Table of Contents
Introduction
Sainsbury’s current focus on building trusting partnerships with various stakeholders in its global supply chain is crucial to the brand’s continued market growth and success. It means that the brand’s focus is anchored on increased collaboration through the sharing of key information, ensuring due recognition of set goal-objectives, and engaging in sustainable development (Churchill, 2017). Sainsbury’s current supply chain is unable to effectively deal with various demands of its large store network. More so, the brand is also experiencing the impacts of the emergent retail market need for direct-to-consumer deliveries, a growing trend related to more quality consumer engagement. Sainsbury, as the UK’s historically competitive food retail chain, has therefore been required to change with the times, adapting to existing innovations and brand marketing strategies (Barber, 2017). Incorporating various issues related to CSR and sustainability within its value chain processes is a distinct avenue through which Sainsbury’s can continue distinguish itself as a global brand. The need to modernize Sainsbury’s supply chain systems, in order to optimally support its network of strategic warehouses, whilst also facilitating stakeholder (suppliers) collaborative engagement, is an effective means through which support for future growth can be achieved.
Sainsbury’s: Value Chain Analysis
Brand Overview: Sainsbury’s
Sainsbury’s, J Sainsbury plc, is currently UK’s second largest supermarket chain, having a 16.9% market share of the nation’s supermarket sector. The brand has historically been renowned for its early adoption of the concept of ‘self-service retailing’ in the nation. As Butler informs, this self-service framework was quite influential in the brand’s history, from 1956-1991 (2015). The framework enabled the brand gain national attention through its pioneering work of developing own-branded products and/or services (Butler, 2015). This model proved quite effective in enabling Sainsbury’s offer various products that matched nationally branded product quality, but at a cheaper price. Its growth and general competitiveness in the UK market was gradual, taking a cautionary approach to its expansion (Barber, 2017). Thus, part of its strategy has been shunning general acquisitions like those undertaken by Tesco, rather preferring to grow organically; in addition to never offering trading stamps.
The brand’s initial focus on High Street stores (massive 10,000sq. ft. arenas). However, as Kay engages, with the concept of self-service becoming incorporated into existing organizational culture, the previous model was gradually replaced by unique self-service supermarkets (1996). These new consumer-centric stores were twice as big, located either within urban settings or in out-of-town locations. The brand’s policy was therefore anchored on investing and providing well designed, uniform stores that possessed a strong emphasis on product/service quality; as anchored in its slogan “good food costs less at Sainsbury’s” (Kay, 1996, p. 29). The highly competitive retail market necessitated Sainsbury’s strategic formation of its joint venture with British Home Stores – the SavaCentre. The hypermarket format led to greater success as it became more mainstream within the retail sector (Hosking, 2004). High competition exists from competitors like Tesco and Asda that launched even bigger stores based on the same format.
The do-it-yourself concept further provided desired momentum to Sainsbury’s, with the brand’s collaborative alliance with GB-Inno-BM proving to be an ingenious strategy under the name – Homebase. With the trending out-of-town shopping phenomenon taking root in the U.K., Sainsbury became one of the different retail names that opened up stores under the format, most notably in Sheffield – the Meadowhall Shopping Centre (Barber, 2017). The gradual growth of the brand is partly attributed to the ‘family values’ instilled by the Sainsbury family, which wholly owned the brand until its 1973 PLO. Customer brand loyalty proved to be key to its success, through provision of products and services based on prevailing market trends (Butler, 2015). However, with the change of management, the 1990s proved to be a tough time for the brand. Overall enterprise success is best captured in the representation – Figure 1.
Whilst previous success ensured continued consumer loyalty, the 1990s proved to be different with the retirement of long-time CEO John D. Sainsbury. The successive management worked through a different management style which led to the brand’s decline. As Hosking (2004) notes, David Sainsbury and his successors, Dino Adriano and Peter Davis made several mistakes that included reluctance to diversify into non-food retailing, failure to use loyalty cards, poor advertising strategy the confusion on quality versus value and suppliers’ ill treatment that made them favour other supermarkets such as Tesco (Hosking, 2004, p. 48). It is only through subsequent focus on regaining brand sustainability in its value chain processes that Sainsbury’s was able to recoup and reclaim its place in the U.K. retail market.
