By Andy McCue, 18 October 2004 13:45
NEWS Embattled supermarket chain Sainsbury's is to hire 3,000 shelf-stackers as part of a back to basics campaign following the failure of its £3bn investment in its distribution network and supply chain IT that left goods stuck in depots and warehouses.
The three-year investment in delivery and depot management computer systems is a legacy of previous CEO Peter Davis but it has failed to deliver the expected benefits and Sainsbury's is now facing a £500m writedown that will plunge it into the red.
Sainsbury's is in talks with its IT suppliers about how to rectify the problems.
Sainsbury's CEO Justin King is expected to launch the "Getting the Basics Right" campaign tomorrow as part of a trading update on the company's full-year profitability figures.
As part of the change in direction up to 700 management positions at Sainsbury's London headquarters are also expected to be axed.
Sainsbury's declined to comment ahead of the official Stock Exchange announcement tomorrow morning.
The supermarket chain is the latest in a series of companies, such as MFI, who have blamed poor financial results on problems with new IT systems.
Comments
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1. anonymous
There has been too much money wasted at Sainsbury's. Too many fat cats at the top, who are just in it for the money...i.e. Peter Davis, who came to Sainsbury's from Prudential. When he left the Prudential he bragged that he had got rid of staff without paying a penny in redundancy! What does that say about the man? He wasted billions on a distribution system that doesn't work, he refused to pay back holiday pay to thousands of Sainsbury's staff and when he finally got the boot earlier this
year, he had the cheek to demand his performance pay!
Bring back grocers to run this company!!!
2. Roger Huffadine
At last - Boardroom recognition that IT isn't a magic wand.
I can't number the people I have converted back to diaries and pencils with erasers over the past 10 years - you don't have to turn a diary on and it still works when the power fails.
Same thing with distribution - Hooray for Sainsburys :)
3. anonymous
Wonder how ling until Sainsbury's sue Accenture who they outsourced their business IT infrastucture too and may be responsible for this mess.
Though from the lack of stuff to sell and unhappy surly staff reported, sounds more like any Tesco's round the country to me than Sainsbury's.
4. anonymous
There's no point hiring 3,000 shelf stackers if the goods are still stuck in the warehouse. No one can buy them unless they reach the all too often empty shelves!
5. anonymous
I remember lots of Sainsbury staff enthusing about the reinvention of the company about 5 years ago, with lots of internal workshops all the way through the company and lots of genuine enthusiasm - but then it all stalled for some reason.
Unfortunately, you cannot run a retail company really well unless you understand your customer AND the logistics, and join it all up coherently - all the way through to the shelves. No product on shelves = no customer.
Lets hope they still have enough remaining enthusiastic customers who believe they can get it right again. And that they can reinvigorate the stores to match the advertising - another element of coherent implementation. In the case of our local ex-Safeways, the spirit is willing but the customers are lacking (but that means some of us have a lovely shopping experience)
6. anonymous
Having worked for a supplier of Sainsburys, It will not be just sainsburys that have lost cost on stock management. We invested quite a sum of monies to ensure we were in complience with their demands! I say demands as we were told to put the new systems in place or you will not be able to supply us. Perhaps if Sainsburys had taken a closer look at there communication style with their suppliers they may have got more co-operation and the project may not have failed?
7. michael john low
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