Supply Chain Management of Tesco Plc: A Case Study

This report discusses the supply chain management of Tesco Plc and its impact on productivity and profitability. It covers various supply chain theories such as just in time, six sigma, and e-supply chain. The report also highlights the importance of planning and inventory management in the supply chain. Additionally, it emphasizes the significance of customer service in achieving business goals and objectives.

Case study Tesco
clothing department

ABSTRACT
This report is about supply chain management of Tesco Plc and how it will help the
managers to complete their process in order to maximise the productivity or profitability. This
project report include the literature review of supply chain theories such as Just in time, six
sigma, E – supply chain, planning, customer service etc. Supply chain management is the process
where business operations convert raw material into finished goods and make sure to deliver
goods & services to the customers. Also ensure that availability of goods maintain in the stores
otherwise consumers shift for substitute. In order to increase the profit leverage through applying
various theories. With the help of supply chain management, managers able to control the
internal process or reduce the supply chain cost. It further helps in increasing firm's profit, cash
flow etc. Supply chain management provide various benefits such as boost customer service,
reduce operating cost, improve financial position of the company and helps in meeting business
goals & objectives on deadline.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
RECOMMENDATIONS.................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Supply chain management is the overall management of goods & services which
organizations have to maintain the process from raw material to finished goods. It include the
various activities which help the business to maximise the value and provide competitive
advantage in the market (Bezes, 2016). In order to get better understanding of this concept, this
report select Tesco Plc which is multinational retail sector organization. Company founded in
1919 by John Cohen. Tesco has retail stores all over the world which provide their services and
huge range products. This report cover various topics such as literature review of supply chain
theories which help the business to maintain effective supply chain management.
MAIN BODY
According to Pandowo and Kantjai, 2015, Just is time is the method help the
organization to eliminate all the activities or resources which is non valuable for the company.
Basically those activities, which does not add value for the company but occur cost. With the
help of this supply chain theory, managers able to evaluate each activity and provide benefits. It
further helps in minimising the cost which increase the profit margin and help in achieving
business goals & objectives. Just in time is the management theory which is used by the
organizations and align the raw material which ordered from suppliers and make sure to deliver
as per the production schedule. Effective use of just in time inventory strategy will increase the
efficiency of production as well as reduce the wastage at the time of receiving goods for the
production purpose. In order to use this strategy, company required produces which can forecast
the demand accurately and make sure that it should be suitable as per the production. If company
face the shortage of raw materiel during the operations than it will highly affect the production of
profitability. Similarly, if company order high quantity of inventory then they have to bear high
carrying cost or sometimes organization have to bear the wastage cost as well. In context of
Tesco plc, it is retail sector company who transport goods from warehouses to the stores all over
the country. So managers have to develop strategy regarding how much inventory should
required in the store to satisfy the demand of customers (Bundy, 2017). Because in the stores,
there are high chances product damage. So they order from warehouse as per the requirement
and it will be analyse with the help of regular sale of goods for the each category.
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As per Drohomeretski, Gouvea da Costa, Pinheiro de Lima and Garbuio, (2014), six
sigma is the technique or tool which used by the organization in order to eliminate the error.
Main aim of this tool is to identify as well as analyse the differences and complexity in the
production process that impact the decision area. With the help of it, business able to identify the
priorities which helps in providing their best output in terms of performances. This approach
used to set a system or process for the production which further beneficial in defining services
and financial process. In order to maximise the production or profitability, company have to
provide necessary training to their employees which can enhance their performance as well as
productivity. Most of the organization, follow the disciplinary process which include the four
phases such as measure, analyse, improve and control (MAIC). With the help of this approach,
initially management analyse the existing system which they currently follow to achieve their
task. Along with this, they have to monitor the progress of the project. After this, organization
have to analyse the system that it is suitable for the business and how it helps in achieving
business goals & objectives. They have to evaluate strength as well as weakness of their existing
process (Calvo-Porral and Lévy-Mangín, 2018). Next stage is improvement, where organization
should adopt optimum solutions and develop a action plan through implementing and confirming
the solutions. Here, managers make sure to measure the methods and review the results which
can satisfy the customer expectation. Last phase of six sigma approach is controlling phase,
where they have to monitor or make control over new system which helps in reducing
manufacturing problems and maximises the production or profitability. For example: Tesco
company, in order to overcome their cost they have to sell around 300 units of cloths in a month
or they have to provide quality cloths to meet the expectation of consumers. So company have to
maintain their process accordingly and focus on product as per the standards.
