A case study on Tesco

  • 14Pages
  • Published On: 23-11-2023

Introduction

Supply chain management is the process of maintaining international operations and project management activities in order to expand the business strategically across the international countries. Through supply chain management, it is possible for the organisations to maintain good brand image and strengthen the suppliers base in the business so that the suppliers and distributes are efficient to handle the organisational operations and secure future sustainable development (Koberg and Longoni, 2019). In the recent era of globalisation, the organisations try to expand their business operations across the international countries and it is beneficial for the organisations to develop strong supply chain and distribution network in order to secure future sustainable development. The study aims at exploring the international operational strategic planning and project management which can be conducted through supply chain activities of the organisation. The suppliers are playing a crucial role in supplying the raw materials and help the production units to create quality products and services in order to distribute the final goods to the ultimate users and hence the supply chain management and distribution network efficacy are important for the organisations to maintain good brand image and handle the customers across the international countries. Through this study, the supply chain activities of Tesco will be explored and evaluated in order to analyse the tactics of the firm in handling their international operations. Additionally, the theories and concept of supply chain management is also effective so that it would be possible to evaluate the latest innovation of the company and suggest some suitable recommendations to strengthen their international operations.

Organisational background

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Tesco is a British multinational groceries and general merchandise retailer which is situated in England. It is the third retailer in the world by gross revenue and ninth largest supermarket chain measured by revenue. It is the latest retailer in the UK and the company is successful to expand their business operations across the international countries (Tesco, 2020a). The employees and other stakeholders of the business such as management team, shareholders producers and manufacturer help the firm to expand their business and handle the international customers successfully. It has expanded their operations across the international nations and it has more than 6800 shops. The product range is huge where the company focuses on product diversification strategy to retain the customers in different segment with diverse needs and preferences (Tesco, 2020b).

Tesco, 2020a

The super market chain is hereby efficient to serve the customers with groceries, health and beauty, clothing and accessories, software and hardware products as well as other necessities in daily lives of the customers. The tag line of the company is every little helps in which the organisation mainly focuses on providing high quality product at affordable price s that it would be possible to create values for the customers across the world (Tesco, 2020c). The total numbers of employees are more than 450000 and total revenue of the company in the previous year was £63.911 billion. Recently statutory revenue is £64.8bn and operating profit is £2,518m in this year. Group sales of the company in the previous year £56.9bn, where the organisation is efficient to run their international operations and satisfy the customers by delivering high quality product and services (Tesco, 2020c).

Supply chain management

Supply chain management is the cross functional approach which includes managing the movement of raw materials into an organisation, certain aspects of internal processing of the goods and services, managing finished maintaining movement of the finished goods in order to satisfy the customers. The role of supply chain management is to design, develop and implement warehousing, distribution and logistics operations. Through the logistics operations, the company tries to maintain the flow of raw materials and finished goods in the company. The warehousing is the strategy of managing the stock of the products and develops good strategic planning to handle the customers by providing good quality products and services to them (Ben-Daya, Hassini and Bahroun, 2019). In this regard technology plays a crucial role in managing the global supply chain where the international business firms try to maintain their suppliers and distributors in order to manage their activities and satisfy the customers worldwide. They try to manage the labour costs, personnel productivity, inventory levels, data accuracy and stocking strategies where technological advancement, It framework and ERP system are effective to manage the supply chain. Recently the firms try to implement the ERP or Enterprise Resource Planning system in the organisation in order to develop an integrated supply chain process in the workplace for managing the international operations. It is mainly software through which the supply chain and distribution can be handled; the producers can review the product stock and maintain the logistics system efficiently.

