Supply Chain Management in Tesco: A Key to Success

This study discusses the effectiveness of supply chain management as an operational management practice in Tesco, a British multinational retailer. It explores the impact of supply chain management on the efficiency of the company and how technology is embedded in the process. The study also highlights the supportive functions linked to supply chain management and their role in Tesco's success.

Operations and
Service Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
One operation management practice within chosen organization..........................................1
Impact of operation management practice on the efficiency of company..............................2
How technology can be embedded in this process and how this already been achieved.......4
Supportive functions which are linked to this operation management practice and how it can
help in becoming successful...................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Operation management is one of the main area of management of an organization which
is mainly concerned with controlling as well as designing of the process of production business
operations in order to produce qualitative products (Radosavljević, Jevtić and Klimenta, 2016).
There are several operational management practices which play an important role and allow
companies in taking competitive advantages and one of the effective practices which this study is
going to discuss on is supply chain. This present study is based on Tesco which is a British
multinational groceries and merchandise retailer with headquarter in England, UK. It was
founded by Jack Cohen in the year of 1919. This present study will discuss effectiveness of
supply chain management as operational management practice and ways as how it makes Tesco
able to become the market leader and also satisfying its customers. It will also discuss some
functions which are associated with supply chain management and required to be followed by
suppliers in order to help company in accomplishing goals. It will also show importance of
technology and models in success of supply chain management.
MAIN BODY
One operation management practice within chosen organization
Administration of all business practices like sales, HR, marketing and others is called as
operation management which is being done by operation manager in order to create the highest
level of efficiency in an organization. The main function of operation management and its
practices are to convert raw materials as well as labour into final goods and services for
maximizing profit and productivity of the company (Liu and et.al., 2018). There are several
effective operation management practices which play an important role especially in
manufacturing and Service Company and one of the main practices which is key for the success
of an organization is supply chain. Quality management, revenue collection, communication
coordination are some other operation management practice.
Supply chain management: In the context of Tesco, British multinational groceries and
retailers, believes that skilled workforce and an effective supply chain management is one of the
main key of its success as it makes it able to provide value to customers and make them able to
stay with the company for the long run. Supply chain management can be defined as the
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management of flow of goods as well as services as it includes all those functions which are
required to convert raw materials into finished goods of company which it sells and by delivering
it to customers it increases value and increase customers’ retention rate. For making this supply
chain management successful it is important to control or link production, shipment and
distribution of products. So, overall it can be said that from production to delivery of products all
functions are being covered under supply chain which can allow company in taking competitive
advantages (Hugos, 2018). There are several advantages of making use of supply chain or mainly
focusing on supply chain management as it allows companies: Tesco, Sainsbury’s Morrison and
others to cut excess costs and deliver final goods to customers in a timely and effective manner.
It can be better done when supply chain manager keep an eye or strict control over internal
inventory, internal production as well as sales. It can be said that all finished goods which comes
up in the market and which is being delivered to customers is result from the efforts of supply
chain. So, from this it can be said that supply chain management plays an important role in
making businesses successful and making them able to attract customers as well as taking
competitive advantages. It needs to focus on main parts or areas such as: the strategy, the source
like raw material, manufacturing, delivery and the return system.
Supply chain of Tesco: It is stated that Tesco wants to make sure that all its 75 million weekly
global customers are getting what they want and it can be done with its supply chain. In its
supply chain management, it is passionate about giving whatever and whenever customers want.
By getting out thousands of products from factories around the worlds to the shelf edge in order
to satisfy its millions of customers by putting right products at right place and in right time.
It also believes that for an effective supply chain management it is important to satisfy needs of
suppliers and maintain a good relation with them. So, by hiring hundreds or thousands of
suppliers it focuses on maintaining relation with merely several suppliers. By ordering products
in bulk it orders products at lower price which minimizes its cost. So, overall it can be said that
supply chain management is one of the main an effective operation management practice
(Banerjee and Mishra, 2017).
Impact of operation management practice on the efficiency of company
It is already stated that supply chain management plays an important role but there are
several other reasons which shows its efficiency in the success of Tesco and other organizations.
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Some important factors and reasons which show its efficiency or effectiveness and it can better
be understood with its some models and theories which are: The Karjlic portfolio purchasing
model, material logistic management, transaction cost analysis and material requirement
planning (Sanil and et.al., 2016).
