Essay Example Comprising the Supply Chain Analysis of Tesco Supermarket

Published: 2022-09-28
Essay Example Comprising the Supply Chain Analysis of Tesco Supermarket
Type of paper:  Essay
Categories:  Supply chain management
Pages: 7
Wordcount: 1750 words
15 min read

One of the significant objectives of supply chain management is to ensure that all the functions and operations within and across the company are efficiently managed. Inventory is considered a burden to the efficiency of supply chain management, but its need is however acknowledged by supply chain managers with a rule to hold inventory as low as possible being adhered to. Numerous strategies have been put in place with the aim of streamlining inventories to supersede the supply chain and at the same time keeping the inventory investment at a bare minimum ,the cost associated with owning inventories are high in most cases, for instance, the cash outlay for the purchase, cost of acquiring and the cost of its management.

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There is a cordial relationship between the customer and the manufacturer. Keeping up with the demands of clients, handling and bridging the gap between them and the manufacturer is a crucial section of supply chain management, in other words, the idea of the collaborative relationship is essential (Touboulic, D. 2014, 581). Though a more detailed analysis of supply chain, more so those including the flow of products, exposes that the Centre of these relations is inventory storage and movement. More than fifty percent of it depends on the transfer, purchase, and management of the inventory. Therefore the most essential and fundamental functions of inventory in the supply chain can be summarized as; to supply and support the balance of supply and demand and also to effectively cope with the reverse and forward flows in the supply chain. The companies need to relate the downstream client demands and the upstream supplier exchanges. A state of decision making and a choice is at the disposal of the company where it has to maintain a balance between keeping enough supply of goods and items and fulfilling the demands of customers that is more certainly difficult to predict with accuracy or precision.

Jack Cohen founded Tesco in 1910, and his first label product was TESCO tea. The company's first store was started in 1929 with the primary aim of their operations at that time being 'Pile it high and sell it cheap,' i.e., economies of scale of products. Tesco went public for the first time in 1947 and a year later started their first self-service store. Supermarket industry was revolutionized in 1956 when Tesco opened the first service supermarket and acquired several chains of stores. In the later years, Tesco changed its philosophy due to the growing customer distractions. Tesco's progress was impaired when another company called Imperial Tobacco suggested diversifying by acquiring Tesco.

Consequently, more than a decade Tesco has faced blow in their endeavor which obliged them to close some of their stores. The modern Tesco supermarket needs inventory and supply chain management dearly. So far Tesco is still the biggest retailer in UK operating 2,291 stores inclusive in 14 countries worldwide. Their focus is to become stable and robust purposefully to earn the lifetime loyalty of their customers, and they need to be all of what the modern customer needs and that means innovation and grand strategy, Tesco's continuous improvement is inevitable.

In the last half a decade, Tesco's supply chain has significantly evolved. The transformation can be classified into five main phases with core factors associated with these phases being the major differentiating issues. In the 1970s there was no range in price or retailer, the suppliers had control and were organized. The supplies had no standards, and the stores were stocked with the varieties, a phase termed as direct to store delivery.

The second phase in the 1980s was the centralization. Rather than the stores, the suppliers and manufacturers supplied their products to the Tesco distribution centers. A sense of quality establishment featured amidst a wide range of products, and the support to functions outsourcing began. The price control regulation was put in place for the retail selling, and Tesco started catering to the product line basis.

Composite phase was the next in the line having occurred in the 1980s and 1990s. Tesco endeavored to secure the quality of products to avoid wastage. The temperatures in the transporting vehicles and regional centers were explicitly adjusted for the respective goods. There was an increased frequency of deliveries to the stores which reduced the need of storing the assets in the ventures and so creating more room in the supermarket. Productivity increased, and optimization of store space was enhanced. The trend of keeping inventory reduced considerably as the quality improved progressively, the convenience of supply was made possible with the introduction of superstores.

The fourth phase involved lean supply and vertical collaboration in the 2000s. By following the lean supply chain concepts and practices, the main focus was to reduce the waste in the chain. Tesco marked success in making the value stream efficient and straightforward, simultaneously ensuring its transparency. Replenishment ordering system depended on customer demand since the planning stocks did not stay much longer in the distribution centers. Products were transported as ready shelf merchandises logistics being considered as a flow. Tesco focused on supporting the JIT environment and technology developments.

