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Effective Logistic Plan For Tesco Plc

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Question:

You are Required to Consider an Operational Issue within an Organisation of your Choice and propose Specific and Practicable Recommendations for Action, which will lead to a Measurable Improvement in Efficiency or Effectiveness.
 
 

Answer:

Introduction

The report includes operational issues faced by Tesco in past. Tesco is the third largest retailer in the world measured by profits. The company has its operations in 12 countries including Asia and Europe. Tesco is listed on London stock exchange and constitutes FTSE 100 index. The retail outlet chain is operating under the four banners known as: Tesco Extra, Superstore, Metro and Express. The first store was opened in 129 in Burnt Oak. The retail chain does not only specialize in food and drinks but also providing with goods like clothing, electronic, telecom etc. Tesco has become one of the Britain’s largest petrol retailer, many of its stores have gas stations. Additionally the company provides personal finance services. It is one of the powerful and successful brands focused on creating valuable customers (Barnes,2008). Tesco has gained a considerable market share through their strong public relation policies and advertising. There local approach to the marketing appears to be the key drivers for success. They have broad appeal to public in order to deal with the widest audience. The company has its online store that has helped them to grow consistently in the market. This part of the business has helped them to grow consistently in all the areas.

Intense completion from the rivals is forcing the retailers to find out different ways for cost savings and effectiveness. Though Tesco holds a superior position in the UK market but it is facing serious risk from the low priced international retail chains like Lidl, Aldi etc. Tesco was previously selling only food products. Now they have diversified their business products. The major part of the profit earned by the company is from UK (Mahadevan,2015).

Customer Services: they provide a multi channel service to the customers and has created a chain of loyal customers within a short span of time. Tesco sells over 2 billion products in a month. There e-commerce website is constantly providing with the facility of multiple products. It provides with the multi-channel facility to the customers. They are also providing with the self-service store which is accelerating the delivery service. Moreover the company is providing with the loyalty cards to the customers that help in building effective relationship with the customers (Fernie  and Sparks,  2014)

Tesco is undergoing significant loss due to unmanageable logistics. The report includes implementation of proper logistic management tools in order to manage organization. It is facing a serious competition from the retail chain across the world. Under such a situation it is advised to implement an effective plan (Palmer, 2005).

 


Market share: Tesco is the market leader in the field of retail chain industry. It need to be mentioned that the company holds a market share of around 30 percent in UK. In the recent time the market share of the grocery store has shrunk due to other retail outlets. There are many ultra cheap retail outlets that are providing goods at a competitive price. The sale has increased in the grocery market for the first time in the five years. It is the only retail chain that has seen a growth whereas the other retail chains faced a decline. The sales growth has increased due to family shoppers by improving their store size. However there is a extreme pressure from the supermarket chains like Aldi and Lidl. There is an uneven distribution of profits due to pressure from the competitors(Frohlich, and Westbrook, 2002).

(Source: Haslett, 2016)

Statement and analysis of the problem

Tesco in order to develop a competitive advantage in the international market has faced significant issues. Tesco has implemented the fundamental of the logistic strategy in order to attain economy of scale. This strategy has helped them to manage effectively all the export and import. Logistic strategy has helped in managing inventory, integration of information, packaging, material handling, warehousing etc (Van Miegham, 2008).

Logistics management is one of  the important strategy that need to be rigid in order to develop according to the changing market. Tesco has been facing a loss due to its logistic management process. All these issues are creating concern for the company. Technology plays an important role in creating a sustainable advantage. Majority of companies across globe are using information and technology as an important tool to achieve distinguished objectives. Tesco is facing problems as it is following human related logistic management system.  this is one of the serious concern from the point of view of future sustainability (Dekker, Bloemhof and Mallidis, 2012).

Tesco is still dependent upon the age old process of managing logistics whereas its competitors are following E-logistics process in order to maintain inventory. The following operational issues are bought under consideration:

Customers relate service: it is evident that the nature of a person changes with the time and every individual behave in a different manner. An increase in demand and service has a direct impact on the operational cycle. There is an accumulated pressure on the retail store due to shift in consumer attitude (Waters, 2003).

Cost of Logistics: they primarily focus on physical distribution of goods and services to the customers. This is causing a huge pressure on the company in terms of keeping a note over the logistics supply. Whereas the competitors are using information and technology to manage logistic supply. This is demonstrating the effect of use of manual logistics instead of e-logistics (Christopher,2016).

