Supply Chain Management: TESCO Case Study

This report discusses the supply chain management practices of TESCO, a British multinational organization. It explores how TESCO manages customer service, inventory, transportation, warehousing, and capacity to gain a competitive advantage. The report also provides insights into the strategies and recommendations for success in supply chain management.

Supply Chain
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Customer Service & Inventory........................................................................................................3
How readily is your product available to the customers.............................................................3
Inventory methods ......................................................................................................................4
Transportation & LSPs....................................................................................................................5
What modes of transport are used by TESCO supply chain and why?......................................5
Which LSPs does you chosen organisation employ...................................................................5
Is the supply side transportation managed differently from the demand (distribution) side? ....5
Warehousing & Capacity.................................................................................................................6
Warehousing contribute to your chosen organisation’s supply chain.........................................6
Why might managing capacity be difficult given the “five steps” involved?.............................7
How efficient is the supply chain in managing capacity for TESCO.........................................7
Strategy, Competitive Advantage & Conclusion.............................................................................7
Recommendation.........................................................................................................................8
REFERNCES:................................................................................................................................10
Books and Journals:..................................................................................................................10

INTRODUCTION
Supply chain management is the process of managing the goods and services. It starts
from procuring the raw materials and ends till they are being converted into finished goods and
sold. The main aim of supply chain management is to satisfy the needs and wants of customers
and to gain advantage over the competitors. This report is based on Supply chain management
followed by TESCO (Maditati, and et.al., 2018). It is a British Multinational organisation that
has its headquarters in England. TESCO is third largest retailer in the world if measured in gross
revenue. The company has diversified range of products such as retailing of books, electronics,
clothing, furniture, toys, telecoms, petrol, financial services, software and internet services. It is
seen that supply chain management has helped TESCO to serve the customers around the world
and gain advantage over the competitors. TESCO has regularly expanded its operations and that
is the reason behind success of the company and enhancing revenues (Marchi and Zanoni, 2017).
This report shows the relation of customer service and inventory management. The mode of
transportation selected by he company to manage the supply chain. Then there is discussion
related to warehousing facility of the organisation and how effectively they are able to manage
the capacity of the organisation. In the end of the report there is discussion related how the
supply chain management strategy helps to gain advantage over the competitors and some
recommendations.
MAIN BODY
Customer Service & Inventory
How readily is your product available to the customers.
All the organisations focus on product and services offered by them. As the product is
what is being offered to the customers,. In relation to TESCO the company has wide range of
product. They always focus on providing quality goods to its customers (De Angelis, Howard,
and Miemczyk, 2018). The another important point that should be considered is they make
efforts to enhance availability of the products.
It is seen that TESCO always maintain ample amount of stock and their products are
always available at stores. They are reachable to the customers as and when they need. Some of
the ways that are being used by TESCO to present the products to the customers are described
below:

Promotion: It is seen that TESCO uses various ways to promote its goods and services
(Liu, and et.al., 2018). It helps to attract the customers and make them aware about the products
and service offered by them.
Services: The complaint handling process offered by the company is advantageous and
solve all the problems of the company 24*7. This keeps the customers of TESCO happy and
satisfied so they are attracted towards the company.
Stores: The company has various stores and presence on online platforms as well. This
shows that the products offered by TESCO are available to the customers.
Inventory methods
It is vital for an organisation to manage its inventory as it helps to make the goods
available as and when required. It also helps in cost savings and avoidance of stock-outs and
excess stock. There are various ways to inventory management like safety stock, ROL, FIFO,
Audit the Stock, etc. It is up to the organisation that which method is used by them to manage the
stock (Mosteanu, and et.al., 2020). In relation to TESCO the company has operations in various
parts of the world and it is identified that company uses big data analytics to improve the supply
chain of the company. It is seen that data analytics model to manage then inventory and make it
available as per the demand of the customers.
TESCO has established a brand name in the market and it is seen that the customers are
happy with the services provided by the company. The company always focus on providing the
goods and services as per the needs and wants of customers (Giannakis, Spanaki and Dubey,
2019). The customers of TESCO are fully satisfied by the services provided by the company.
There are various methods that are used by different organisations to manage the stock that are
mentioned below:
LIFO: This stands for last in first out which means the stock that is purchased in the end
is sold first. It helps to save the tax and helps to match the revenue with latest cost in case of
rising price. Advantage: It is beneficial as it helps in tax benefits an improves the cash flows of the
organisation. Disadvantages: In this method the inventory is understated in balance sheet.

