Operations Management: Analysis of Tesco Stores Limited

This report analyzes the principles of operations tasks and process strategies implemented by Tesco Stores Limited. It identifies internal and external customers, operational objectives, and ways to improve operational efficiency. It also describes the operating process and recommendations for improvement.

Running head: OPERATIONS MANAGEMENT
OPERATIONS MANAGEMENT
Student’s Name
University Name
Author note

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Executive summary
The purpose of this report is to define the principles of operations tasks and analyze the process
strategies and procedures implemented by the chosen organization, Tesco Stores limited to
ensure that the tasks and the core operations of the business organization are carried out
effectively. The report introduces with a brief description of the company and the contribution of
my department. It identifies the internal and external customers of the business organization. It
analyzes the operational objectives of the business organization and suggests the process of
operating. Further, it describes the ways in which the operational procedure helps or hinders the
ability to meet the operational efficiency. It recommends ways in which the business
organization and improve the ability of the operations to meet the organization’s operational
objectives. Lastly, it summarizes the main points and concludes the report.

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Table of Contents
1. Introduction..................................................................................................................................4
2. Discussion and Analysis..............................................................................................................5
Consumer Analysis......................................................................................................................5
Operational objectives.................................................................................................................6
3. Description of the operating process...........................................................................................8
4. Recommendations......................................................................................................................12
5. Conclusion.................................................................................................................................13
References......................................................................................................................................14

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1. Introduction
The operations management of any business organization is very important and
challenging as it enables the business organization to offer products and services to the
customers. The consumer needs and preferences are constantly changing along with the
advancements and development of technology, therefore it is highly challenging. The chosen
organization is Tesco Stores limited. It is one of the largest retail stores throughout the world.
Tesco Stores limited operates more than 2300 supermarkets and employs around 300,000 people.
The core business of Tesco Stores limited is in Britain, it ranks to be the largest private sector
employer in the country; moreover, it is the largest food retailer in the business organization
operating nearly 1900 stores (Tesco PLC. 2019). In the continental Europe, Tesco Stores limited
operates in other countries like Turkey, Slovakia, Republic of Ireland, Poland, Japan and
Malaysia. The company also ranks to be one of the topmost and largest online supermarkets all
across the globe. It also offers various financial services through Tesco Financial services and it
controls approximately around 4.6 million customers between car insurance policies and credit
cards. It is the vision of the company to maintain its focus on customers and the sales personnel’s
working in the business organization (Tesco PLC. 2019). The business organization aims to
grow and expand its business to be a better leading retailer throughout the world. It also aims to
better understand the needs and preferences of the customers and offer them the products and
services as per their unique taste and preference in a creative way. The mission of the business
organization is to create value for the customers and earn loyal customers while growing
profitably and benefitting the customers as well as the shareholders. It is the core value of the
business organization to create value for the customers and earn lifetime loyalty. Tesco Stores

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limited adheres to the values stated by the company as per their code of conduct. The customer
values and strives to be highly passionate towards their customers and value their service
offerings and the employees (Brown and Bessant 2013). Tesco Stores limited ensures that the
working environment of the business organization is high in quality and safe for the employees
to better manage the works as a team. Tesco Stores limited highly encourages team work and
group activity. This helps the business organization to segment the entire work of the
organization in department so as to ensure efficiency and better productivity (Tesco PLC. 2019).
The managers and the senior executives of the business organization motivate the employees and
the team so that the employees and the sales executives can provide better services to the
customers. The department in which I work is customer care and services, this department
mainly deal with the complaints of the customers and problems faced by the customers. This
department evaluates the service while reviving the competitors and answering to the queries of
the customers. It also recommends improvement to the organization. This is one of the most vital
departments of the business organization as it aims to maximize customer satisfaction.
2. Discussion and Analysis
Consumer Analysis
The internal customers of the business organization are the internal staffs and employees
working within the supermarkets and stores. According to Chen, Cheng and Huang (2013), the
internal customers of includes the supervisors, sales personnel, team members who help the
customers get to products and services as per their needs and requirements. While on the other