Tesco supply chain management is the transformational process where the firm stores to upgrade their system of international operations. During 1970s, the suppliers are organised and controlled by the leader and the operations are maintained through direct store delivery. Expanding the brand through store was the strategy of Tesco to manage their operations. During 1980s, the manufacturers and suppliers distribute their products and services in the distribution centre rather than providing the products directly to the stores across the UK and other counties. Outsourcing through managing distribution centres was the strategy of managing their supply chain. Through centralization, Tesco distribution network was efficient to maintain product portfolio and helping the customers to get their products as per their needs and preferences. During 1990s, the regional centres were developed for maintaining strong product portfolio and manage the supermarket chain efficiently (Tesco, 2020d). Composite structure and optimised productivity strategy are helpful or the company to maintain quality of the products and maintain inventory to serve the customers successfully. During 2000s, the company focused on vehicle collaboration and lean supply chain management where it was possible to develop integrated supply chain and distribution network through lean management. Transparency in lean management was helpful to manage customers order processing and the company was efficient to develop lean management and create JIT or just in time environment. The logistics operations were efficient and the flow of goods was maintained efficiently. Tesco started agreement with the suppliers for developing JIT to meet the orders and fulfil the customers demand in long run.

Supply chain flowchart of the company

The supply chain management of Tesco is a complex process and mostly oriented towards global supply chain. For international operations and project management, it is mandatory for the organisation Tesco to develop strong supply chain and strengthen the distribution network as well. Global supply chain management of Tesco is effective where as per the supply chain network, the company maintains the store replenishes, warehouse maintenance as well as review the products stock for further expansion of the business (Suryanto, Haseeb and Hartani, 2018). The supply chain is hereby efficient to scan the sales at check out, update the sales volume, store the demand generated and maintain purchase order generated which are effective for handing the print distribution.

Figure 2: Supply chain of the organisation
Suryanto, Haseeb and Hartani, 2018

The supply chain excellence of Tesco is maintained efficiently through increasing availability for their customers, improving the overall efficacy through building the stable business while maintaining partnership with their suppliers. Tesco is also efficient to use the scale of the business to reduce the waste of food while ensuring quality and freshness. Hence, the just in time is effective for managing their international operations and develop supply chain for further enhancement of the business activities. It has mainly four types of supply chain system which are,

Development of the blueprint team

Through development of the blueprint team, it is possible for the brand to focus on the waste management and innovation to gain high competitive advantage. The problem analytics and supply chain system are also beneficial to serve the customers successfully and gain high competitive advantage over the UK market and other international countries (Tesco, 2020e).

Store ordering system

Store ordering system is another strategy of handling the supply chain of the company, where through warehouse maintenance and managing the stock of the products, the company is able to meet the demand of the customers and strengthen their consumer base in long run. The organisation tries to maintain the product stock and utilise bar code for identifying the product category to serve the consumers efficiently. The organisation is also successful to display the products and expand the stores efficiently throughout different international markets. There are six types of stores at Tesco which are express, metro, extra, hypermarket, super store and online stores, and all the business supply chain operations are maintained efficiently in order to serve the consumers successfully in the long run (Tesco, 2020e). Store expansion through super market chain is hereby beneficial for Tesco to handle international operations and meet he consumers demand in the market for their quality products and services.

Suppliers ordering system

Suppliers ordering system is also another effective tactic to manage the global operations where the suppliers are efficient to manufacture and supply the products and services to the target group. They order more than 30 million food items in each week from the suppliers and it becomes a largest super market chain in the UK.

Transportation system

Transportation system is a key area of Tesco in managing their operations and maintains 30 million products being delivered worldwide (Sparks, 2019). They utilise the multi modal transport to ensure that their customers can get the high quality products and services for better operational control. They also utilise supply chain analytics to handle the transportation system worldwide and in this regard the transport mode is efficient to maintain the quality of their products. Rail transport and shipping are also utilised to reduce greenhouse gas emission and maintain good transportation strategy for supplying huge volume of products. This is effective for maintaining inventory and product stock in the organisation (Tesco, 2020f). Rail services and shipping are hereby contributing factors to handled global supply chain where Tesco is able to handle the stock of the products and serve the customers innovatively within effective time.

