Operations and Logistics Management of Tesco - Term Paper Example

Operations and Logistics Management Introduction The management of operations and logistics generally refers to the harmonization of organisational strategy, business activities and processes to meet the desired long-term goals of the enterprise. In the increasingly competitive twenty-first century world of integrated business procedures, linkages and expansion, application of logistics and operations is vital to the prospects of modern businesses. Using the global retail giant TESCO as a model, this essay discusses the relationship between operations management and corporate strategy, within the context of logistics management. The organisation and activation of key elements such as capacity, process design and type, layout and facility design, shall be examined for this model organisation (Tesco). The various elements of its (Tesco’s) corporate strategy, and their bearing on the numerous aspects of the organisation’s vast enterprise, will be analysed, with a view to determining the nature of the relationship. An attempt will also be made to identify/evaluate possible areas of improvement in the organisation’s operations management; in addition, the ways in which Tesco’s operations add value to the delivery of its products/services will be explained. Corporate Strategy is essentially the long-term direction of an organisation. As a global mogul in the retail business, Tesco has a long-term business strategy of: (a) succeeding as an international retailer, (b) being as strong in food as in no-food business, (c) development of its retail services, (d) growth of its core UK business, (e) putting the community at the heart of its activities. In line with its organisational strategy of success as an international retailer, Tesco has imbibed a Facilities culture that reflects this aspiration. Ideally, organisational business activities should integrate the needs of people (customers and staff), machinery and material to provide a smoothly-functioning system. Tesco’s introduction of Tesco Link, giving its suppliers access to in-store sales and stock availability data, exemplifies this concept (the logistical underpinnings of a smooth flow of materials/goods from the suppliers through Tesco to the consumers, are obvious). This is further enhanced by the Capacity management efforts of Tesco, whereby it utilises an online delivery system to replenish its stores thrice daily, to achieve (in addition to meeting customer needs and the activity-level needs of staff) shorter lead-time in the supply chain and lower inventories (Case Studies From Tesco HSC, 2010). This, the source further notes, has helped the organisation achieve improved product availability and a boost in its labour productivity. There is a connection in the context of obvious benefits to product/service delivery, as the latter is undoubtedly impacted by availability and productivity, in the flow of business operations and activities. Value is further added to Tesco’s product/service delivery by this system, as it achieves the elimination/minimisation of long storage delays by facilitating continuous movement of goods between warehouses and stores. The logistical benefits are unmistakable, considering that this system enables Tesco to adjust delivery quantities within six hours of actual arrival of the products (Case Studies From Tesco HSC, 2010). There is thus the elimination of storage bottlenecks and concomitant expenses. These operational features positively impact the internationalisation of Tesco’s retail business, as it’s global chain of about 4,308 stores benefit from the network of (integrated) capacity, facility and supply management online system. It is easy to understand this set-up as a direct offshoot of Tesco’s corporate strategy goal of becoming successful as an international retailer. Furthermore, the operations management element of Enterprise Resource Planning is recognisable in this process embraced by the organisation. Tesco’s strategy of being strong in food as in non-food products, has seen it embarking on product innovation across non-food products( in addition to food). Examples include sporting goods, PC software, and equestrian equipment, to name only a few. As an organisation, its activities are carried out in partnership with suppliers, and listening to what customers want (Tesco plc- Our Strategy). This can be interpreted as an element of the ‘bottom up’ concept of operation strategy, where strategic decision-making occurs as an accumulation of practical experiences, formed from dealing with customers and suppliers (Slack, Chambers & Robertson, 1995). This corporate strategy has also impacted Tesco’s international activities, for instance, reflected in its reorganisation of Tesco Corporation’s operations for effective pursuit of the oil and gas industry overseas (Shanghai Zoom Intelligence Co., Ltd., 2006). Tesco, in terms of its in-house logistics, aims to achieve and maintain its in-store level of customer choice (Tesco, Corporate Strategy 2010). This is reflected in its Capacity set-up, whereby many of its stores stock over 40,000 product lines, and across its range of stores has over 7,000 products, and is planning to increase this (Tesco plc- Our Strategy, 2010). This can be seen as consistent with its strategy of listening and responding to customers. The value of this, in terms of product/service delivery, cannot be overemphasised. Customers are able to have well-timed access to the range (choice) that they desire; a diversity that makes for an equally wide range of prices. Growth of its core (UK) business being an