Essay: On-Shelf Availability In UK Supermarkets - Tesco Vs. ASDA.

You are required to conduct a mini project about on-shelf availability in supermarkets, and to write up your findings in a report is required electronically.

1. Go to a supermarket of your choice and make notes on any items that are out of stock.

2. Compare the findings from the first supermarket with a competing supermarket. Are the same products out of stock?

3. Conduct an analysis of your results where you consider the issues in the supply chain that couldcause these products to be out of stock. Do this for five products.

4. Provide an analysis of the tools and techniques used by supermarkets to provide a high level of on-shelf availability.

The “on-self availability” is a measurement of the number of products and services available in saleable condition to a consumer, at the place when the products are expected to purchase by the consumers (Fernie and Grant, 2008). The OSA mechanism has been a major fact of concern to the United Kingdom grocery retailers over the past five years along with the topic has been core focus of various commissioned research reports by trade associations. It has been found out that on an average level, many retailers spend around 5% of sales on logistic management. The major part of these expenses is caused on the store level by around 38% inventory control and 7% holding. Therefore, developing in-store inventory management system is now important to retailers’ profitability. On the other hand, it could be said that managing “On-self availability” or minimizing “Out-of-stock” help in increasing in-store inventory management and hence are valuable indicators of retailer performance (Renko and Druzijanic, 2014). This study will indulge in evaluating the out-of-stock conditions of products in the two competing supermarkets in UK, Tesco and ASDA through thorough investigation and survey.

The main aim of the research is to find out the status of on-self-availability in supermarkets in UK and how its is impacting on customer purchasing habits.

• To evaluate the efficiency level of on-self-availability in supermarkets in UK
• To find out the out-of-stock conditions in Tesco and Asda
• To find out what are the tools used to prevent stockout conditions

• What is the efficiency level of on-self-availability in supermarkets in UK?
• How out-of-stock conditions impacting Tesco and Asda?
• What are the tools used to prevent stockout conditions?

The main purpose of this report is to unveil the relationship between OSA mechanism and the out-of-stock product conditions in the retail markets in the UK. This examination will help in revealing operations of the two competing and leading supermarkets in UK and hoe they are controlling issue, which has been exacerbated by organizational management focus on latest technologies and supply chain facilities (Spethmann, 2016). Since, this study has not involved survey of any of the employees of the two supermarkets, this study has involved only investigating through online contents and visiting to the stores as a major part of the Secondary data analysis process. On the other hand, for the research embedded case study approaches that have been employed to evaluate how stores of the enlisted supermarkets (TESCO and ASDA) in the United Kingdom managed the condition in concern. Examining the in-store operations of TESCO and ASDA carries the advantage of having an analogous knowledge of chain-wide average functions procedures and management practices, averting the concern of missing “unobservable across-unit heterogeneity” (Bass et al., 2018).

On the other hand, the methodology of finding the out of stick conditions and “on-self-availability” of products also involved secondary research from online books, journals and other published articles (Walliman, 2017). To be more detailed, the methodology and survey process as part of the secondary data analysis process consists of primary statistics, data collection with the help of studying reviews of customers since the time was short and gathering information from relevant figures. The methodology section also carries evidence of research philosophy, that is positivism, since it is helpful in calculating the quantifiable data and deductive research approach altogether. On the flip side, this methodology also included the explanatory research design for better understanding of the research finding and data collected. All these efforts have helped in quantifying that information collected.

Research Objectives

From the current survey on the Tesco supermarket to find out the out of stock products, it has been found out that Tesco is currently cutting out one-third of its goods from the supermarket shelves in a determination to plug a £6.37 billion ($9.51 billion) economic hole, marked as the biggest loss in the organization’s nearly 100 years of trading operations. It has been also identified that a slimmer series of options aligns more concisely with the selling practices of discount chains such as Lidl and Aldi that keep expenses low by providing fewer products than the traditional supermarkets (businessinsider.in, 2018).

On the other hand, it has been noticed that when consumers have a limited choice of stocked products, it develops the guarantee, which those goods would get sold. Larger sales volume assists to develop discounts, and in turn, draw the attention of the customers. The survey conducted has pointed out that from the popular list products such as Mango Pulp, Dishwasher tablets, Savoury rice, chopped tinned tomatoes, Counter garlic sausage and other are out of stock currently (tesco plc, 2018).