Brand Focus on Sustainability
Enabling efficient and effective interfirm relationships and pertinent networking is an important facet of the contemporary retail sector. Dekker states that the relationships between different firms bring up new issues for management accounting to deal with. One example of such an issue is to collect information that helps to optimize activities between and among the firms in a value chain. Value chain analysis plays a significant role in addressing such challenges (Dekker, 2003). The incorporation of an activity-based costing (ABC) model is viewed as an optimal approach towards enhancing overall supply chain management processes, practices, and engagements. The framework is founded on the ideology of value chain examination and incorporated cost information through the implemented supply chain (Dekker 2003). Incorporation of good models focusing on effective chain management is a viable avenue through which retailers can be able to enhance future sustainability and competitiveness.
Sustainability accounting is increasingly utilized by organizations in the aim of ensuring more optimal engagement of pertinent supply/value chain processes. As Spence and Rinaldi point out, “sustainability accounting has been used… as a means to seek to govern social, economic and environmental issues relating to suppliers” (2014). Both the concept of governmentality and the four analytics of government, are considered effective frameworks of engagement. They are set in the analysis of how organizations exercise control and authority within themselves and in the industry. This theoretical framework illuminates the specific rationales and practices of government that enable particular aspirations of reform – such as sustainability – to be constituted”(Spence and Rinaldi, (2014). Implementing various forms of sustainability-oriented practice regimes, necessitates focusing on specific supply chain aspects within a major retail supermarket chain.
It is notable that sustainability accounting is able to foster distinct disciplinary effects such as the practices, rationales, and the forms of power within a given supply chain. Under current contemporary settings, Sainsbury’s as a brand continues to focus on enhancing overall sustainability in its daily engagements. More so, focus is on enhancing its value chain processes through incorporating various fundamental aspects of organizational engagement. The supply chain at Sainsbury’s was unable to address the demands and orders. As such, the change was needed in the UK’s major food retailing to facilitate supplier collaboration among other initiatives to ensure that future growth is secured (“Sainsbury’s makes great strides in supply chain optimisation (Case Study)”). Focus is on exploring the extent senior decision-makers both use and frame sustainability accounting in order to foster enterprise disciplinary influences founded on both environmental and socially-conscious goal-objectives.
From existing literature, two key concepts are vital in the quest for enhancing various aspects related to sustainability development within value chain processes. Agndal and Nilsson observe that both open book accounting (OBA) and inter-organizational cost management (IOCM) practices are requisite within retail industry organizational contexts (2009). The two frameworks are able to enhance general value chain efficiency and effectiveness, especially within the highly competitive retail market arena. Reviewed studies, mainly from Japan, the U.S. and the UK portray distinct findings. For example, it is proven that both the OBA and IOCM frameworks greatly improve existing inter-organizational relationships, thereby enhancing general performance, competitive, and future strategic engagements (Agndal and Nilsson (2009). Organizational value chain analysis is helpful in ensuring that sustainability is adequately developed within existing value chain processes.
Current Sustainability Engagement and Way Forward
Current globalized contexts increasingly necessitate not only adaption to, but also evolving with the prevailing times and trends in the retail market/sector. Modern logistics has changed with technology and best practises. Therefore, aspects such as humanitarian logistic, collaboration and outsourcing have become essential factors to consider (Waters and Rinsler, 2014). Sustainability is considered a vital element in contemporary organizational settings, changing with prevailing market trends and organizational best practices. It is important to note that current times call for various organizational entities to ensure continued focus on not only the incorporation of optimal business ethics in enterprise engagement, but also corporate social responsibility (CSR) and various sustainability measures (Heizer and Render, 2014). Sustainability is a critical organizational goal-objective that goes hand-in-hand with issues related to business ethics and general organizational CSR.