integral part of Tesco’s strategy, is reflected in the organisation’s domestic expansion and development activities. This is exemplified in the capacity planning project at one of its major distribution centres. This facility, originally having a handling capacity of 20 vehicles per hour, courtesy of 26 truck loading decks (Tesco Case Study, 2010). Tesco’s strategy-informed considerations were: (a)employee safety- how to design a new system avoiding collisions; (b) customer needs- putting together activities/processes to meet the delivery needs of individual supermarkets every hour; (c) a system where people, machinery and materials re well-balanced to achieve a smooth flow of work. Tesco, sequel to consultations with a materials handling firm, was able to achieve its strategic goal of an optimum operating system, harmonising the existing facility with automated guided vehicles(it was also able to achieve cost savings through this). Inevitably, such a scenario adds value to Tesco’s product /service delivery because of enhanced integrated system meeting the delivery requirements of its supermarkets Customer experience is also enhanced by the elimination of non-availability of products arising from delivery hiccups. The positive impact on Tesco’s revenue returns is also a desirable consequence of such. Tesco achieves customer satisfaction and its strategic objectives through the design and delivery of interrelated processes. As noted by Ma and Ding (2010), the organisation engages its customers via a two-pronged service process: (1) the front-office process, i.e direct customer interaction, (2) back-office process, i.e indirect customer participation through online means such as Tesco.com. Key elements of management attention in Tesco’s process include, as the authors note, provision of service, scheduling workforces, management of growth, development and control, marketing,startup of new units, attention to physical surroundings, and control of far-flung locations. Tesco’s corporate strategy- in the context of its community inclinations- is reflected in the fact that it obtains daily feedback from its customers (community) regarding the products, prices and services in its stores (Tesco plc- Our Strategy, 2010). This source also makes it clear that the organisation listens and responds to customer criticisms, when it is not getting things right. This corresponds with the concept of continuous improvement, an aspect of quality management, again an easily recognisable element of operations management- which invariably involves measurement and analysis of all processes and activities associated with an organisation. Everything Tesco does, is (according to Tesco- Our Strategy 2010) judged against measurable objectives. The organisation has facilitated the execution of this by organising an annual programme of Customer Question Time, where it listens to the views of customers on issues surrounding its business- quality, brand, service, Tesco’s community role, product, and pricing. The same source notes an average annual attendance of about 12,000 at these sessions. Tesco, further, activates its community inclinations through its two-pronged Community Plan of: (i) being a good neighbour by means of positive contribution to the community, for instance, by supporting local sports teams, and job creation (Tesco’s Regeneration Partnerships is a case in point. These are geared towards revitalising economically-deprived communities, and it has created about 4,000 jobs in the last seven years), and (ii) environmental responsibility- Tesco examines and reviews its processes and consumption, to operate environment-friendly practices (an example is the installation of wind turbines at its Norfolk store). Enshrined in the organisation’s strategies are its business values; simply expressed, the creation of value for customers to secure their lifetime loyalty. This is interpretable in the Management Control and Coordinating Function context of operations management. By this, a broad range of Tesco’s activities is targeted at ensuring the achievement of organisational objectives. Tesco’s Corporate Strategy is organised around a ‘Steering Wheel’ concept (Tesco- Corporate Strategy, 2010), which deals with all the key aspects of its business- people, operations, customers, community and finance- on a balanced scorecard. This has desirability as it helps ensure that its activity-level people (staff/labour force) appreciate that they are an equally important part of the entire process. Motivation results from such; and this is invariably carried through the process management activities that eventually create product/service delivery. The fact that Tesco’s core operations are service-oriented (Tesco- Corporate Strategy, 2010)is another reflection of adherence of its operations management system to its corporate strategy. Considering that the development of retailing services is one of the organisation’s stated long-term strategies, the emergence of services such as Tesco personal finance, tesco .com, telecoms, etc, becomes quite understandable. Part of Tesco’s process design is the placement strategy (Ma and Ding, 2010), which increases the buying places and choices for customers, with the associated convenience, through a variety of services- financial, mortgage, travel insurance, offered through Tesco’s clubcard plus scheme. These are different forms of stores offering more buying places and choices for customers, at their convenience. This makes for a purchasing process that is more beneficial for the customer. Tesco’s network is such that 95% of all its volumes is delivered by centralised