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hand, the external customers of the business are the everyday consumer and public who come in
the supermarket for purchasing grocery products and other items offered by the business
organization (Choi, Cheng and Zhao 2016). They are likely to be the consumers, stakeholders
and the users. The customers are those who utilize the products and services. Stakeholders
include the shareholders who voting rights at the time to time meeting held by the business
organization. The stakeholders also include the public such as the customers of the local
community. Tesco Stores limited segments the customers on the basis of short term and long
term. The high profitability and the short term customers fit between the offerings of the
customers and the needs and requirements of the customers (Drake and Spinler 2013). These
types of customers have the potential for high profit. These customers prefer the best deals and
offers provided by the business organization. However, these customers do not usually prefer
building long term relationship with the business organization. On the other hand there are long
tern customers who are usually satisfied with the offerings of the business organization and are
often loyal to the company (Felgate and Fearne 2015). They have a long term profitability of the
business organization.
Operational objectives
According to Slack, Brandon-Jones and Johnston (2013), the operational objectives
include satisfying the customers and offering the customer error free products and services in
order to satisfy their needs and requirements. The other operations objectives include minimizing
the time between customers seeking for the products and its availability. The customer deliveries
are to be made on time. The operational activity of the business organization must be highly
flexible so as to make necessary changes as per the changes in the situation or unexpected

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circumstances (Brown and Bessant 2013). The business organization must offer the goods and
services in the most affordable price and that is most appropriate for the market. This objective
can help the business organization to gain cost advantage. The operations management is
considered to be a vital part of the business organization. According to Drake and Spinler (2013),
the main operational activity involves designing, operating and transformation of resources raw
materials and labors into finished goods and other services (Felgate and Fearne 2015). The five
performance objectives for the operations of Tesco Stores limited are flexibility, dependability,
quality, cost and speed. Tesco Stores limited continuous performs the function for maintaining
effectiveness in order to attract huge customer base, maintain the existing customers and gain
new customers. Being a large business organization, it continuously ensures that the products
and the goods are arranged on the store shelves so as to help the customers get directed to the
products and goods they required (Galindo and Batta 2013). The working operations of the
business organization include filling of the shelves, deliver of products to the customers, billing
and cleaning. The managers and the senior executives of the business organization set different
operational objective divided in category of people’s choice, price and people. Customer
satisfaction is the top most priority in Tesco Stores limited as it leads to maximization of profit.
The suppliers of the business organization are responsible for providing the goods and products
timely as per the needs and demands of the customers. According to Ge et al. (2016), the
employees of the organization also play a vital role in the business organization. They employees
are directly involved in the operations process of the business organization as they directly deal
with the customers as they directly deal with the customers by guiding them and offering them
the goods and products as per their needs. The shareholders of the business organization provide

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financial assistance to the company for smooth running of its operations. Tesco Stores limited
utilizes control systems and inventory analysis for the purpose of measurement and
classification. It mainly prioritizes the stock based on value (Heizer, Render and Munson 2017).
It is suggested that the business organization need more complicated approach for
managing its operation, controlling the operational activities and inventory planning. This can
result in the complex information system to measure the level of inventory in the store and the
reorder (Hoyos et al. 2015). Tesco Stores limited do not process in batches. The company
implements this approach by avoiding large batched. They mainly focus on lean manufacturing
and provide immediate value. However, it is believed by Kato et al. (2015), that the lean
manufacturing helps to maintain accuracy of records of the stocks in comparison to the large
batches. It is suggested by Lee and Tang (2017), that by doing the right things the business
organization can seek to influence the quality of the goods and services. The business
organization needs to focus on the quality of the products and services as it can help to satisfy the
customers. Incorporating quality operations in the business organization can reduce the cost of
the business organization and increase the dependability. The business organization can ensure
speed by performing the operations fast and influencing the speed in which the goods and
services are delivered (Reid and Sanders 2015). This also reduces the risks by delaying the
commitment of resources. It can increase the dependability of the goods and services by
increasing operational reliability. This enables the business organization to save the time and
resources which could otherwise have been wasted in solving reliability issues. It is also
suggested that the business organization can introduce new products and services to ensure
flexibility in the business organization (Reyes and Visich 2016). This can help the business