Inventory control

Inventory control mechanism is mandatory for the organisation where the organisation is successful to manage their inventory mainly for the food items and vegetables. In order to reduce the issue of food waste, the inventory approach, cold storage mechanism and just in time approach are suitable for the brand to supply grocery items and foods (Tseng et al., 2019). It is helpful to reduce food waste and maintain the distribution centre efficiently. Frequent delivered and efficiency f the suppliers are hereby the contributing factors to manage inventory and in this regard RFID technology is also utilised by Tesco in order to manage their inventory and secure future sustainable development.

Information management

Information management system plays a crucial role in handle the global operation management where the multinational corporations try to manage their activities across the international countries and secure future sustainable development. Tesco as multinational corporations try to manage the international operations and it is important for the firm to handle the information so that the operations can be conducted smoothly (SPARKS, 2018). Tesco utilised automated system since 2006 where big data analytics has been introduced in the product ion and manufacturing sites in order to handle their international operations. The big data analytics is important for the brand to manage sales pattern, customer demand, and target audiences for their quality products and services. The integrated information base is efficient for the organisation where Tesco is successful to manage their information related to customers, sales activities and order processing so that it would be possible for the organisation to meet the consumers demand and secure future client base (Tesco, 2020f). The online database management system and integrated software system at the workplace are helpful for Tesco to maintain their international operations and secure future sustainable development. The information about the clients, product availability and sales activities are fruitful to maintain the client base and deliver high quality products within effective time.

Sourcing

Sourcing is another strategy conducted by the organisation in order to maintain their suppliers and deliver high quality products and services to the customers. Tesco is sourcing 70 countries to ensure the customers to purchase the best quality of products. End to end supply chain operations are hereby helpful for the company to manage their production and distribution and serve the clients successfully (Wood, Coe and Wrigley, 2016). Sourcing is also effective to deliver the products to the distribution centre and deliver it to the ultimate users. Building end to end supply chain is hereby effective to maintain access, quality and speed as well as productivity for ensuring fast movement of the goods such as grocery products, food items and vegetables so that the clients can get the fresh products within effective time (Tesco, 2020f). Business efficacy of Tesco further help the company to improve the international process to source the products to the customers in a fast and productive way. The logistics operations and delivery centres are also doing great job to fulfil the client demand where fast movement, maintaining transpiration and order processing system are fruitful for Tesco to satisfy the customers by delivering high quality products within effective time.

Operational management of Tesco

The operation management of Tesco is hereby beneficial for the organisation to handle their operations across the global markets and gain high competitive advantage in the international retail industry. The global supply chain and just in time approach is also effective to satisfy the clients and retain them for long run. The suppliers are efficient to supply the raw materials of the head quarter of Tesco for further production of quality products as well as the distribution chain is efficient to maintain distribution centres with product handling and stock management so that they can fulfil the demand of the customers in the retail market. The distributors are playing crucial ole to handle the global customers and deliver the products within effective time. In the recent years, the online activities are increasing at a rapid rate and the distributors are productive to manage the customers, track the orders and utilise Google map to delivering the products safely to the ultimate users.

Figure 3: Information and good flow
Evans and Mason, 2018

The supply chain management at Tesco is hereby efficient where the firm is able to strengthen their supplier’s base and give them high return on their investment, it is beneficial for the company to strengthen their customer’s base in long run and gain high competitive advantage. The suppliers try to reduce waste and provide high quality products through managing transportation system and cross docking (Evans and Mason, 2018). Recently, the company is efficient to handle cross docking system to maintain their international operations in long run and it further provides a scope to the organisation to ensure that the customers will get the right products within effective time.

Figure 4: Supply chain management
Evans and Mason, 2018

The company is also efficient to utilise RFID technology in 2003 which provides a scope to Tesco to track the products, especially when shipping, transporting and handling online operations. The unique identification code and security system are maintained through RFID and it provides an opportunity to the organisation to strengthen the global supply chain and enhance the productivity of the employees, suppliers and distributors.