 


Conflict in organization: there is a big issue in the logistics strategy implemented by Tesco. It is unclear and doesn’t create proper responsibility on people. Thus it has created a complex environment in the organization. they are unable to pile up a proper stock in the store (Smith and Sparks, 2004)

Pressure from outside: there is a continuous pressure from the external bodies. There are other British low cost companies that are posing a serious threat on Tesco. High growth of the international brands is causing a decline in the profits of Tesco.

Trade off: the company is opting for efficient ways to manage the logistics. This will boost the overall supply chain of goods. Thus it will help in managing the goods at the right time according to the necessity (Smith and Sparks, 2009).

 Proposal(s) for workable recommendation(s)

The company is lacking behind as it is following the age old method of managing logistics. In the era of information and technology it is important to focus on modern tools to improve the overall revenue. Tesco is lacking behind in terms of managing their logistics. The company procurement and delivery process was on time but due to the expansion it is facing multiple issues they used follow JIT approach to meet the requirements related to logistic management. However due to expansion of the company there are serious issues that the company is facing causing lack of productivity. The overall logistic cost has increased causing a direct impact on the revenues.
 
The overall logistic cost increased due to lack of efficient transportation system. Poor transportation facility is causing a problem in delivering goods to the consumer on time. There is low tracking procedure on the trucks that is causing a major issue in arranging the inventory. Expansion of stores requires proper availability of products. It is seen that the company is facing an issue in managing the transportation. Supplier clustering is an issue for the organization as this is creating a poor mechanism in the whole system. There are Issue related to the transfer of goods to the other stores that is causing a problem in managing the unit efficiently.. Lack of transportation service has decreased the overall efficiency (Sandberg, and Abrahamsson,2010).
 
Poor order cycle led to customer dissatisfaction in the overall procedure. The ordering cycle time has increased which is causing a problem in managing the customers. this is causing a problem in managing the online customers. The ordering cycle is moreover inefficient that is causing a problem in managing the customers. Most of the Tesco stores are facing issues like no stock and less stock which is causing a problem in managing the supply.
 
 
Another major issue with the company is the reverse logistics. The reverse model is under the scrutiny as the products which are returned by the customers don’t reach to the store on the proper time. Although the company has captured a significant part of market but it is getting difficult for them to manage the logistics as necessary. The goods that are on return process don’t reach the store in a proper time. The customers are finding difficulty in tracking the goods (Boyer, Prud'homme and Chung.,2009). Moreover the reverse logistic system is based on the traditional method that is causing problem in managing the logistics. There is lack of proper automated reverse process to meet the whole process. Communication plays an important role in managing the organization efficiently. In case of lack of lack of proper system it is causing difficulty in managing the inventory. Tesco is finding difficulty in meeting the demand of the customer due to unorganized logistics (Van Weele, 2009).
 

Implementation plan

The company is completely dependent upon the age old traditional methods of using JIT Approach. It is suggested that the company should implement Prince2 Methodology which will help in creating more business opportunities. This will benefit Tesco’s Top and bottom-line logistics. Implementation of proper road map will help in future growth. Tesco can develop a proper quality and compliance procedure by delivering the goods efficiently. This will help in planning and controlling the inventory. This method is one of the kind of technique used to manage the organization efficiently (Slack,2015).

Another technique necessary to be implemented is the E-procurement method. This technique is useful in procuring the goods electronically. It is essential to use technology at work in order to manage the logistics in a proper manner. this technique will help in delivering the goods in the most appropriate manner. the cost of procuring the goods can be reduced through use of this technique. It is the most appropriate method being used in order to manage logistics at workplace. They should follow an E-procurement system of managing logistics. This will eventually reduce the high delivery cost. Utilizing this technique will help in procuring the goods through technology. Filing information in system will help in utilizing the data properly (Russell and Taylor-Iii,2008). This will make sure that the company is utilizing all its energy efficiently.  They can use the following tools in order to manage the procurement of goods:

  • Electronic request for information
  • Request for proposal
  • Request for quotation

It will help in creating better relation in between the suppliers and the organization.  Use of information and technology will help in reducing manual burden(Hill and Hill,  2012)

Critical analysis of the recommendation(s) and implementations plan

It is recommended that Tesco need to focus on the current and future requirements. It is essential for the organization to improve the logistic system. This is only possible if the company focus on developing more comprehensive mechanism. It is seen that the company were using an old technique of logistic management. It is causing a problem in supplying goods at the right time. They need to improve the chain by implementing technology which will help in managing the logistics in a proper manner. It is seen that the company need to implement Prince2 Methodology of managing logistics instead of the JIT approach. This will help them to create a benefit over the other companies. In this competitive atmosphere it is becoming necessary to use a better method to increase the competency over other companies. It is a much required method that required to be focused upon instead of other tools. The retail sector in UK faces competition from various international business organizations. This is only possible if the company wants to Implementation of a proper logistic management tools will help in delivery goods in a proper manner. This will help in developing a strict supply chain in the organization. The money of the organization can be saved through implementation of science and technology at workplace. It is one of the important sources of managing regular supply of raw material. The success of most of the companies across the world is caused due to an effective supply chain management system (Zurich, 2016.).

