Tescos Supply Chain Components - Essay Example

? Management – The Organization Inserts His/her Tesco: Company Background Tesco, established in 1919, is a UK based general goods and grocery items retailer with its headquarters located in the UK. As far as the international ranking is concerned, Tesco stands third among the international list of retailers (after Wal-Mart & Carrefour), and in terms of revenue/profit, it holds the second position (Wal-Mart being on top). It is a celebrated leader of the grocery market in the United Kingdom, Malaysia, Ireland and Thailand. Its stores are spread across Asia, Europe and North America in 14 different countries (Malley & Palmer, 2010). Tesco’s Supply Chain Components Supply Chain Overview Tesco employs a well organised structure to ensure rapid growth of its supply chain. A focused supply chain strategy has enabled Tesco to strengthen its UK based business and expand it to new global markets. To achieve its purpose of expansion, Tesco heavily relies on comprehensive analysis of its supply chain data. Tesco's supply chain analysis processes have earned it a profit of millions of pounds by recognising various opportunities such as carrying out effective promotions and reducing waste (Sukati & Baharun, 2011). Customers. Customers are the jugular vein of a business enterprise. They are the most valuable asset of an organisation and Tesco is no exception in this regard. The core purpose of Tesco is to create value for its customers and earn their lifetime loyalty. The success of Tesco can rightly be attributed to its widely spread customers who have enabled it to emerge as a market leader of retail business. Satisfaction of customers directly leads to greater sales and profits; therefore, Tesco sticks to two major values when dealing with its customers. No-one tries harder for customers, and Treat people as we like to be treated. Tesco offers a wide range of products to cater the needs of its diverse customers. Although Tesco offers numerous cheap products, Tesco Finest products are a specialty of Tesco, available for its premium customers. Some of the well renowned Tesco brands are Cherokee, F&F and Healthy Living (Clark, 2013). Planning. The purchase request initiated by Tesco’s customers is followed by a production plan that is adopted by its planning department to manufacture a product according to the requirements mentioned by the customer. The planning department takes great pains to prepare a dynamic and vigorous plan utilizing all materials and resources to fulfill all requirements put forth by Tesco’s customers. Suppliers. Tesco has the opportunity to collaborate with thousands of suppliers around the globe who are experts in diverse aspects of business operations. To exchange knowledge with its supply chains and keep abreast of the rapidly changing needs of the supply chain industry, Tesco has set up an online Tesco Knowledge Hub to share best practices with its suppliers on an everyday basis (Malley & Palmer, 2010). Being a pioneer in delivering safe and responsibly sourced quality products through its retail stores, the sole purpose of Tesco is to create value for money and gain an everlasting loyalty of its customers. To achieve this goal, Tesco has nine sourcing offices around the world that enable it to source products from across 40 countries and collaborate with a large number of suppliers who are the major contributors in strengthening and materialising its core values. Tesco makes special arrangements for training courses and workshops of its suppliers. These training workshops are aimed at elaborating its standards, creating an awareness of ethical issues and establishing supplier confidence while dealing with all such issues in their respective countries and factories (Malley & Palmer, 2010). Warehousing and Distribution Centres. In Europe, North America and Asia alone, the number of stores is 5,380. It is the undisputed leader of the grocery market in the United Kingdom, where its market share is close to 30 percent. Warehousing and distribution activities are the lifeline of Tesco’s business. They are aimed at on-time delivery of products from suppliers to its retail stores, thus providing goods and products to its customers with loyalty and commitment. Being a world leader in logistic management, it possesses the world’s largest distribution network. Its 26 UK depots alone occupy an area of 11.5 million square feet, which can easily fill Wembley Stadium ten times. Also, every week Tesco UK is engaged in a colossal figure of 43.7 million cases related to production and manufacturing. Distribution and warehousing activities allow Tesco to combat with competitive prices while strengthening its customer service and improving the quality of life of all customers (Sukati & Baharun, 2011). Production. At this phase raw materials are sent to the production site where the finest quality products are manufactured by Tesco by employing state-of-the-art technologies. Upon completion, products are inspected for quality and delivered to the warehouses. Transportation. The shipping department or the transportation department is responsible for in time delivery of final products to the customers. Potential Problems in Tesco’s Supply Chain Tesco faces continuous challenges of standardisation and integration in its supply chain. Also, it has to cope with the rapidly changing technological advancements. Tesco has to make sure that its business strategy is aligned with the corporate and global business strategies. Also, Tesco needs to maintain and manage its systems in a cost effective manner. Approaches Adopted by Tesco in Its Supply Chain Initially a British grocery dealer, in the 1990s Tesco expanded its business operations in other areas of household use such as books, electronics, furniture, clothing, software, petrol, Internet services, financial services, music downloads, telecoms, DVD rental and many more. Also in the 1990s, Tesco took the bold initiative of repositioning itself in the business arena, which resulted in a rapid growth of its retail stores from 500 in the mid-1990s to 2,500 stores at present (Datamonitor.com, 2004). Moreover, Tesco has a special team of analysts to keep an eye on the latest trends and adapt itself according to modern practices of buying, manufacturing and processing patterns. Tesco with its revolutionary motto of “Building a Better Tesco” gives utmost attention to the following major areas: Service & Staff It inducted a large batch of staff members to provide better service to customers especially in the fresh food section of stores. Stores & Formats It gave a makeover to its stores’ outlook for a faster and warmer look and feel. Price & Value It introduced several promotional and discount offers to please its customers. Range & Quality It worked on re-launching Tesco brands and offered improved ranges and quality. Brand & Marketing It worked on building a healthy relationship with customers. Clicks & Bricks It facilitated its customers by introducing the Click & Collect programme for online sales (Clark, 2013). To improve its customer service, Tesco has employed a new check-out technology at its retail stores, which allows the staff to execute a quick check-out for the customers and also enables customers to make use of self-service check-out. Moreover, Tesco has adopted the practice of sourcing its products directly from manufacturers which allow it to have a deep insight into and great knowledge of the manufacturing domain. It conducts regular audit programmes to ensure that products are manufactured only in line with the highest quality standards acceptable to the customers. Implementation of Enterprise Resource Planning System For the purpose of implementing an enterprise resource planning system, Tesco makes use of the Internet and e-commerce technologies. The use of Eqos’ Global Sourcing systems for the purpose of digitising instead of manual processing has been a recent development. This is also expected to help the company in quality management of its suppliers. Added benefits may include the ability to check and maintain the quality of products and get early information regarding delays in business deals (Clark, 2013). References Clark, L. (2013). Tesco uses supply chain analytics to save ?100m a year. ComputerWeekly.com. Retrieved from: < http://www.computerweekly.com/news/2240182951/Tesco-uses-supply-chain-analytics-to-save-100m-a-year>. Datamonitor.com. (2004). Tesco PLC: Company profile. Datamonitor.com. Retrieved from: http://people.exeter.ac.uk/wl203/BEAM011/Materials/Lecture%204/TESCO%20Company%20Profile.pdf. Malley, T., & Palmer, D. (2010). Tesco: A corporate profile. Retrieved from: . Sukati, I., & Baharun, R. (2011). An Investigation of the relationship between supply chain management practices and competitive advantage of the firm. Contemporary Marketing Review, 1(4), 1–13. Retrieved from: http://www.academia.edu/1029278/AN_INVESTIGATION_OF_THE_RELATIONSHIP_BETWEEN_SUPPLY_CHAIN_MANAGEMENT_PRACTICES_AND_COMPETITIVE_ADVANTAGE_OF_THE_FIRM. Read More