distribution (Watkins, 2008). This source further notes that the organisation’s supply chain comprises 29 warehouses and over 2000 vehicles covering 659 million kilometres across the primary and secondary transport operations. Tesco however does not obtain its products directly from primary producers- not even concerning the procurement of its own brands. This may perhaps be an area the organisation wants to look into, regarding cost effectiveness of product-sourcing. It buys already-processed products, delivered by suppliers. Perhaps there is a need for consideration of an elimination of undue dependence upon external suppliers, even for the most basic products associated with its name. As a reflection of corporate strategy, Tesco’s disposition towards domestic growth has seen it carry out a network optimisation programme. This has involved infrastructural changes, with site closures, warehouse openings and management transfers (watkind,2008). Greater network capacity considerations has, for instance, been a major purpose for Tesco’s move to the Livingston composite distribution centre, away from the Crick regional Distribution Centre and the Middleton depot. The organisation embraces an integrated transport solution that allows for better product-grouping, enabling the arrival of products (together) in-store, on a dedicated delivery. These are capacity and logistical elements aimed at harmonising the flow of operations across its facilities. This, again, is clearly recognisable as an operations starategy concept- a management of processes which produce the products and services. Every tesco retail outlet has a strategically-planned layout which is geared towards an enhancement of customer experience- making it easier for the customers to locate products in the store during purchase visits (case Studies from tesco HSC, 2010). As explained by this source, the check-out counters, entrance and exit points, rack, counters, are also strategically situated- for the benefit of customers and suppliers. This represents a good correlation with Facilites management, in the context of operations management. It also reflects elements of tesco’s corporate strategy in terms of attention to customers in the flow of business. Furthermore, operations management is seen in this approach, as the attempt of Tesco to achieve efficiency and effectiveness in its management of the business process and activities. Hence, the organisation’s operations strategy is reflected in what it is trying to do in its market. The customer experience created by the above is valuable, as it constitutes a major part of the reason for repeated customer visits. It is useful and desirable as a business goal because it is the basis of growth for any enterprise. It also brings about recommendation, leading to the emergence of new customers willing to enjoy the experience. Tesco’s introduction of thermal sensors to ascertain the number of persons needing attention at its check-outs, is yet another dimension of its facilities management, to positively impact customer experience. This has generally resulted in the disappearance of long queues, while putting the staff in a better position to effectively handle the number of customers at Tesco’s check-outs. Quality of service at check-outs, is an obvious result of this. Simultaneously, the need of staff in such a process is attended to, as there is reduced pressure on check-out personnel, so that there is the dual benefit in the direction of both staff and customer. Tesco- as it often does- has relied on technology to achieve this situation, through its service centre that developed the Tesco Link portal for suppliers. The same service centre developed the organisation’s continuous replenishing system earlier mentioned). Tesco relies on technology to achieve its business process goals. Further ( as noted in Case Studies form Tesco HSC 2010), the organisation’s operating model is a set of business systems and processes that are able to meet the needs of various countries where it chooses to set up. The surce observes that the system standardises Tesco’s core process/operations/activities across board, and also reduces the time taken to roll out operations in new locations. As observed by Ma and Ding, Tesco, through comprehensive company operations, tries to ensure that it delivers customer value, retaining loyal customers through: (1)The Customer plan, which is geared towards delivering real improvements fro customers through the year, (2) The Operations Plan, which develops the commitment and capability of people, 93) The finance Plan, which ensures that the output from operations, customers and people delivers value for its shareholders, (4) The people plan, which develops the capability and commitment of people. Conclusion The organisation of operations and logistics, from the foregoing model discussed, is clearly an integrated, multi-dimensional process. This is even more so, in the contemporary business world. Tesco, as an organisation has arguably demonstrated that a keen, unwavering attention to customer/community concerns and interests, cannot be divorced from the prospects of a business organisation today. This model considered demonstrates that a successful enterprise requires, perhaps first and foremost, a sense of direction and values to drive its operational principles, besides giving it a crucial element of identity in today’s crowded business environment. This must however translate into mode of activities peculiar to the demands of the market it seeks to cater for. This is vital, as it eventually forms the basis of recognition by that market. This sense of