Guskey, 2014, state that planning is the process which help the organization to manage
business activity in order to perform their task in well manner. Along with this, they have to
make sure that planning include all the aspects which is important for business point of view.
Planning required everywhere in order to complete task in systematic manner which help in
completing work with full of efficiency or effectiveness. Strategic planning improve the
efficiency where business have to build networking which has to be interconnected or
interdependent. It is very important in the supply chain where managers have to build plan in
such manner which make relationship of supply chain flourish and make it constant. Basically
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supply chain management include the three networks such as suppliers, manufacturing or
distribution of goods & services among the customers. In order to make these three networks
together, they have to required effective planning and it will be done by the managers of the
company for the successful results.
Managers have to plan that how to get raw material to fulfil the requirement of
production process (Cavender and Kincade, 2015). If supply of goods not deliver on time then it
further impact the manufacturing process because production wait for the raw material. It is very
costly process which required human resources, time and huge efforts to complete this process.
Strategic planning improve the economy because speedy delivery not beneficial if they have to
bear high cost. Company required to minimise the cost of distribution as well as overall cost of
product which is more important. Because of this reason, planning is important which make them
managers capable to analyse all the areas which required effective planning. The biggest
question for the business is that how, where and when business get the cheapest cost. So
managers have to implement various supply chain theory which is beneficial in minimising
overall product cost. Such as, with the help of just in time, managers able to identify the quantity
of raw material which can fulfil the manufacturing needs (El-Adly and Eid, 2015). Planning also
increase the expectation of business. It is the another factors which is beneficial for the supply
chain network and provide strategic advantage through transecting with manufacturers who
provide fast delivery of goods on cheaper rate. Planning include in the manufacture process
where managers analyse all the factors such as internal or external and make decisions in order
produces quality work which helps in achieving business goals & objectives.
According to Valverde and Saadé 2015, E-supply chain management is the key
competitive factors which is very important to analyse the overall process. It is also one the
supply chain theory which used by the organization in order to improve logistic performance. It
is the practices of manufacturing industry where organization using internet to carry out the
value added activity. E- supply chain management (E- SCM) is the effective utilization which
organization used to deliver goods and inform the supplier to consumers in effective way.
ESCM include the various parties which help in completing the task before deadline such as
manufacturers, logistics, distributions, suppliers, retailers, consumers etc. E-SCM majorly focus
on reducing inventory cost because through physical checking of inventory required human
resource which bear a cost. With the help of internet or centralized data provide various benefits
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through reducing cost which helps in maximising profit margin. Supply chain management flow
divided into three main activities such as product flow, information flow or financial flow.
Product flow include the movement of goods from one place to another place from
suppliers to consumers and goods also return from the customers due to some reasons. Another
flow is about information where business update internal process which include the transmitting
orders and the status related to delivery of goods (Gbadamosi, 2016). Last flow of supply chain
management is regarding financial flow which include the monetary terms such as payment of
suppliers, credit, consignment etc. These flows will be managed by the supply chain in order to
maximise the production as well as profitability of the organization. There are lot of issues faced
by the supply chain management such as coordination over the processing activity that originate
from the customer level. Process or order generation, order acceptance, processing system,
production, material forecast etc. E-SCM perform with the help of internet, so organization have
to make sure that internet connectivity always maintain in order to update the information.
Shortage of electricity will affect the production as well as electronic supply chain management.
E-SCM provide various benefits such as improve overall production efficiency, reduce the use of
inventory or inventory cost, provide better competitive advantage, increase the ability to
implement just in time delivery process which enhance on time delivery of goods to the
consumers and satisfy them as well.
Muller 2019, refer that inventory management is one of the essential aspect which help
the business to manage their stock which provide various benefits. It is one the component of
supply chain management where inventory management used to maintain the flow of goods from
warehouse to the point sale. Main function of this management is to keep accurate records of
new or existing inventory items. It also maintain the records of return items from consumers
which help the managers to analyse all the factors (Groß, 2015). Inventory management is one of
the complex process, specially for large organization because manufacture goods at very large
scale which required to do lot of activity. Here goods are delivered in the manufacturing unit
from the warehouses in form of raw material. In the large organizations such as Tesco, they have
to order products from the warehouses to fix in their retail stores on the shelves.