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organization to speed up the response time, save the time and maintain its dependability. By
doing things cheaply and cost efficiently, the business organization can increase the profitability
and sales. Ensuring cost performance in the business organization can help to improve the
performance of the business organization and attain the operational objectives of the business
organization (Riefer et al. 2017). Low cost, can help the business organization to gain highly
volumes of sales, long term relationship building with the customers and increase in profitability.
3. Description of the operating process
Tesco Stores limited mainly operates in 4 store models including Tesco Express, Tesco
Metro, Tesco Superstore and Tesco Extra (Smith 2013). The multi-format store enables the
business organization to increase the flow of the customers, increase in the total sales of the
company and also guarantees an increase in the profitability. According to Smith, Maull and CL
Ng (2014), this not only helps the business organization to meet the changing needs and demands
of the customers but also face the saturation of domestic market and addresses the stiff
competition in the market. In respect to the core strategy of the business organization it adheres
to its consumer-centric approach throughout its operations and activities. They are highly
sensitive and responsive to the needs and demands of the customers. It is believed by Sparks
(2014), Tesco Stores limited has always been “one step ahead of the competitors” and therefore,
it has been able to gain the top most position in the retail market. One of the most critical
strategies for its operations is strong customer centric approach for the benefit of the customers.
The company has adopted a low price policy of its goods and services and has introduced a club
card for its customers (Starr and Van Wassenhove 2014). These are some of the strategies of the
company to enhance its operational activities. The availability of the products and the services at

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a lower price is one of the key competitive advantages for the company. According to Thomé,
Scavarda and Scavarda (2016), Tesco Stores limited improves the speed of delivering the
products and services and saves expenditure of the company by implementing a primary
distribution system and it utilizes its own fleet to transport the domestic goods to the customers.
This helps the company to gain customer satisfaction and increase customer loyalty. Tesco
Stores limited also enhances the supply chain system by implementing new and advanced
technology as well as its lean operations management. The business organization implements
latest technology and focusing on cost and improving the supply chain (Walker et al. 2015).
New technology and improvements helps the organization to provide a better customer service
and an increase in the working efficiency. Further, this also helps the business organization to
improve the check-out speed and minimize the waiting time for the customers. However, as
mentioned by Zangiski et al. (2013), there are few drawbacks and limitations of the company in
the process of implementation and application of RFID technology. It is believed by Lee and
Tang (2017), that the technology implemented is not matured fully. It causes data error when the
tags of the products come in closer contact with the metals and the liquid. It has also been argued
by Reyes and Visich (2016), that the RFID technology increases the operational costs, as it is
comparatively costly than barcode. This indirectly increases the cost of the products which
deviates the operations of the company from its main goal of cost effectiveness. It directly
contradicts which the low price concept (Reid and Sanders 2015). Therefore, the business
organization must constantly improve the RFID technology and focus on the RFID to the
suppliers of the business organization.

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According to Reyes and Visich (2016), the order qualifiers for Tesco Stores limited are
quality and cost. The order winners are flexibility and the speed of delivery. This enables the
business organization to meet the needs and the demands of the customers. Tesco Stores limited
shows strong commitment towards the quality of the products and services offered and ensure
flexibility by decreasing and increasing the output in order to gain customer satisfaction (Starr
and Van Wassenhove 2014). Moreover, it focuses on providing fresh and quality products to the
customers. It also highly prioritizes the speed of delivery, which helps the business organization
to meet the needs and expectations of the customers. The quick online service provided by the
business organization can be considered as an example in which the company provides its
customers faster service and product delivery by better utilization of its resources through its 24
hours delivery service to the customers (Thomé, Scavarda and Scavarda 2016). Further, Tesco
also considered utilizing an internally developed analytics model for the purpose of improving its
own supply chain. It mainly targets the inventory management systems for analyzing the trends
of the market, predicting the preferences and needs of the customers and their purchasing habits
in a better way (Zangiski et al. 2013). It helps the business organization to track the
effectiveness of the special offers and discounts that is provided to the customers. This helps the
business organization analyze the needs and demands of the customers. According to Kato et al.
(2015), this also helps the business organization to analyze the weather patterns with the help of
analytics model to store and stock the store shelves in a proper manner. Further, it analyzes the
history of purchasing patterns of the customers and determines the expected temperature trends
of the market. It also helps the business organization to predict the accurate manner in which the

