of cash flow is addressed. Basically, matters of finance are usually very important and sensitive in an organization. The cash flow problem at the Sainsbury's supply chain has been addressed to create space for making payments and the related cash flow methodologies in the whole supply chain. Finally, the issue of stock has been a major part of the supply chain management methods.
It is always important to know the location as well as amount of inventory of an organization within the supply chain. This ensures that the company's products do not reach unfavorable levels within the supply chain. It is important for all organizations to ensure that the best supply chain management methods are put in place. This is advisable since an efficient supply chain is a source of more sales of an organization's goods and services. Companies such as Sainsbury should also commit a part of their resources into research on the best supply chain management methods.
This will lead into a discovery and application of the best supply chain management method capable of producing optimal results for the company. It is also important to ensure that the management seeks the services of experts in efficient operations with emphasis on procurement and supply chain management (Erridge et.al. 2001). According to Sinha (2009), it is also advisable that all companies do a continuous improvement of their respective procurement methods and systems. This is always important for the purpose of removing any existing weaknesses as well as loopholes.
The people responsible for the management of the systems and processes involved should be well trained and developed to ensure that they perform as per expectations. More partnerships with various providers in the supply chain should be encouraged to ensure that cost is cut while upholding quality. The fact that online business has been on the rise should encourage the management of Sainsbury's to work towards benefiting from it. References Erridge, A., Fee, R. & Mcllroy, J 2001, Best Practice Procurement: Public and Private Sector Perspectives, Gower Publishing Ltd. Sinha, A., 2009, Supply Chain Management: Collaboration, Planning, Execution and Co-ordination, Global India Publications. Â