Inventory management include the various technique which followed by the organization
to manage operational process of the company. It help the managers to understand that what is
the right amount of goods which fulfil the demand of consumers and generate profit. It become
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difficult when business deal with the thousands of products so they required various warehouses
according to the nature of goods. There are various methodology which followed by the mangers
in their business to manage their inventory level. These methodology includes stock review, just
in time and ABC analysis.
Stock review is the simplest form of inventory management which mostly used by the
small organizations where manger analyse the stock on regular basis and projected as per the
future needs. It include the physically review of goods which is very time consuming and costly
process because business have hire person to review inventory regularly. Just in time is one of
the methodology where products arrive as per the requirement of customers and it will be
analyse on the basis of customer behaviour. This methodology include the research about buying
patter of consumers, seasonal demand of goods and other factors which impact the demand or
production of business. It include risk also because of misreading market demand or having any
problems regarding distribution which can lead the out of stock issue. Another methodology of
inventory management is ABC analysis which classified the inventory in three categorises (Jones
and Livingstone 2015). Where category A represent the high quantity of low value goods,
category B include the moderate value goods with moderate quantity and category C include the
low value goods in large quantity. Each category required to manage separately with the help of
inventory management system. It is very important to know that which item having greater sales
then further business strategies developed accordingly.
Copacino, (2019), state that customer service is very important for any organization
because excellence in supply chain and logistic management required to understand the need of
customers. Business have to evaluate the market analysis which further helps in analysing the
need of difference customer groups. Organization provide various benefits which impact directly
or indirectly to the consumers. Such as deliver the goods on time satisfy the consumers, with the
help of effective research & development, business able to identify the individual needs as well
as meerkat trend. In the competitive market, it is very difficult to fulfil the consumers
requirement through internet. Through setting effective customer service which make them
capable to ask their queries regarding any product is beneficial for the business as well as
customers. Organization also has to set a proper platform in order to give respond of each and
every issues that customers have. With the help of unique bar code, customer can get the
knowledge and the service operator person also able to understand the product or related issues.
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For the requires of picking any product will be done automagically with the help of technology.
Customer service help the business to connect with each consumers by using technology which
increase the customer satisfaction level.
RECOMMENDATIONS
It has been recommended that, in order to maximise productivity as well as profitability
of clothing department of their business. Managers have to make some changes and it will be
recommended below:
 Tesco have to focus on their operational strength and try to convert it into opportunity for
the business (Joung, 2014). Company have to follow the online trend because it is the
best opportunity to expand their each among the consumers.
 They have to use their strength in order to minimise the threats which affect the
production as well as profitability of the company.
 Tesco have to identify their opportunity and try to minimise weakness with the help of it.
Expand their business in the China and other countries which reduce the dependency on
UK market.
 Company have to increase their reach in the developing country which provide them
huge popularity in the retail sector.
 Tesco have to increase number of stores in the UK which increase their revenue
generated sources (Kukreja and Gupta, 2016). Along with they have to analyse the
internal process on timely basis which helps in reducing errors.
 They have to follow six sigma approach in order to reduce the errors or defect which
minimise the wastage and it further helps in maximising productivity as well as
profitability.
CONCLUSION
From the above discussion it has been concluded that supply chain management is the
process which used by every organization in order to provide effective operational services. With
the help of various supply chain theory, managers can enhance their process which help in
minimising the overall cost, make availability of products in the stores and maintain distribution
and logistic for the company. There are various supply chain theory such as just in time, six
sigma etc. It help the business to reduce their operating cost and maximise the production as well
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as profitability. It is used to improve operational or financial position of the company because
lower the cost will maximise the profit margin. By use of effective customer service, business
able to satisfy their consumers through resolving each and every issues and it can be related to
the product quality, return of goods, related to delay in delivery etc. Effective use of supply chain
management and its theory will help the organization to enhance their business operations which
provide various benefits through reducing inventory cost, maximise the profit margin and timely
deliver the goods on the final destination. All of them helps in maximising the production as well
as profitability and it will be possible due to effective supply chain management in the busienss
operations.
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