The last period of the phases was managing complexity. The supply chain was mostly oriented to the global standards, and the Tesco chain became complex. Stores were built with different sizes depending on their respective locations. Online shopping kicked in, and Tesco made it possible for their customers. To measure performance more effectively, steering wheel and balance score concepts were introduced and RFID technology fastened supply chain. Some of the main initiatives comprised of using intermodal transport and sustainability concepts to increase cost advantage.

The organizational structure that works for hand in hand with the Tesco supply chain can be more complicated in realistic situations considering that they should profoundly understand their customers and at the same time maintain the flow of goods by investigating about their products and suppliers. The supply chain management of Tesco must coordinate transportation worldwide be it water, road and air transport (Christopher, M. 2016, 109). Tesco should consider some of these factors to meet their quest of being a more multichannel retailer in offering new, wide range and quality products for their customers. The excellence of the supply chain should be determined to increase availability for their customers, maintain the partnership with suppliers while creating stable business to improve the overall efficiency, and to make sure the freshness and quality of food becomes a vital concern using the scale of the business, this in another way will reduce food wastage.

To converge all these for effective functioning, I can assume an organizational structure is having all its structures categorized into close to four major teams:

The blueprint and development team. The team is to aim at innovation and competitive privilege applying analytical supply chain problem-solving methods. The consequence of the acts will be reduced wastage of food with ensured availability, and the teams to work with suppliers and other supply chain teams around the globe.

The ordering and supplier team is another major category. The target of the buying group and managing suppliers is to plan the supply and manufacture of products. When the goods are supplied, then the next team which is the third in the line is the store ordering team.

Managers in this department should set their plans to satisfy customer's demand. So the primary purpose of this group is to maintain the correct stock in each go down (Harrison, A. 2008, 54).

Last but not least is the security team. The safety standards of the working environment of Tesco is addressed by this team to prevent loss through thefts.

To make the supply chain more efficient, an obligation to coordinate various sectors is inevitable. Some of these sectors that need coordination are information, pricing, sourcing, transportation, inventory, and facilities. Pricing should be considered to lure customers all the year round, the stability of prices ensures smoothness in the supply chain.

Sourcing sector is to enable Tesco to assure their customers of the best quality products. Coordination of this area will help manage end-to-end supply chain from the main source to the numerous distribution centers. However, this group should be bucked up with teams dealing with logistics, supply planning, and business efficiency.

Coordinating Information sector helps to understand customer demands, sales patterns which effects in targeting customers more effectively. Tesco uses software for automatic data collection to feed information into its servers, the big data analytics since 2006. Many sources are used to generate information about the customers which has drastically reduced the power of buying, Tesco, however, has taken advantage of this by developing a model to understand link between the sales pattern and weather including using Google maps to identify Vehicles Park has also been adopted as another initiative (Budhalis, D. 2003, 418).

Transportation is a vital sector in Tesco connected with extremely many cases of product delivery in the globe every year. To make sure their customers get their demands regarding time, place and price, they use multimodal transport. The quality of the products should not be compromised by the transport mode, and they handle all transportation using supply chain analytics for affectivity. The transport strategy has enabled them to cut done on carbon emission by around 14% in their shipping and rail transport. Rail services commenced by Tesco cutting down on Lorries up to 40,000 annually. So transportation is a major sector for coordination in the company.

Facilities in Tesco mostly include the distribution centers and stores worldwide. The large number of distribution centers maintained by Tesco contribute a significant influence in the overall productivity. The structure of the stores sustains an essential portion for the driving factors of the supply chain. The six main types of stores in Tesco which serve customers are online, extra, hypermarket, superstore, metro and express stores (Sheu, C. 2006, 27). Express stores partnered with Esso serve customers in spaces which are small, while the urban population has Tesco metro providing its solution.

Tesco should adopt special inventory management relating to perishable goods like meat and vegetables. For products like meat and vegetables are being ordered daily unlike other goods where stores place orders every week. The distribution centers have received inventory issues from Tesco as an initiative to reduce food wastage. Due to this, space in the stores is used more effectively with less inventory inside. The linkage with transport ensures that distribution centers make frequent deliveries to the stores. Inventory handling has been managed by Tesco using RFID technology. Coordination among all these sectors is, therefore, necessary to make the supply chain more effective.

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