Supply Chain Management
You are to identify the component activities for an organisation of choice then evaluate the performance objectives used by each and critically examine and suggest ways in which the performance could be improved?
We are considering the company ‘Tesco’. It is known that Tesco is the second largest chain of retail in the UK and the fourth largest retail chain in the world. There are 12 countries in the world where the retail chain is present in the Europe as well as in Asia. Tesco is the market leader in the grocery division in the countries like Malaysia, Thailand, UK and Hungary and other countries. The retail chain was opened in the year 1924. Tesco being one of the well known retail chain in the world, and it has a well developed supply chain management system as well as performance objective measures (Annual Report and Financial Statements 2014, 2015). Though the company has a well developed supply chain there are certain changes that needs to be implemented into the system so that the company can prosper. The company ventured in the convenience store format when the retail chain opened the Tesco Express stores. 20000 stocks of the products can be hold by the large Tesco stores, thus it needs to have a well developed supply chain management (Fernie, 2004). A well developed supply chain is needed for the company so that the company can have the delivery of the goods at the correct time and they are able to receive the correct quantity of the goods at the correct window of the stores. Thus it needs to be seen that the services that the company provides to the people would not have been possible without the support of the service levels which the company gets.
The process of supply chain management can be said as the process which is strategic as well as systematic in nature, it includes the tactics that can be applied to the processes of the business and also the other business that are associated with it. The main aim of the supply chain is to improve the long term performance of the company and also the companies that are associated with the company (Hines, 2013). Supply chain management process involves the process of sourcing, conversion as well as procurement and all the logistical activities of the company. There are certain players like the suppliers, customers and the intermediaries associated with the company, the work of the supply chain is to provide a coordination and collaboration among them (COMPETING THROUGH LOGISTICS, 2015). Thus it can be said that the main function of the supply chain management is to integrate the demand and the supply of the company as well as to the entire business that the company has.
The supply chain management system of Tesco relied heavily on the improvement of the process. This concept was used by the company in the sense that the company wants to create loyalty for the customers for life time basis. The supply chain of the company was in the process from the period of 1983-1996. During that period the company took some serious steps to improve the supply chain of the company. The electronic data interchange was introduced by the company, there were certain other services that the company took the initiative of like centralized distribution, scanning of the point of sale, automated control of warehouse and centralized ordering. The supply chain manager of the company at that time from the year 1985 to 2002 was Graham Booth (Retailgazette.co.uk, 2015). According to him this replenishment was triggered by the need of the customers. He felt that the need to have the same set of suppliers along the distribution centers of the company as well vehicles that supply the goods to the company as well as the entire chain of the company would be ideal for the company (Xie and Allen, 2013).
The supply chain process in Tesco
The company had 23654 stores in the year 2005 throughout the world out of which 1780 stores were in the UK. There were 12 countries where the internal operations of the company were spread. The company gained competitive advantage over the competitors and they tried to maintain that position. The company tried to do so, by incorporating innovations which was due to the demand of the customers. More over the company wanted to maintain a cordial as well as strong relation with the suppliers of the company so that they are able to get the goods on time and so that the company is able to deliver safe and sustainable product to the customers.
Earlier delivery process- It was seen in the retail chain in the earlier tomes that the product was delivered to the depots of the company rather than the individual outlet of the company. During the late 80s and 90s it was seen that the company had 26 depots and the goods were delivered to those depots. Those depots were small and they were inefficient ('Tesco now plays a team game', 2000). It was also seen that the volume of the goods that were delivered to the stores were also low and it was not economic for the company to deliver the goods in one day. There were certain problems that the depot faced was that these were not able to handle the growth in the sales and the need for the high standard cooling as well as temperature control were not possible for the company.
The customers- There was a way that Tesco carried out the business that was the company used to pile up the goods and they later sold those at cheaper rates to the people. This was the philosophy that the people believed earlier. As the people became richer, they started to demand more luxurious goods and expensive products (Sparks, 2015). There was a bad phase that was going for the company as the company was not able to deliver the goods as per the demand of the people. Several stores were closed at that time as the demand of the goods fell in the stores of Tesco. A few of the small capacity stores of the company were running which were refurbished so as to make the stores friendlier for the people.