Karljic portfolio model: It is stated and said that for performing different functions of an
organization, all department requires to spent money on fuel. Different departments choose
different modes of transport like air, ground and others. It all can increase overall cost of the
company and it is one of the main key issues in supply chain. So, Tesco and other retailers make
an effective use of Kraljic purchasing model as it allows purchasers to maximize supply security
and reduce costs by making the most of their purchasing power. This model in supply chain
management is being used by dividing it into different parts for different functions such as:
purchase classification, market analysis, strategic positioning and action planning. Purchase
classification is also being sub divided in 2 parts which shows when customers and company can
maximize profit and when it cannot (Shaharudin and et.al., 2017). As supply risk is high when
there is scarcity of raw materials and profit is high when products add values to customers.
So, it can be said that by making use of this model in supply chain management, Tesco
can identify strategic weight of purchasing families.
Transaction cost analysis: This is one of the effective model in supply chain, based on financial
models. In this model company needs to decide whether it can buy products or raw materials at
lower price and can sell final goods at high prices by analysing market condition and all
situations. This model in supply chain also helps companies in determining whether their
materials are priced in an effective manner when purchased and sell goods. All these information
can be used by supply chain manager in taking better decision for stocking warehouse.
Rather than these models there are several other reasons which show it effectiveness such as:
Supply chain management allow companies in improving productivity as it oversees each
touch point of a company's product or service from initial creation to the final sale (Montgomery,
Ogden and Boehmke, 2018). There are some main duties of Tesco under supply chain
management include:
 Forecasting demand for products and materials by customers.
 Creating effective supply plans in order to get all available raw materials.
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 Determining effectiveness of different suppliers by evaluating their strategies and also
maintaining relationship.
 Managing all important activities of purchasing and inventory control.
 Coordinating supply chain with other linked functional areas of the company like
marketing, quality assurance and sales in order to make all their functions effective and
reducing errors.
 Evaluation of all associated risks while making plan in order ot prevent company against
failure and poor productivity.
So, from above discussed models and theories of supply chain management it can be said
that it plays an important role and it can improve efficiency of Tesco and also can make them
able to become successful and become the market leader. It also helps them out in improving
quality because there are several operational management approaches are available related to
supply chain such as six sigma and total quality management. All these approaches are being
used by Tesco as it helps it out in continuous quality management
How technology can be embedded in this process and how this already been achieved
Technology also plays an important role as it helps companies in making their supply chain
successful and managing supply chain in an effective manner. There are several technologies
which are being used by Tesco and other retailers such as Artificial intelligence, internet of
things, block chain and advanced analytical. One of the main aim of using technologies in the
process of supply chain management is to make its software faster as well as efficient. Tesco can
control over inventory put in warehouse which protects it against lost of products and theft of
data. It improves labour management, monitors resources and reduces stock losses with real time
stock checking (Wu, 2016). So, from above discussed all reasons it can clearly be said that
technologies in supply chain management plays an important role. A detailed description of each
technology which is being used by Tesco is being discussed below:
Artificial intelligence: Artificial intelligence allows companies to make better decision,
automate and remake customers’ experience. Artificial intelligence in supply chain management
help companies in finding patterns as well as predicting future scenarios (6 Application of AI in
Supply chain management, 2017). Artificial intelligence technology works completely
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autonomously without needs of human intervention such as robot performing key processes and
others. So, all these increases speed of supply chain and make it successful.
Advantages
 It reduces human errors which is beneficial in supply chain.
 It is available 24*7
 Allows faster decision.
Disadvantages
 Implementation of AI is costly.
 Lack of creativity is other disadvantage.
Advanced analytical: It is other main technology which is being used by several retailers
including Tesco as it allows them to take advantages of future opportunities and also reducing
future threats. It also allows them to take better decision in functional areas of supply chain like
supply chain planning, logistics, sourcing and others. Overall it can be said that this advanced
analytical technology in the process of supply chain management improve end to end supply
chain performance. By making use of these advanced analytical, companies can forecast demand
of customers and can also present them against over inventory and inventory cost.
Block chain: There are some main functions which are being performed by this technology in an
effective manner such as: smart contract, traceability and authentication. One of the main uses
and reason of using this technology in the process of supply chain is to track the movement of all
products from manufacturing place to retail stores by developing a digital record as it includes all
unique attributes (Saberi and et.al., 2019)
Advantages
 There is 0% of fraud in it.
 It improves financial efficiency
Disadvantages
 It uses expensive energy.
 Scalability is other weakness
So, from discussed all technologies in detailed manner it can be said that it overall helps
companies and Tesco in improving decision making process and also performing all functions in
a faster and effective manner. There is several other effectiveness of these technologies as it
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improves communication, reduces errors, save time and enable people to tie their business
together.