 


Moreover there is a necessity to strengthen the procurement system in order to achieve the targets. The E-procurement method will however help in managing the goods in a proper manner. This technique will help in delivering the goods in the most appropriate manner. The cost of procuring the goods can be reduced through use of this technique. It will help the company in managing the supplier more efficiently. It is necessary for a business organization to retrieve profit with the help of the modern technology. However it is necessary for every company around the world that if they want to succeed they need to implement an efficient operational management plan. This will help in reducing the overall risk associated with the project (Krajewski, Ritzman and Malhotra, 2013).

Conclusion

The report includes the operational issues faced by Tesco while managing logistics supply. Instead Of manual process Tesco should implement an effective process to manage the resources. It is however necessary for an organization to manage the resources in order to attain effectiveness. Tesco is a big name in the field of retail chain organization. Inefficiency in the logistic system has caused problem in the overall productivity. The company has faced loss due to the loopholes in the operational mechanism. In order to succeed in the market against the various competitors it is necessary to implement better techniques. This will help them to grow in a efficient manner. It is recommended that the company need to focus on establishing a landmark through  better logistic management procedure. It is necessary to regulate proper supply of goods through efficient utilization of resources. This will help in increasing the productivity. The retail sector in UK faces competition from various international business organizations. Under such a competitive environment it is necessary to use technology. This wil help in strengthening the internal and external chain. At the time of crises company can control the overall organization. This is a necessary procedure required to manage the organization. Tesco has been facing a loss due to its logistic management process. All these issues are creating concern for the company. Technology plays an important role in creating a sustainable advantage. Moreover This will help in creating interest over the other companies. Extensive research model is necessary to be reinstated in order to attain benefit. Managing the operations at the work are equally important for a company to manage availability of goods. It is seen that the company can only grow if it has a proper system to manage goods.

 

References

Barnes, D., 2008. Operations management: an international perspective. Cengage Learning EMEA.

Boyer, K.K., Prud'homme, A.M. and Chung, W., 2009. The last mile challenge: evaluating the effects of customer density and delivery window patterns. Journal of Business Logistics, 30(1), pp.185-201.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Dekker, R., Bloemhof, J. and Mallidis, I., 2012. Operations Research for green logistics–An overview of aspects, issues, contributions and challenges. European Journal of Operational Research, 219(3), pp.671-679.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan Page Publishers.

Frohlich, M.T. and Westbrook, R., 2002. Demand chain management in manufacturing and services: web-based integration, drivers and performance. Journal of Operations Management, 20(6), pp.729-745.

Haslett,E,2016. Take that, Aldi: Tesco gains market share for the first time in years but Morrisons, Sainsbury's and Asda decline further. Online. Available at: https://www.cityam.com/251669/take-aldi-tesco-gains-market-share-first-time-years-but Accessed On: 10 March 2017

Hill, A. and Hill, T., 2012. Operations management. Palgrave Macmillan.

Krajewski, L.J., Ritzman, L.P. and Malhotra, M.K., 2013. Operations management: Processes and supply chains (Vol. 1). New York: Pearson.

Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education India.

Palmer, M., 2005. Retail multinational learning: a case study of Tesco. International journal of retail & distribution management, 33(1), pp.23-48.

Russell, R.S. and Taylor-Iii, B.W., 2008. Operations management along the supply chain. John Wiley & Sons.

Sandberg, E. and Abrahamsson, M., 2010. The role of top management in supply chain management practices. International Journal of Retail & Distribution Management, 38(1), pp.57-69.

Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.

Smith, D. and Sparks, L., 2004. Logistics in Tesco: past, present and future. Logistics and Retail Management, 2, pp.101-120.

Smith, D. and Sparks, L., 2009. Tesco’s supply chain management. Logistics & Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain, London and Philadelphia: Kogan Page, pp.143-171.

Van Miegham, J., 2008. Operations strategy. Belmont, MA: Dynamic Ideas.

Van Weele, A.J., 2009. Purchasing & supply chain management: analysis, strategy, planning and practice. Cengage Learning EMEA.

Waters, C.D.J. ed., 2003. Global logistics and distribution planning: strategies for management. Kogan Page Publishers.

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