From the survey it has been found out that there are several products from the Tesco supermarket and ASDA supermarket that have recently out of stock. All the listed products and findings from the Tesco online store stock range are listed below;

It has been noticed that the lots of products from their value range as well as the cheaper products are becoming out of stock in a regular basis. It has been noticed that these products are being out of stock for several weeks at a time. For instance, in the previous week some products that have been out of stock form the Tesco online supermarket are listed below;

(Source: tesco plc, 2018)

The products that usually are out of stock is listed below;

(Source: asda.com, 2018)

From the above table and survey of out of stock products of Tesco Supermarket it has been identified that most of the unavailable products fall under the cheapest section. Expensive products are not being out of stock from the online as well as from the stores. This could be a reason of changing buying decisions of the customers and they are inclined for more value-added products in cheapest rates (tesco plc, 2018). On the other hand, the table of out of stock products from the ASDA supermarkets, it has been identified that customers are finding it difficult to purchase the daily used items in their best prices from this organization. It could be that the quality and popularity of the products are attracting customers all over the world to purchase them from the online stores of ASDA (asda.com, 2018). However, the unavailability of products from the two supermarkets are remarkably high. Lack of effective management could be pointed out as one of the prominent reasons behind these conditions. On the flip side, it could be said that both the supermarkets have their own product range and it is noticed that though the product category of out of stock items are more or less same, individual items are different.

Methodology

For analysing and pointing out the core reasons in the supply chain process of the two (TESCO and ASDA) supermarkets that are causing the products to be out of stock, there is a need to divide this answer into two subdivisions; one is more generic sense and the second is based on five specific products’ performance.

According to Govind et al.  (2017), one of the main causes of out-of-stock of products is ineffective data sync. For instance, as a new product is launched in the market and the old ones are discontinued, database inaccuracies obviously occur along with inevitable consequences for the supply chain. This means companies are somehow lacking in regular checking and updating data for their online stores. On the other hand, the second reason could possibly be the perpetual inventory management failure. It has been found out that, accuracy level related to this system is extremely low, as little as 30% to 45% of the time. These system failures consecutively lead to phantom inventory, which means a product is listed, but nowhere to be found out.  Another reason of the out of stock of items is distorted forecasting methods. As per the observation of Bianchi-Aguiar et al. (2016), it could be said that making demand-based planograms is not possible if the store managers are not complying with planograms in the initial stage. More collaborative analytics with the market suppliers will provide effective insights for the management of better supply chain procedure and would be helpful in reducing out-of-stock problems.

From the above table and analysis, five products have been selected, which are Mango Pulp, Dishwasher tablets and Counter meats form Tesco supermarket as well as ASDA Butcher's Selection Lamb Leg Bone in Joint , ASDA Mashed potato from ASDA supermarket. It has been found out that Mango Pulp is not even available in online and offline stores. This could be fact that the production department is not producing this product for some reasons. On the other hand, Dishwasher tablets have not available in online stores but present in offline stores. It suggests the fact that online demand of this product exceeds the supply of the products. Case of Counter meats is also the same. From the table of ASDA out-of-stock products it has been identified that ASDA Butcher's Selection Lamb Leg Bone in Joint , ASDA Mashed potato both are not available in the offline and online stores of the company. It indicates to the fact that demand forecast and supply management related to these items are not managed properly. Another reason could be production of these items are temporarily stopped due to limited supply of raw materials.

According to several studies and previous practices it has been identified that behind increased stock out ratios of products there are many reasons that is causing these challenges. One of this is inaccurate data. This problem has been reduced to some extent with the help of electronic inventory system such as cloud-based inventory management system (Christopher, 2016). This process has been implemented by Tesco. With the help of this technology the supply chain management in the company, applied point-of-sale system, which automatically develops inventory levels as boost up sales. On the other hand, other supermarkets like ASDA and others are adopting a more effective approach when it comes to managing inventory accuracy and reduce the stock out conditions. Such a technology is RFID, which can store and track goods information applying a chip embedded in a product’s tag or packaging. Other effective tool is conducting regular stock counts (Patel, 2017). This process helping in having a near real-time data on what the stores have in hand. This means counting available merchandises quarterly and twice a year.