FIFO: First in first out is the strategy that is followed by companies to manage the stock.
In this method the stock that comes first is sold first (Kazancoglu, Kazancoglu and Sagnak,
2018). It helps eliminate the chances of dead stock and wastage of stock. Advantage: The balance sheet shows the current amount of inventory and real position.
 Disadvantages: It is not effective at the time of inflation to use FIFO method.
Weighted Average: In case of weighted average cost total cost of good purchased is
divided with number of units that are to be sold. Advantage: It helps to reduce the effect of change in price of materials.
 Disadvantages: The problem associated with this method is it does not match the cost
with the revenue occurred in the current period (Oelze, 2017).
In respect to TESCO the company uses First in First Out Method of valuation of
inventory. It helps to sell the goods first that are purchased first. As it reduces the chance of
obsolescence and spoiled stock.
Transportation & LSPs
What modes of transport are used by TESCO supply chain and why?
Transportation plays a vital role in movement of goods and services. It helps to take the
goods from the manufacturer and provide it to end user. The logistics help to provide the product
from one location to another (Khan and et.al., 2018). The transportation facility helps to provide
the goods to the end user. If the transportation facility used by a company is not string then they
may face various challenges. In relation to TESCO the company uses rail and road as a source of
central distribution. It helps to provide the goods and services on time to stores so that the can
sell the goods to customers (Yu, and et.al., 2017). Also TESCO uses sea transport in case of
global suppliers. This shows the company maintains consistency. The company delivers around
30 billion product worldwide annually. This shows transportation plays an important role in
success of supply chain management. The company has its operations at multinational level so it
is important to use transportation effectively.
Which LSPs does you chosen organisation employ.
Logistics Service Provider (LSP) are the one that provide outsource entities shippers
leverage as it helps to manage the warehousing facility and also helps in distribution and
transportation of freight. They are specialist in the field and that is the reason the have updated

technology and have good knowledge of industry. It is seen that they are able to solve the issues
related to transportation faced by the companies.
3PL is a service provider that helps to provide basic support facilities of logistics. They
help to meet the needs and wants of the company. They provide option of providing a single
service or couple of services to the company as per their needs and requirements. It helps the
company to focus on their core area and to operate effectively (Fernandes, and et.al., 2017). The
major functions that are provided by 3PL are Transportation, Global shipping and Information
technology. In regard to TESCO the company use the facility of global shipping to manage the
transportation at global level.
Is the supply side transportation managed differently from the demand (distribution) side?
Supply transportation is the capacity of transportation infrastructure. This shows the
transportation facility that is available for the company to provide goods and services to the end
users. It is the availability of the transportation infrastructure available to the company.
Transport demand is the demand of transportation facility that is available. It is also
considered in the terms of number of people, tons per unit of time and distance or volume. It is
seen that there is a reciprocal but asymmetric relation among both of them. It can be said that
transport demand is not possible without transport supply but at the same time transport supply
can exist without transport demand (Singh, Shukla, and Mishra, 2018). Yes, both the
transportation are managed in a different way as the demand is a natural process but supply is in
the hands of company. The company can manage and change the supply side of transportation as
per the demand side.
In respect to TESCO the company has strong supply chain management and the
transportation used. As the company is planning to cut the cost of logistics by £450 million.
They are working over the plan and are achieving success. Also the transportation adopted by
TESCO is also efficient as the goods are available on time and served to the end users.
Warehousing & Capacity
Warehousing contribute to your chosen organisation’s supply chain
Warehousing is the facility used by the company to store the goods at a safe place. It
plays a vital role in storing the goods and then using and selling them afterwards when there is
requirement. It is one of the important function of the organisation. As the TESCO deals in

variety of products they also assure the facility of warehouse. It is seen that the company gets
various benefits by maintaining warehouse. In regard to TESCO the warehouse helps in
following ways:
Sustainable Inventory Management: As the stock is stored and kept in warehouse. It is
the place where the stock can ship, store, and distribute. It will help in inventory management as
all the details related to demand and supply and availability of goods is available in the
warehouse (Centobelli, Cerchione and Esposito,2018). Warehouse helps TESCO in managing
the inventory.
Efficient Picking: It is an important fact that the right goods and being packaged and
distributed. It is observed that TESCO gets benefit of efficient picking as all the products care
organised in warehouse and it is clear which product is ready for picking.
Timely Shipping: As in the warehouse all the products are kept and packaged. It is clear
that they are ready and there is no chance of confusion at the time shipping. This is also a point
of advantage that TESCO gets due to used of warehouse properly.
Superior Customer Experience: It is an indirect benefit that is associated with
warehouse. As the products are available at time to the customers and they get it is good package
(Arunachalam, Kumar and Kawalek, 2018). It enhances the satisfaction level of customers and it
is also beneficial for TESCO.
The above mentioned are the benefits that add value to the supply chain management of
TESCO. It is important for an organisation to understand the benefits and manage the all the
goods and services.
Why might managing capacity be difficult given the “five steps” involved?
The five steps that are involved in managing the capacity are as follows:
Step 1: Check on the current Service Level Agreement levels.
Step 2: Check the existing capacity
Step 3: Determine future needs
Step 4: Identify any opportunities for consolidation
Step 5: Make recommendations related to capacity and take action
It is seen that managing capacity is important for an organisation and the in these five
steps the old agreement are reviewed. It is not important that the factors and all the tools remain
the same. These steps are not fully effective to manage the capacity.

