Sainsbury's brings in McKinsey to draft new £500 million saving plan

22 August 2017

Sainsbury’s is due to announce more than 1,000 job cuts at head office as part of an efficiency drive designed to save £500 million. The exact number of roles axed is expected to be revealed in September 2017, with the supermarket giant currently employing 3,000 back-office staff across the UK.

The UK’s second-largest supermarket chain has drafted in management consulting firm McKinsey & Company, in order to draw up a headcount reduction plan amid ailing sales figures. Sainsbury’s sales fell back into decline after it posted a 0.8% decrease in like-for-like sales for the first quarter of 2017, having inched into 0.1% at the end of last year’s Q4 – the first time the store’s figures had increased in over two years. Market analysts have suggested sales were hit by the abolition of the store's "buy one get one free" offers, along with its brand-match guarantee. While Sainsbury's replaced those promotions with overall lower prices, a damning report by the competition regulator said multi-buy deals across the industry routinely mislead customers, further impacting on the reputation and sales figures of top stores.

The big four supermarket chains of Tesco, Sainsbury’s, ASDA and Morrisons have been embroiled in an increasingly fierce price war as German discounters Aldi and Lidl – who are also investing heavily in the US – expand across the UK, with Aldi becoming the fifth largest chain in the country, while Lidl is projected by Kantar Research to be on course to reach the top seven by the end of 2017. As a result, each of the biggest supermarket chains have announced job cuts in recent years as they seek to compete with the fast-growing discounters.

Sainsbury's brings in McKinsey to draft new £500 million saving plan

In March, Sainsbury’s declared it was to cut 400 jobs in stores, while another 4,000 workers would be facing changes to their working hours, including the scrappage of night shifts in 140 stores, as the grocer looked to run its customer-facing operations more cost-effectively. The chain will reach the end of a three-year plan to save £500 million in March 2018 but with chief competitors Tesco rapidly scaling back staffing costs, cutting 1,400 jobs in June, Mike Coupe, Sainsbury’s chief executive, has said the company will then embark on a new programme in order to save the same amount again. Advisors from McKinsey will assist the supermarket in drawing up the plan.

Under the leadership of Coupe, Sainsbury’s has sought to broaden its appeal with last year’s £1.4 billion purchase of Argos, which was targeted at diversifying the brand’s offering beyond the increasingly competitive grocery market, while presenting access to Argos’s fast delivery network. The company is also analysing the books of convenience chain Nisa, which it has been eyeing a £130 million deal for, in order to grow sales inorganically in the grocery sector, but any subsequent deal will also heavily be subsidised by the proposed £500 million in savings McKinsey may help to find.

Sainsbury’s currently employs 3,000 back-office staff spread across a number of sites including Holborn in central London, while  and a human resources support centre in Manchester. It also has an IT team based in Walsgrave, Coventry and a banking division in Edinburgh, however the specifics of any jobs lost are not currently available. In a release following the news of McKinsey’s hire, Sainsbury’s said “We do not comment on speculation and would always make any announcement around jobs to our colleagues first.”


How data insights helped Network Rail improve the South-East route

11 April 2019

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.