International Annual Conference

OPERATIONS MANAGEMENT

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
TASK 2............................................................................................................................................6
TASK 3............................................................................................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Material management refers to a process of managing and handling raw materials and final
products produced by company more efficiently and effectively. Or in other words, it is a process
of planning, directing, controlling and monitoring of all the activities which is related to product
so that optimum utilisation of resources would be attain by an organisation (Heizer, Render and
Munson, 2017). For this report, Tesco PLC is taken for consideration which is one of the largest
retail chains in world as well as in United Kingdom. Company has more than 7000 shops
worldwide and has revenue of 63.911 Euro million in 2019 and employees more than 450,000
people worldwide (Reid and Sanders, 2019). Material management is essential and mandatory
for company like Tesco as they have diversified product like books, cloths, electronic
accessories, toys etc which requires management and alignment of products with company’s
vision and goals. Wa ys to adopt lean and agile technique and how it assist company to gain
competitive edge over others is explained. Relationship between MM, logistics and reverse
logistics is also determined by taking functional example of company. Impact of outsourcing and
how it affects organisation performance in the market is also explained. Application of
information technology and how it assist supply chains of company is also determined and
explained in the latter part of the report.
TASK 1
As mentioned above, Material management is a step by step and continuous process of handling
goods or raw materials within business operations so that it would be available at the right time,
to the right place, right person. Primary objective of MM is to reduce wastage in the whole
production process which will turn into profit for company thus better performance in the
market. Due to large number of products and services offered by Tesco, it becomes hard and
complex for them to manage simultaneously. For instance, Tesco sell clothing for Men, Women,
and Kids etc which means more than one supplier is requires for purchasing raw material. Same
concept goes with every product sell by the company. That means, company needs to manage
more than 500 approximately supplier on a daily basis and on every second hence requires
advanced and latest technology to manage it effectively (Hitt, Xu and Carnes, 2016).
Company has approached and implemented various techniques for material handling and
changes according to external and internal needs. In the starting or 1970’s Tesco used to use

Direct store delivery technique in which suppliers directly comes at the store and unload their
material and then Tesco had to take care of it. This strategy is effective in nature if company
does not have high amount of stores in the market as no investment is made in technology or
human resource to handle those products which lead to better profit margin. But on the other
side, it becomes complex if company has more than 20 stores in a single city or different city.
For instance, if Tesco has 50 stores in different places then company needs to find suppliers
which are nearby Tesco stores due to profit constraints which lead to more human resource and
complex process in nature (Bromiley and Rau, 2016).
To avoid this problem, Tesco starts using centralisation technique in their material
management in which manufactures and suppliers needs to drop their raw materials in a single
place or warehouse of Tesco and then Tesco will handle and disseminate materials according to
customer needs and demands in different stores. But it only works if stores are nearby warehouse
because if it is located far from the centralised location then transportation cost will eat up all the
profit earned by the company. For instance, it is easier for Tesco to transport their products
within 5-10 miles of location but if one store is 100 miles from the location then it becomes hard
to earn profitability from that stores hence overall loss for the company.
To resolve this problem, Tesco comes up with composite approach in which above mentioned
technique is used simultaneously with the aim of removing obstacle faced by company. For
instance, if there are 10 stores which are located near each other than centralised location would
be open to cater their individual requirements. On the other hand, if any store location is far from
the centralised location then individual suppliers and manufacture will be identify to deliver
goods on a constant basis. Overall operation cost decreases but company does not have any
authority over quality or quantity management due to increase in competitions and outsourcing
of products from supplier. To maintain quality, quantity and profitability of Tesco, company
comes up with vertical collaboration and supply chains techniques (Thomé, Scavarda and
Scavarda, 2016). These approaches requires manpower and investment on a large basis but it
also ends up in increasing company’s profitability, market share and goodwill which is a
favourable sign of Tesco growth in the future.
Tesco approach to its intermediaries have been strict and to avoid any type of vague and
unwanted behaviour of employees, company management has set rules and regulations which
everyone needs to comply with if they want to work with Tesco. For instance, Tesco