The need to ensure support for future growth is important towards enabling the continued success and competitiveness of Sainsbury’s. Within contemporary contexts, consumers are evidently becoming more concerned about the surrounding environment, in terms of impacts and effects experienced from bought products (2013). As a result, consumer trends are becoming more environmentally focused, greatly influencing enterprise competitiveness and general profitability. Consumer concerns are thus more focused on physical impacts of their spending habits, as related to broader issues of environmental sustainability vis-à-vis enterprise CSR engagement. (Jones, Comfort and Hillier, 2013). As Churchill (2017) notes, the brand emphasizes on working with suppliers to ensure that the costs used on a supply chain are minimized. The retailer needs to focus on ensuring that the customer does not feel the impact of cost prices by making sure that the retail prices are as slow as possible. As such, ensuring that suppliers are efficient and cost effective goes directly into ensuring that customers are comfortable with the price range provided. Sainsbury ensures that it considers its customers first by working closely with suppliers (Churchill 2017). Sainsbury’s future success and competitiveness is anchored on how various inter-organizational engagements with various suppliers are undertaken.
Sainsbury’s success has partly been attributable to its use of the VCA (value chain analysis) model in managing its supply chains. Lanka, Khadaroo and Boehm inform that the VCA framework has been helpful in terms of cooperative engagements and enhanced supplier relationships (2017). The utilized activity-based costing (ABC) model has enabled the brand aptly support its supply chain management engagements with various suppliers (Lanka, Khadaroo and Boehm, 2017).Management accounting is critical to inter-firm relationships, ensuring the optimal realization of “(1) the make-or-buy decision that can lead to the initiation of a partnership, (2) the use of management accounting in the actual management of a partnership, and (3) the partners’ responsibilities to each other, which creates a role for performance measurement” (Dekker 2003). Information use is thus essential, especially whenever relating to two basic purposes: the development of stakeholder trust, and the mastery of various organizational events.
Current brand success has been achieved through the brand’s recent incorporation of the Manhattan Warehouse Management system. Sainsbury’s has as a result been able to gain not only real-time, but also accurate representation of various inventory levels across its vast distribution network. Pertinent information captured includes data pertaining to the brand’s 4 strategic fulfilment centres, which collectively process the bulk of the brand’s inventory – 400 m cases per annum. Manhattan technology is utilized in process engagement as a means of ensuring greater efficiency and effectiveness (“Sainsbury’s makes great strides in supply chain optimisation (Case Study)”). Through deployment of Manhattan’s Extended Enterprise Management framework, Sainsbury’s has been able to greatly improve supplier collaboration and general brand competitiveness.
Conclusion
The need to modernize Sainsbury’s supply chain systems, in order to optimally support its network of strategic warehouses, whilst also facilitating stakeholder (suppliers) collaborative engagement, is an effective means through which support for future growth can be achieved. Sainsbury’s current focus on building trusting partnerships with various stakeholders in its global supply chain is crucial to the brand’s continued market growth and success. It means that the brand’s focus is anchored on increased collaboration through the sharing of key information, ensuring due recognition of set goal-objectives, and engaging in continuous sustainable development. The brand has been required to change with the times, adapting to existing innovations and brand marketing strategies. Incorporating diverse issues related to CSR and sustainability within its value chain processes is a distinct avenue through which Sainsbury’s can continue distinguish itself as a global brand.
Appendix
Figure 1. “Supermarket Share; 12 weeks to 4 Jan.” in, Barber, Lynsey. “Asda overtaken by Sainsbury’s as UK’s second largest supermarket but big four continue to slide.” City A.M., 2017. Web. http://www.cityam.com/207026/sainsburys-overtakes-asda-become-uks-second-largest-supermarket-big-four-continue-slide. [Accessed 13 Dec. 2017].
- Agndal, H. and Nilsson, U., 2009. Inter-organizational cost management in the exchange process. Management Accounting Research, 20(2), pp. 85-101.
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- Lanka, S., Khadaroo, I. and Boehm, S., 2017. Agroecology accounting: biodiversity and sustainable livelihoods from the margins. Accounting, Auditing & Accountability Journal.
- “Sainsbury’s makes great strides in supply chain optimisation (Case Study).” Manhattan Associates, Resources, [online]. http://www.manh.com/resources/case-study/sainsburys-makes-great-strides-in-supply-chain-optimisation. [Accessed 13 Dec. 2017].
- Spence, L.J. and Rinaldi, L., 2014. Governmentality in accounting and accountability: A case study of embedding sustainability in a supply chain. Accounting, Organizations and Society, 39(6), pp.433-452. DOI: 10.1016/j.aos.2012.03.003
- Waters, C.D.J. and Rinsler, S., 2014. Global logistics: new directions in supply chain management. London, Kogan Page.