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products and services are purchased by the customers in a specific location and supply the
products to the area accordingly (Riefer et al. 2017).
However, as mentioned by Drake and Spinler (2013), there is certain weakness in the
operating process of the business organization which hinders the ability of the company to meet
the needs and the demands of the consumers. The weakness mainly lies in its operations in terms
of lean manufacturing. It is believed that the system of implementation of the lean system. In the
opinion of the supply chain managers, they believe that the long process of batches can reduce
the cost. With the use of the logistics resources, cost can managed easily and can be optimized.
The lean operation system is aimed to maximize the profits; however, it increases the
dependability of the company on the suppliers (Choi, Cheng and Zhao 2016). This disruptions
the inventory processes and can detract the company operations. Lean management can increase
the operational cost for the company as it requires high amount of training and new equipments.
However, Tesco Stores limited has implemented a combined lean operation management along
with advanced RFID technology which enables the company to give high velocity products to
the customers of the organization (Drake and Spinler 2013). It has been a successful retailer and
has been able to manage its operational activities in a successful manner.
4. Recommendations
The operational efficiency must be considered as a core part of any business organization.
Therefore, it is recommended that that Tesco Stores limited must introduce and implement cross
docking operation and implement a collaborative plan in order to support its inventory
management (Heizer, Render and Munson 2017). This approach can help the business

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organization to avoid the need of the retail store and reduce the holding of inventory. Further, it
is recommended that Tesco Stores limited can control the stock holding or inventory holding at
a lower level o inventory and satisfy the demand of the customers at the same time. As per the
analysis, it has been identified that managing the inventory of the retail business organization is a
challenge; therefore, this approach can help the organization to satisfy the needs and demands of
the customers along with minimized inventory cost (Lee and Tang 2017). This will help the
business organization to meet the objectives of the operational activities. It is recommended to
implement a just in time inventory model, this can help the business organization to take care of
uncertain rise in the demands of the customers (Smith, Maull and CL Ng 2014). The business
organization can consider making a scientific and reasonable forecast with the network for
ensuring that the needs and requirements of the customers are met (Walker et al. 2015). As per
analysis it has been identified that Tesco Stores limited highly relies on the operational
efficiency and on the operational skill. The company has already formulated various ranges of
strategies for satisfying the needs, costs and improves the delivery system. However, it is
recommended that the business organization can implement just in time inventory system to
address the changes in the customer needs and demands or sudden increase in the customer
demands (Zangiski et al. 2013). Implementing ERP (Enterprise Resource Planning) systems it
can handle the stocks and inventories effectively without errors or poor forecasts. This can help
the business organization to increase the operational efficiency. Fir effective implementation of
just in time management, it can consider hiring an expert to look into the aspects of supply chain
management and the operational processes (Starr and Van Wassenhove 2014). The

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implementation of just in time approach can contribute towards smoother production flows,
decrease in the financial costs and labor cost. Hence it is cost effective.
5. Conclusion
Therefore, from the above analysis, it can be concluded that Tesco Stores limited has
been highly successful retail business organization through its successful implementation of
operational activities and its adherence with the goals and operational objectives that is speed,
flexibility, cost and quality of the products and services. The process of its operational activities
and the objectives of the company have been identified in the report. However, it has been
identified that the operations of the business organizations has certain drawbacks and limitations
especially in the lean operation management. The business organization has tactfully
implemented advanced technologies to overcome the limitations and the weakness of the
company. The report has recommended various strategies, tools and processes to improve its
ability to meet the operational activities of the business organization to face the changes in
consumer demands.

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