direction is evident in Tesco’s business approach, while simultaneously ensuring that planning, management and strategy are constantly in a state of integrated interplay. Beyond this, there is the inevitability of the need for clout, as regards the necessary wherewithal to pursue strategy-inspired values. The best of boardroom, without facilities, capacity and finance to back up those ideas, are doomed to failure. There is a need to recognise the importance of the personnel; the space in which they interact with the flow of machinery, and materials is a vital 21st century consideration ibn business, as this inevitably impacts on efficiency of the entire process. Customer satisfaction, based on business relationship, will deliver results, although the initial stages may require repeated visits to the drawing board. Bibliography Ma, Yan and Din, Jianxung.”Delivering Customer Value Based on Service Process: The Example of Tesco.com”. Vol.3, No.2, April 2010. 7 August 2010 Mc Namara, Carter. “Operations Management” (nd) 6 August 2010 Slack, Nigel, Chambers, Stuart and Johnston, Robert (1995). “Operations Management” 4th Ed. Pearson Education Website. 7 August Shanghai Zoom Intelligence Co. Ltd. (2006).“Tesco Realigns Corporate Strategy for Energy Operations”. 7 August 2010 “Tesco plc- Our Strategy” (2010) 7 August 2010 “Tesco Case Study”(2010).Paragon Simulation Website. 10 August 2010 “Case Studies From Tesco HSC” (2010) 7 August 2010 “Tesco- Corporate Strategy: An Evaluation of Tesco’s Competitive Position within The Food Industry Market” (2010). 6 August 2010 Watkins, Darran (2008). “Tesco: Network Re-design for Sustainable Growth”. IGD Website. 11 August 2010 Is Perfect Research Achievable? Perfect research, in academic or non-academic work, is in reality a reference to a somewhat fictional, flawless assemblage of facts, data and information in the process of investigating a particular subject of study. Desirable as it may be, perfect research remains the elusive ideal towards which every generation of scholars, professionals and students must continue to strive. Paradoxically perhaps, this is a healthy state of affairs regarding such work. Courtesy of its time-sensitive nature, investigative study to unearth, synthesize and present information or data about a subject introduces innate imperfection into research. Invariably, research into any field of study must, over time, require an update. Even from this most simplistic perspective, it becomes rather obvious that, at no point in time can research be deemed perfect- however ‘excellently’ conducted. The hope of perfect research insinuates the desire for absolute satisfaction with the entire process of investigation, compilation and analysis of findings. It suggests completeness and flawlessness over the whole exercise, such that there is total absence of deficiency in any form, and where everything fits seamlessly. This, however, is a situation which every researcher will honestly admit is non-existent. A World Bank report investigating the positive effects of bank research on international trade notes in its summary that “The bank has succeeded in pushing research…in directions the academic literature has explored inadequately…” (Hanson and Pavcnik 10). Invariably, at the end of every researcher’s investigative journey into his subject is a deep-seated desire to find some extra piece of information that will resolve some outstanding imperfection in his exploration of the subject. A consideration of some of the elements that make up research conveys to us the futility of an expectation for absolute excellence in research work. Data may be available, but what exactly is the guarantee that they are the best ones? Expressed in another way- is any researcher always guaranteed access to the best data or literature in his field of investigation? Obviously, the researcher must learn to depend on information he finds, and accept their accuracy within certain prescribed standards, depending on his project’s purpose or objective. What has always mattered, where such work is concerned, is that the process and results of research be treated as accurate or perfect within acceptable error limits. It has therefore been always vital to decide the purpose or scope of the use to which the results would be put- an acknowledgement that research (with its concomitant field data and literature extrapolation) can never really be perfect. To what extent is perfect objectivity guaranteed, in the mind of the average researcher? The non-attainability of perfect research may be further understood from this perspective, considering the almost-certain presence of some degree of bias in a researcher. He is, after all, human- with inclinations or deep-seated assumptions. These, even at the highest level, may affect how the researcher analyses or interprets his data or information. Indeed, a reasonable argument is that “We all have our predispositions about what research is and what it can do. Some use research as a tool to validate what they think they know. Others use it as a way to find new information that will help steer the proper course of action.” (Cohen) In all, research is necessary and vital- in whatever field. However, there is a need to put the limits of research accuracy in perspective. No research is absolutely perfect. The objective of research becomes the defining parameter of its accuracy or excellence. Bibliography Cohen, “Research: Do It Early, Do It Often”. Click Z. 16 January 2001 5 March 2010 Hanson, Gordon, and Pavcnik Nina “Overall Assessment of World Bank Research on International Trade”. 21 November 2006. 3 March 2010 Read More