BUS351: In January 2011, Jaime Maia, Sonae’s Human Resource Director, Stared Out His Office: Operations Management Assignment, SUSS, Singapore

Case Study:

In January 2011, Jaime Maia, Sonae’s Human Resource Director, stared out his office window overlooking the Continente hypermarket store in Matosinhos, Portugal. This was where Sonae MC, Sonae’s Food Retail business, had been born in 1985. Although the country’s economic mood was gloomy, it seemed that they had another busy shopping day at the store. In the last 4 years, Jaime Maia had spearheaded the steering group responsible for the implementation of Lean in Sonae MC’s stores across the country. He felt satisfied with the course the program had taken to date. Several difficulties had been overcome and the program had produced major benefits.

Jaime Maia pondered on the course that the program should take in 2011 and beyond. In a few days, he would make a recommendation on future directions at the forthcoming steering group annual review meeting. One challenge would be to sustain the motivation for the program across the organization, after four years of continuous successes. He also felt the program was reaching a new turning point and needed to be reinvented. Until now, lean principles had been applied mainly to materials flows and workplace organization. Could lean principles be extended to customer flows?

Sonae Corporation

Sonae was founded in 1959 in the district of Porto, Portugal, as an engineered wood business, producing high-pressure decorative laminates. Belmiro de Azevedo joined the company in its early beginnings and is recognized as the main architect of the group and its development as we know it today. He was recently ranked by Forbes magazine as the third richest man in Portugal, with an estimated net worth of US$ 1.5 billion.

During its first 20 years of existence, Sonae was a small-to-medium-sized business, focused on the wood derivatives market. In the 1980s, under the leadership of Belmiro de Azevedo, Sonae began a period of rapid expansion and diversification, which coincided with Portugal’s strong GDP growth as the country joined the European Union. During this period Sonae acquired and set up new businesses.

In 1983, Sonae decided to enter the retail business. Because of the absence of previous expertise in this sector, Sonae set up a joint venture with Promotes (a French retailer which merged with Carrefour in 1999) to operate hypermarkets in Portugal. It opened the first hypermarket store under the Continente brand in 1985.

Case Assignment Questions:

1. Discuss the key drivers that motivated SONAE MC to start the lean initiative.
2. Implementation of the lean principle is a challenging project. Evaluate how SONAE MC dealt with the scale and complexity of the implementation (i.e. a large number of stores, large number of people involved, etc.). Use specific examples to illustrate your answer.
3. In what other areas could SONAE MC extend their lean principles? What obstacles would they face?
4. The principle of involving everyone is key to lean implementation. Given the SONAE MC case, how can they sustain staff motivation? Evaluate possible ways/strategies forward with lean implementation (evaluate 2/3 alternatives).
5. How can Sonae MC sustain motivation and reinvent the lean program? Discuss possible ways forward.
6. Should lean principles be extended to customer flows? If so, how?