Suggested recommendations for further improvement

The company is efficient to expand their business through managing international operations across the international markets and in this regard the organisation is able to improve their global operational management in order to secure future sustainable development. It is hereby mandatory for the business to manage their operations through developing efficient supply chain operations. The company must focus on emerging market economies such as India and China as well as other Asian countries and in this regard hiring efficient suppliers and cross decking system are useful for the company to manage their international operations. The organisation must focus on managing international supply chain in a cost effective way to reduce the cost of operations and generate profitability so that there would be no loss for the company. Developing ERP system is another major strategic planning for the organisation through which it can create integrated system. Through the online ERP system, the company would be able to handle the product stock, maintain the global suppliers and distributors as well as manage them efficiently in order to serve the customers successfully. Through the ERP system, it is also possible to improve the efficacy of customer’s services where the representatives of the firm can handle the clients and provide 24*7 supports to the clients. The organisation must develop online client handling portal to support the customers and resolve their queries. The business activities are hereby necessary to be maintained through the ERP system in the workplace so that the leader would be able to manage the operations across the international countries through data analytics, online data handling and supply chain management. The strategy of online selling activities is another major tactic which will provide a scope to the company to manage their international operations. Rather than store expansion, Tesco must focus on online expansion of the business where the customers can place their orders through online application and the organisation also would be able to manage their product stock, online customers tracking process to deliver high quality products within effective time.

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Conclusion

It can be concluded that for international supply chain management, it is mandatory for the multinational corporations to manage their suppliers, strengthen distribution network, develop good product portfolio and manage online data base management system through data analytics. Tesco is efficient to introduce RFID and big data analytics in the company in order to handle their international operations and it would be beneficial for the company to develop online selling activities through strengthening their supply chain, online customers handling portal and product process system through develop ERP system in the organisation.

Reference List

Ben-Daya, M., Hassini, E. and Bahroun, Z., 2019. Internet of things and supply chain management: a literature review. International Journal of Production Research, 57(15-16), pp.4719-4742.

Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. London: Kogan Page Publishers.

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, pp.1084-1098.

SPARKS, L., 2018. Tesco’s chain management supply 07. Logistics and Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain, p.183.

Sparks, L., 2019. Tesco: how supply chain strategy supports retail success. The Business & Management Collection.

Suryanto, T., Haseeb, M. and Hartani, N.H., 2018. The correlates of developing green supply chain management practices: Firms level analysis in Malaysia. International Journal of Supply Chain Management, 7(5), p.316.

Tesco, 2020a. About us. [online] Available at: https://www.tescoplc.com/about/ [Accessed on 10 December 2020].

Tesco, 2020b. History. [online] Available at: https://www.tescoplc.com/about/our-history/ [Accessed on 10 December 2020].

Tesco, 2020c. Key facts. [online] Available at: https://www.tescoplc.com/about/key-facts/ [Accessed on 10 December 2020].

Tesco, 2020d. Sustainability. [online] Available at: https://www.tescoplc.com/sustainability/ [Accessed on 10 December 2020].

Tesco, 2020e. Annual report 2019. [online] Available at: https://www.tescoplc.com/media/476423/tesco_ar_2019.pdf [Accessed on 10 December 2020].

Tesco, 2020f. Annual report 2020. [online] Available at: https://www.tescoplc.com/investors/reports-results-and-presentations/annual-report-2020/ [Accessed on 10 December 2020].

Tseng, M.L., Islam, M.S., Karia, N., Fauzi, F.A. and Afrin, S., 2019. A literature review on green supply chain management: Trends and future challenges. Resources, Conservation and Recycling, 141, pp.145-162.

Wood, S., Coe, N.M. and Wrigley, N., 2016. Multi-scalar localization and capability transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional Studies, 50(3), pp.475-495.

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