Supportive functions which are linked to this operation management practice and how it can help
in becoming successful
There are several function associated with supply chain management and if supply chain
manager follows all these functions then it can help its company in meeting its goals like
increasing customers satisfaction, taking competitive advantages, increasing productivity and
others. All main functions of supply chain management which help Tesco in becoming
successful include:
Purchasing: It is already stated that supply chain management include all functions which help
them out in transforming raw materials into finished goods and for this, there is requirement of
purchasing raw materials. In this function supply chain manager require purchasing all important
resources and raw materials for manufacturing process. The main factor which needs to be
considered is improving relation for getting effective materials at affordable price (Fallahpour
and et.al., 2017).
Operation: After buying raw materials and another resources it is important for operation team
to engage in demand planning and forecasting. The main aim of performing this function of
determining market demand is to reduce inventory and manufacturing cost and excess of
inventory. After determining customers’ or market demand, order is being given to suppliers and
manufacturing of products is also being done according to the demand. Over production and
lower production, both can affect company’s overall performance so, this function plays an
important role.
Logistic: After ordering of raw materials as per the demand there is requirement of space for
storage until it is shipped for delivery to customers. It all can be done by warehouse manager. If
products are to be delivered outside of the city, then company needs to have an outstation
warehouse for keeping products safe and for easier delivery. One of the main aim of this function
is to make sure that logistic is being reached to the end point delivery without any problems.
Resource management: For production of services and products there is requirement of human
resource, technology, financial resources and other resources. For reducing cost and producing
products in an effective manner it is important for resource manager to have control and manage
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all resources. They need to make sure that workers are using appropriate resources in an effective
manner for protecting company from over usage of resources (Oelze, 2017).
Information workflow: It is one of the important functions which keeps all other functions and
workers on track. When all departments of workers and different functions coordinate with each
other’s then it reduces miscommunication and help them out in improving quality and reducing
errors.
Customer service: After performing all functions from transforming raw materials into finished
goods and delivering them to customers it is important to interact with customers. Post sale
services help companies in improving relation and increasing customer retention rate. In this
function, after delivery of products, supply chain manager ask for feedbacks and reviews and
also provide customers services for making improvement in products. It satisfies customers and
makes them feel valued.
So, from the above discussed all functions it can be said that all plays an important role and
needs to be performed in sequence for successful supply chain management and success of
company.
CONCLUSION
From the above study it has been summarized that supply chain management plays an
important role as it is one of the important and effective operational management practice. It has
discussed some effectiveness and reasons of this important operational management practice as
why it is considered the main key of the success of retailers and by managing it how they can
take competitive advantages. Further, this study has also discussed technology used in this
management by which companies can make themselves successful and how it achieves. There
are several functions associated with this practice of operation management and companies
require following all these in order to provide value to customers by providing qualitative final
goods to them and also retain them for the long run with the company. An effective SCM
include several functions like product development, customer service, distribution and marketing
for satisfying customers’ needs.
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REFERENCES
Books & Journal
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business intelligence perspective. Journal of Retailing and Consumer Services, 34,
pp.248-259.
Fallahpour, A. and et.al., 2017. A decision support model for sustainable supplier selection in
sustainable supply chain management. Computers & Industrial Engineering, 105,
pp.391-410.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Liu, X. and et.al., 2018. Distributed operation management of battery swapping-charging
systems. IEEE Transactions on Smart Grid, 10(5), pp.5320-5333.
Montgomery, R.T., Ogden, J.A. and Boehmke, B.C., 2018. A quantified Kraljic Portfolio Matrix:
Using decision analysis for strategic purchasing. Journal of Purchasing and Supply
Management, 24(3), pp.192-203.
Oelze, N., 2017. Sustainable supply chain management implementation–enablers and barriers in
the textile industry. Sustainability, 9(8), p.1435.
Radosavljević, J., Jevtić, M. and Klimenta, D., 2016. Energy and operation management of a
microgrid using particle swarm optimization. Engineering Optimization, 48(5), pp.811-
830.
Saberi, S. and et.al., 2019. Blockchain technology and its relationships to sustainable supply
chain management. International Journal of Production Research, 57(7), pp.2117-2135.
Sanil, H.S. and et.al., 2016. Effectiveness of supply chain management with reference to apparel
industry: A case study in India. International Review of Management and
Marketing, 6(4S).
Shaharudin, and et.al., 2017. Product return management: Linking product returns, closed-loop
supply chain activities and the effectiveness of the reverse supply chains. Journal of
Cleaner Production, 149, pp.1144-1156.
Wu, L., 2016. Smart supply chain management: a review and implications for future
research. The International Journal of Logistics Management.
ONLINE
6 Application of AI in Supply chain management. 2017. Online Available through: <
https://medium.com/@KodiakRating/6-applications-of-artificial-intelligence-for-your-
supply-chain-b82e1e7400c8>
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