Visiting the Supermarket and Notes on Any Items That Are Out of Stock

Other important reason behind the stock out conditions is failure in re-ordering in a timely manner. This condition is happening as currently products and favourable items form the online stores as well as offline stores are flying rapidly than the capacity of the organizations to re-stock them, and resulting selling out of in demand products. This problem has been minimized what so far with finding out the “out-of-stock” patterns (Rosales et al., 2018). It has been done with regularly auditing inventory and taking note of the days of a week when organizations normally experience stockouts.

                                                                      (Source: Rosales et al., 2018) 

From this above figure related to comprehensive retail out-of-stock technique it has been identified that the “OOS” for a specific store peaks during Friday afternoon, Saturday at noon and Sunday in the afternoon. With this information, the retailer could then schedule to have items delivered as well as replenished at the right time to make sure that they do not run out-of-stocks.

On the other hand, another successful technique to minimize the stock out of goods is implementing the demand forecast method. As the name suggests, this procedure is all about forestalling demands so the management could determine what items to order and when.  The inventory counting tool is another successful example of controlling stock out. For example, Scanner, a free barcode application for the inventory, which works on any possible gadgets (Fernie and Sparks, 2014). This application lets an individual to scan all the barcodes and data matrix codes of products. After that saves their quantity and names of products one scan.  

Conclusions

From the above analysis and examination of the research it has been understood that on-self-availability process becomes one of the major mechanisms is controlling and analysing the out-of-stock conditions of products in the supermarkets. On the other hand, this report has helped in examining and portraying the supply-chain and operational processes of Tesco and ASDA as well as a comparison has helped in outlining the trending technologies and tools used by managements to tackle the stockout conditions. Further, indulging into the study of store processes of the two enlisted retail chains in the United Kingdom has provided with the scope to contrast the complex approaches taken by individual organizations to achieve objectives and main performance criteria of the supermarket chain, affording to the micro-level evaluation of the nuances in on-self-availability operations among the stores. This study has also helpful in pointing out the different operations and supermarket condition in the United Kingdom along with the contributions of Tesco and Asda in developing as well as impacting the supermarket chain in both negative or positive way.

Reference list 

Asda.com. (2018). Asda.com - Online Food Shopping, George, & more. [online] Available at: https://www.asda.com/ [Accessed 28 Nov. 2018].

Bass, J.M., Beecham, S. and Noll, J., 2018, May. Experience of industry case studies: a comparison of multi-case and embedded case study methods. In Proceedings of the 6th International Workshop on Conducting Empirical Studies in Industry (pp. 13-20). ACM.

Bianchi-Aguiar, T., Silva, E., Guimarães, L., Carravilla, M.A., Oliveira, J.F., Amaral, J.G., Liz, J. and Lapela, S., 2016. Using Analytics to Enhance a Food Retailer’s Shelf-Space Management. Interfaces, 46(5), pp.424-444.

Business Insider. (2018). Tesco is trying to be more like Aldi, the discount German supermarket that everyone loves. [online] Available at: https://www.businessinsider.in/Tesco-is-trying-to-be-more-like-Aldi-the-discount-German-supermarket-that-everyone-loves/articleshow/47029809.cms [Accessed 28 Nov. 2018].

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

Fernie, J. and Grant, D.B., 2008. On-shelf availability: The case of a UK grocery retailer. The International Journal of Logistics Management, 19(3), pp.293-308.

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

Govind, A., Luke, R. and Pisa, N., 2017. Investigating stock-outs in Johannesburg's warehouse retail liquor sector. Journal of Transport and Supply Chain Management, 11(1), pp.1-11.

Patel, Y.J., 2017. Future Scope of RFID Technology and Advantages & Applications.

Renko, S. and Druzijanic, M., 2014. Perceived usefulness of innovative technology in retailing: Consumers? and retailers? point of view. Journal of retailing and consumer services, 21(5), pp.836-843.

Rosales, C., Whipple, J.M. and Blackhurst, J., 2018. The Impact of Out-of-Stocks and Supply Chain Design on Manufacturers: Insights from an Agent-Based Model. Transportation Journal, 57(2), pp.137-162.

Spethmann, P., 2016. Out of Stock Situations as a Retail Service Failure: The Role of Item Importance and Service Recovery Measures-An Experimental Study of the German Grocery Retail Sector (Doctoral dissertation, University of Surrey (United Kingdom).

Tesco plc. (2018). About us. [online] Available at: https://www.tescoplc.com/about-us/ [Accessed 28 Nov. 2018].

Walliman, N., 2017. Research methods: The basics. Routledge.