Supplier Relationship Management for Tesco UK and Greek Suppliers

The report examines how the supply chain structures are becoming more complex, how choosing the right supplier is more critical in the present environment. The report aims to investigate various aspects between the relationship of the buyers and the suppliers in between two countries Greek and UK taking account of various risk factors in the supply chain.

Running head: SUPPLIER RELATIONSHIP MANAGEMENT
SUPPLIER RELATIONSHIP MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report will examine how the supply chain structures are becoming more complex,
how choosing the right supplier is more critical in the present environment. The report aims to
investigate various aspects between the relationship of the buyers and the suppliers in between
two countries Greek and UK taking account of various risk factors in the supply chain. Features
of the UK and Greek food supply chain has been identified which are involvement of the risk
factors which are related with the policy adopted by local banks, sustainable procurement as well
as buyer and supplier procurement. The research findings in the paper will emphasize the Supply
Chain Management issues in the context of Tesco which is a supermarket in UK.

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Table of Contents
Introduction......................................................................................................................................3
Supply Chain Management..............................................................................................................3
Grocery Business in UK..................................................................................................................4
Fig 2. Supply Chain Network between Tesco UK and Greek suppliers ( Fatima 2017)................6
Factors which can improve the relationship between the vendors and the buyers due to the rapid
shift in the business environment....................................................................................................6
Conclusion.......................................................................................................................................9

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Introduction
The paper will discuss on Tesco’s Supply Chain Management and describe the supplier
relationship management between Tesco and the Greek good suppliers. The report will also find
out the barriers in the vendor – supplier relationship in Supply Chain Management. The
strategies which will be implemented to bridge the gap and stop the conflicts between Tesco UK
and Greek supplier. The report will also recommend the factors which will help the company to
improve the relationship between the vendor and the buyer which is created due to the rapid
shifts in the business environment.
Supply Chain Management
It is defined as the management which is required for the interconnection between
organizations which can be related with each other with various upstream as well as downstream
linkages. The linkages are also between the processes and the procedures which produces value
to the consumers in the form of various services and products. Mollah (2014) also included the
flow of fund as well as information in the supply chain management. Porter was the first person
to add the term value supply chain in supply chain management. Adding value supply means that
each and every activity in the supply chain will be very minutely evaluated as how it can add
value to the supply by increasing or decreasing the cost.
Therefore it can be said that the supply chain management mainly focuses on the supply,
value chain as well as the demands also including the flow of fund and the information. The
demand chain is mainly introduced to measure the demand of the customer. Fulfilment is
represented by the supply chain management whereas performance is represented by the value
chain management (Rafi-Ul-Shan 2018).

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Grocery Business in UK
This part will focus on the competition of the UK grocery sectors as well as the strengths
of the Greek agriculture which made Tesco UK in outsourcing their food from Greece. The
values of the high competitive UK groceries market which was around $178.56 million in Mach
2018. The rival companies are also intensively growing in the market like Hackney, Grant and
Birthwitls. Tesco purchases products which includes fruit, cheese, pasta, honey, olive oils and
wine from the Greek market. Selling the organic products are more than 80% of the overall
production (Evans and Mason 2018). Like all other Greek supplier. Greek Deli is a big supplier
of the organic food materials to Tesco. According to the recent reports Tesco has adopted long
term strategic agreements along with the suppliers. After every two years Tesco renews the
contract with Greek Deli. Tesco deducts money very unfairly as fines imposed to the bills of the
suppliers. Tesco does not follow the contracts but the payment is made 90 days later. Therefore it
can be seen that an uneven practice and balance of power is very clearly observed in the
relationship between Tesco and Greek Deli. Tesco has recently launched online network with the
suppliers which connects around 5000 suppliers in Greek Deli to identify how the suppliers are
treated (Brannen, and Mughan 2013)
Tesco has prepared core strategies which shows that it has given support and
procurement to regain the supplier relationship. This strategy strengthen the competition through
alliances, bargaining with the suppliers and also developing new quality product from different
local market which is directly related with the supplier relationship and betterment.

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Fig 1. Strategies applied by Tesco
(Source: Raikos 2018).
Fig 2. Supply Chain Network between Tesco UK and Greek suppliers
Strengthen the firm’s bargaining positions
with the suppliers. Action and approaches
should be used in arranging the R and D.
Actions to gain back the sales as well as the
market shares which are of lower price base
and lower cost.
Action to gain the sales as well as the
market shares by showing them more
performance features, also providing
better quality of goods and services to
the customer service.
Actions to produce or make an entry of
the new products in the prevailing
market, or in new geographic location.
Also to capture the emerging marketing
strategies as well as opportunities and
defending the external threats.
Strategies applied by
Tesco