Suppliers- The supply chain and the logistic of the company were not developed and the company had to depend on the suppliers of the company for the supply of the goods to the retail outlets of the company. The large stores were able to afford the cost of the delivery from the suppliers but it was not possible for the small stores (Kamath, 2015). The method of the transportation of the goods from the suppliers was a problem for the company as the suppliers were not sure of how much to send to the outlets. With so many stores operating and with so much range of product it was not possible for the company to keep track of the products in all the stores.
The delivery process adopted by Tesco and the operation management
Employees- in order to benefit the employee the company introduced the system of EPOS (electronic point of sale) by which the company was able keep the track of the goods that were sold. When the customers make any purchase then the employees need to use the bar code reader so that they are able to record the transaction and thus they are able to tally the record with the stock keeping unit of the company (Ryle, 2015). The cumulative sales of the company are recorded in the information exchange of Tesco.
There are five performance objectives of the company they are quality, speed, dependability, flexibility, and cost.
Quality- in order to maintain the quality standards the company used to order the only what was needed by the company for the next day. It was done so that there are no stocks left in the outlets of the company for the next day. Thus it increased the capacity of the depots as they were able to reuse the depots for stocking other products. The delivery in the stores is done by two waves (Special Topic Forum on Resources and Supply Chain Management, 2013). It is done in specific times and was delivered to the defined windows of the store so that the products were available to the stores throughout the day and thus it would support the changes in the demands of the people and also to maintain the quality of the items.
Speed- the delivery of the goods at the right counter of the store is essential and at a faster rate so that the people are able to get the products at the right shelf at the right time. In order for the company to be efficient as well as fast, the company has several distribution systems so that the company is able to ensure that there is high availability if the goods and those are done in high speeds and are transported to the right block of the company (Jacobs, Chase, Aquilano and Chase, 2009).
Dependability- Tesco is the third largest retail chain in the global retail business, the company has several diversified business in the area of telecoms, clothing, car insurance, internet services apart from the food and the drinks. The company has six ranges of stores that are operational under the Tesco brand. They are the Tesco Extra stores which are large in size, then the hypermarkets, Tesco super stores the Tesco metros and the Tesco express stores. Tesco was the first retailer that offered home shopping since the year 1996 (Lindgreen and Hingley, 2003). Thus the people can depend on Tesco as they are able to find a Tesco in every block of the neighborhood.
Flexibility- flexibility is ensured at all the outlets of the retail chain so that it is able to serve the customers very well. The flexibility of the jobs is ensured so that the company are able to save the time. The company moves the products throughout their modern and proficient supply chain into their multi-format, well located network of store, which is ready for the customers to buy the products 24 hours a day (TESCO: A CASE STUDY IN SUPER MARKET EXCELLENCE, 2004). The company has made noticeable improvements in the process of supply chain; it has done so by shortening the length of the logistics programmes and focusing on attribution, traceability and greater control.
The problems faced by the company
Cost- the Company is upgrading their logistic practices in order to reduce the cost and improve the reliability of the suppliers. The radio frequency identification technology of the company takes the handles the additional responsibility of the distribution process (ComputerWeekly.com, 2015). The company operates in various countries thus there arises a need for the increased use of information technology
To be concluded that the process of supply chain and operation management is a system of associates which converts essential products that are called upstream, and the finished products or the downstream and these are valued by the end customers who are main evaluators of the products and the services at every level. More over the company is aiming to become a zero carbon company by the end of 2050. There are certain ideas that the company has incorporated like the Tesco in a Box which is a supply chain that are positioned when the company enters in a new country. It was seen that when the company enters in a new location in the foreign market there is erosion of the resources since each market are different from the others (Tesco and Society Report 2013, 2015). But it was seen that the standardized system of Tesco in the process of supply chain and the inventory management as well as operation of the store prevent the company from the erosion. The company tries to build a stronger relation with the suppliers as well as the customers. The company decided to bring 1000 of the suppliers of the company under the hub in the hope that the company cut 30% of the emissions of carbon from the supply chain of the company by 2020 (Mentzer, 2004). The solution to the supply chain that the company got was aimed at reduction of the materials, waste, energy and the use of water. The company aims to achieve the objectives with the help of the 20000 professionals with in the wider community of the company under the knowledge hub of the company.
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Xie, Y. and Allen, C. (2013). Information technologies in retail supply chains: a comparison of Tesco and Asda. IJBPSCM, 5(1), p.46.
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