Shorter, faster, better, cheaper
Sainsbury's has sought to regain marketshare by launching customer-based inititiatives, such as home delivery.
SOURCE: © J SAINSBURY PLC 2002
For years, J. Sainsbury PLC dominated British grocery retailing with an unparalleled reputation for blending leading manufacturers' brands with its own top-quality products. In mid-1995, after years of gradually clawing a little more market share each quarter, rival chain Tesco PLC saw its market share reach 11.4 percent, just 0.1 percent behind Sainsbury's. Months later, it finally became top dog, a position it has held since, thanks to the success of a series of canny innovations. When Tesco began offering a loyalty card program in late 1994, for example, Sainsbury's chairman, Lord Sainsbury, at first publicly dismissed the idea as unimportant to customers. Sainsbury's launched its own loyalty card a year or so later, however.
Supply chain management was another stumbling point. When the grocery industry on both sides of the Atlantic began adopting a retailwide supply chain initiative known as Efficient Consumer Response, Sainsbury's again openly described its own systems as inherently superior. Shortly afterwards, the company announced that Lord Sainsbury was stepping down in favor of a less entrenched executive team.
These days, Sainsbury's is still number two. But to its slick new management team, nothing is sacred, and everyone's eyes are on becoming number one again. In the process, says supply chain director Martin White, its executives are given considerable latitude in developing new initiatives that can help it fight back. The result: projects that are firmly focused on what really matters.
Sainsbury's, it seems, no longer discounts an idea without thinking about it. These days, in fact, management is more likely to try something out while the chain's rivals are mulling it over. “The golden rule,” says London, U.K.-based White, “is that a project must take no longer than 13 weeks to implement and must provide a 100 percent return on the investment within six months.” As long as projects meet these criteria, White can sign-off decisively on most things that he considers will help close the now-shrinking gap with Tesco.
Sainsbury's, a leading U.K. grocery chain, is focusing on short-term projects that will reap fast rewards, such as revising store layout and remodeling.
SOURCE: © J SAINSBURY PLC 2002
Nor is Sainsbury's alone. Across Europe, such tough project-gating criteria are fast becoming the norm within the retail sector, observes Steve Wilson, a management consultant with Accenture Inc. in London. “We're seeing a clear focus on projects with clearly defined goals and defined benefits—and which come in within a realistic timeframe,” he says. “Retailers are saying: ‘What is the benefit, and when does it accrue?’”
While the time constraint is certainly one part of the equation, it turns out that it's the return on investment that takes precedence over the project timescale. Indeed, put the right project in front of the board, and most companies will look at stretching the timetable, says Wilson, but only from “very tight” to just “tight.”
In addition, companies will want chapter-and-verse on project deliverables and will want to make sure that the resource inputs are not just quantified but actually identified, too. Compared to just a couple of years back, observes Wilson, “people are much less likely to go on a whim. The economic fundamentals of a project have to make sense.”
Speaking of the economy, costs are under scrutiny in a way that they weren't a few years back. Even though Europe's retailers are more-or-less keeping red ink at bay and certainly have yet to see a meltdown of Kmart proportions, there's little doubt that staying profitable in such strained times is no sinecure.
America's retailers, too, are now taking a cold, hard look at the projects that they are prepared to sign-off on—particularly when it comes to projects with a significant IT element, says Ken Fobes, chairman of Ponte Vedra Beach, Fla., USA-based Business Strategy Group, a retail consultancy. Fobes, whose clients have included Kroger, Canadian Tire, Wild Oats, Save-A-Lot and Supervalue, says retailers now are especially reluctant to undertake the sort of “big bang” projects associated with enterprise resource planning systems. For retailers, he says, “these often have turned out to be a lot of hype and vaporware.”
“A lot of companies bought into the idea that all these [IT] applications were going to work together, but then found that the cost of the software was pennies compared to the cost of the implementations,” charges Fobes, pointing to the experiences of retail companies such as Nash Finch of Minneapolis, Minn., USA—which spent nearly $70 million before finally pulling the plug.
While shorter project timescales with tightly-defined benefits are a refreshing alternative to such behemoths, says Fobes, retailers need to avoid going from one extreme to another. A case study in point: NASA's much-vaunted post-Challenger “faster, better, cheaper” approach to space exploration resulted in more than a fair helping of expensive hardware slamming at high speed into the surface of Mars or otherwise going absent without leave. Shorter projects, even with tightly-defined benefits, still may backfire, he warns.
From left, Harnish Elridge, finance director and Martin White, supply chain director, Sainsbury's.
SOURCE: © J SAINSBURY PLC 2002
The golden rule is that a project must take no longer than 13 weeks to implement and must provide a 100 percent return on the investment within six months.
SUPPLY CHAIN DIRECTOR, SAINSBURY'S
“Most retailers approach technology from a tactical standpoint,” he explains. “They have poor truck utilization, so they get a logistics system. They have a labor management problem, so they buy a human resources solution.” Even shorter-term projects only exacerbate the problem. What's more, just as NASA found when two subsystems aboard the Mars Climate Orbiter mission muddled up metric and imperial units of measurement, they add to the risk that the individual pieces won't work together.
Enter the project manager, says Daniel Garvin, first vice-chair of the Project Management Institute's Retail Industry Specific Interest Group (SIG) and a logistics analyst in Greenville, S.C., USA. The beauty of shorter project timescales, believes Garvin, is that they focus the project manager on achieving just what is required to meet the deadline—and nothing else. “Change what you have to, but no more,” he cautions. “Ultimately, you might have to change a lot of things, but right now, you're saying: ‘What do I have to change now?’”
And this calls for a change in mindset, concludes Garvin. In the past, project managers have been more concerned with accountability issues, such as time and attendance, and have stayed clear of the choice of technology or defining what that technology is to accomplish. The result: too much attention paid to acronyms—ERP, CRM, SCM and so forth—and not enough to the underlying business processes that the new solutions were designed to address.
Consequently, he says, there's a temptation to reengineer wholesale, when in fact, only small changes are required to achieve the core objective. Yes, a CRM implementation may ultimately mean changing systems X, Y and Z, but not immediately. A better solution, he says, is “to look at the business processes and make decisions that reflect them. [With a given process], the right decision might be to do nothing. Don't assume that there has to be a change.”
It's an appealing notion, and one that Garvin describes as akin to continuous improvement: “You're always getting money back, rather than waiting five years.” Better still, risk is reduced, as incremental changes are made rather than a wholesale redrawing of the business.
If European-style project gating does come to America, it will certainly ease one of the project manager's perennial bugbears, adds Sufian Abu, Edina, Minn., USA. Abu, chief information and knowledge officer for Video Update Inc. and vice-chair of programs in PMI's Retail SIG, sees shorter-term projects as helping to maintain the knowledge assets and focus of the project throughout its duration.
“Two- or three-year projects often outline the project team; people move on,” he says. And the higher-up the manager who is departing, the greater the risk. “The project starts out led by someone with the vision, but by the time it's halfway through, they're gone, and the people who are left are asking themselves: ‘What was the vision?’”
This scenario is all too familiar. Thirteen-week projects may be tough, but at least there's a good chance that the team that started it will see it through. PM
Malcolm Wheatley is a U.K.-based freelance writer and former Big Five management consultant who has contributed to a number of American business magazines, including CIO, Manufacturing Systems and Healthcare Informatics.
PM NETWORK | MAY 2002 | www.pmi.org
MAY 2002 | PM NETWORK