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( Source: Fatima 2017).
The supply chain network of the Greek food in Tesco illustrates that the farmers delivers
the products to the food processing centers in UK. The processed food is then packaged in plastic
wrappings and are supplied to the packaging centers. It takes Tesco about 30 to 45 days to settle
the bills of the suppliers which in a way dissatisfies the suppliers. Ethical as well as technical
audits of the audits are mandatory which is very well done by the audit team of the company
(Christopher 2018).
Factors which can improve the relationship between the vendors and the buyers due to the
rapid shift in the business environment.
 Suppliers are not the vendors – The suppliers are also known as the partners of the
company. These relationship should not be based on the financial transaction between
each other. They should have a loyalty and trust between them. Tesco should make their
suppliers understand that they are also a part of the business and company. They also
enjoy the right of getting informed of any new changes made in the company. (Peng
2018).
 Technology makes the supplier relationship very simple to manage – Tesco should invest
in new supplier management software companies which will be able to keeping track of
the information of the suppliers in a single place. Tesco can also install various latest
software on the purchase order department of management which will be later on uses to
create, track and process the purchase orders of the suppliers.
 Realizing that payments should be made on time – If Tesco do not want to lose the
supplier they should make the payment to the suppliers as soon as the targets are reached.

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This will in the way prove that the company is a reliable one and hence it will help to
work very smoothly. If the payment is due then the company should inform the supplier
about it where the expected date should be mentioned. Suppliers also like to get the
payment on time just like the companies want the products to be delivered on time.
 Relationship should be very strong and deep – A very strong relationship is maintained
with the suppliers. They should be kept informed of the up to date actions, strategies and
plans set by the company, so that they can also benefit themselves from the plan. A
strong and deep relationship with a very clear communication between the company and
the supplier allows the communication to be more real (Utami 2018).
 Price is what is paid and value is what is received – To a company nothing is better than
growing the profit margin day by day. Sometimes it will be better for the company if it
pays a little more to the supplier when it has provided the company with a better and
faster service. It is because it will require lesser time in managing the stock or they can
also be trusted to provide a better and faster delivery of the product to the customer. As it
is stated in the earlier point that building relationship is very important, but Tesco should
not stick to single suppliers. It should thus choose more efficient suppliers for the
business (Evans and Mason 2018).
 Detailed agreements make suppliers relationship easier – If Tesco continues to buy from
the old suppliers then Supplier Relationship Agreement is a must. Tesco should note
down everything happening between both the parties which are the Service Cost, Service
descriptions, Delivery term and also the terms of payment. This is a very simple
document which fully depends on the requirements of the business. A very well prepared
Supplier Relationship Agreement will always reduce the possibilities of the confusions

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and disputes in a business requirement. It is always recommended to create a flowchart of
the ideas which will help everyone to know if something has gone wrong. The problem
can later on be recognized over the workflow (Kirby Hawkins and Clarke, 2018).
 Evaluating the risk – A proper evaluation will help Tesco in dealing with the suppliers if
Tesco follows a strong supplier chain management. References and examples can be
asked from the previous works in the business years. I should be properly taken care of
how they are dealing with the problems. The company then can deal with various issues
relating with the partnership of the vendor. (Gusaptono and Oetomo 2018).
 Not all suppliers are made of the same material, think globally – As in the present
scenario where the world is becoming more connected with each other. The company
should also increase in dealing with the vendors which are globally spread across the
country and the globe. Each and every company which are placed in various cities has
their different goals, rules, laws and terminology. It can also be explained with a small
example like a vendor is a very common and frequent term which is used in USA
whereas the term delivery or suppler is used in Southern American Countries. Therefore
each and every document should be properly stamped in the receipt. (Woo and Lee,
2018).
 Most importantly is getting everyone on board – Tesco should have a Supplier
Relationship Management process which helps in getting everyone in the organization on
board. It was estimated that around $546 billion dollar a year is spent outside just to get a
proper procurement channel, which is also called as Maverick spending , which means
that the procurement is not happening what it was said in the agreement which was made
by the vendors. This will always result in an additional cost to the company. In the report

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of Tesco UK it has been found out that out of 95 vendors or the suppliers only 45 of the
has a proper procurement system in the place and other firms are having a preferred
supplier list (Srinivasan and Swink, 2018).
Conclusion
Therefore from the above report we can conclude that a company’s success mainly
depends upon the effectiveness of the cost as well as the supply chain management strategy.
Demand, sustainability, value and supply chain network. It can be found out that the only key
factor which can manage the supply chain network are the value chain activities. Supplier
relationship management and performing the skills along with the changes in demand which
creates a strong impact in the success of the company. It can sound good theoretically, but it is
very difficult to maintain the network agility. The downward movement in the chain is very
much complex and flexible which enough to respond with the changes in demand of the end
users. If a very small area of the network fails to bear up with that limited speed. It can also
affect the whole network.

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