How efficient is the supply chain in managing capacity for TESCO
As all the resources are used effectively and optimally to gain full advantage of them.
The task is to procure raw materials and convert them in finished goods so as they are able to
satisfy the needs and wants of customers (Çankaya and Sezen, 2019). As all the goods are kept in
warehouse and with supply chain the capacity is managed. As all the details related to demand
and supply of stock s maintained it helps to manage the capacity.
Strategy, Competitive Advantage & Conclusion
The report is based on supply chain management. It is vital for an organisation to take
care of supply chain as it helps the company to provide goods and services to the customers on
time. It helps to satisfy the needs and wants of customers and retain them for longer period of
time in the organisation. It is seen that TESCO take care of all supply chain and it helps the
company to gain advantage over the competitors. As the goods and services are accessible to the
customers as per their requirement (Köksal and et.al., 2017). In the report there discussion
related to how effectively TESCO manages the inventory and uses data analytics model to
manage the inventory. It helps the company to enhance the customer services and keeping the
customers satisfied. It is also seen that effective transportation facility used by TESCO helps
them to gain advantage over the competitors. As they are able to provide the goods to the
customers on time the customers are attracted towards the service of the company. It is also
analysed that warehouse helps to manage the stock and helps in managing the capacity of the
organisation.
In relation to TESCO the company has its operations in around 70 countries. They try to
provide best quality products to its customers. They take car of all the products are procured
from he source and provided to the end users. As TESCO has strong supply chain the company is
able to provide the products and services to the customers faster (Gold and Schleper, 2017).
They focus on being economical and that helps the company to gain advantage over the
competitors. It is important for company to maintain the supply chain management and work
effectively.
TESCO has established a strong position in the market and that is due to quality of
products offered by the company. It is seen that the image helps the company to attract more
customers and by serving the customers effectively and that helps the TESCO to gain
competitive edge.

Recommendation
From the above report it is analysed that supply chain engagement is important and
TESCO has understood the importance and uses all the resources effectively to satisfy the
customers. Some of the recommendation are discussed below:
 To gain advantage over the competitors TESCO should work on providing the goods to
the customers on time. They should work of distribution channel and make the ggoods
and services accessible to the customers.
 The suggestion for the company is they should use innovative ideas to manage the
capacity of the warehouse. As the company has variety of products it is important for
them to manage the capacity of the warehouse effectively, that will helps the company
become more successful.

REFERNCES:
Books and Journals:
Arunachalam, D., Kumar, N. and Kawalek, J. P., 2018. Understanding big data analytics
capabilities in supply chain management: Unravelling the issues, challenges and
implications for practice. Transportation Research Part E: Logistics and Transportation
Review, 114, pp.416-436.
Çankaya, S.Y. and Sezen, B., 2019. Effects of green supply chain management practices on
sustainability performance. Journal of Manufacturing Technology Management.
Centobelli, P., Cerchione, R. and Esposito, E., 2018. Environmental sustainability and energy-
efficient supply chain management: A review of research trends and proposed
guidelines. Energies, 11(2), p.275.
De Angelis, R., Howard, M. and Miemczyk, J., 2018. Supply chain management and the circular
economy: towards the circular supply chain. Production Planning & Control, 29(6),
pp.425-437.
Fernandes, and et.al., 2017. Supply chain management and quality management integration: A
conceptual model proposal. International Journal of quality & reliability management.
Giannakis, M., Spanaki, K. and Dubey, R., 2019. A cloud-based supply chain management
system: effects on supply chain responsiveness. Journal of Enterprise Information
Management.
Gold, S. and Schleper, M.C., 2017. A pathway towards true sustainability: A recognition
foundation of sustainable supply chain management. European Management
Journal, 35(4), pp.425-429.
Kazancoglu, Y., Kazancoglu, I. and Sagnak, M., 2018. A new holistic conceptual framework for
green supply chain management performance assessment based on circular
economy. Journal of Cleaner Production, 195, pp.1282-1299.
Khan, and et.al., 2018. Green supply chain management, economic growth and environment: A
GMM based evidence. Journal of Cleaner Production, 185, pp.588-599.
Köksal and et.al., 2017. Social sustainable supply chain management in the textile and apparel
industry—A literature review. Sustainability, 9(1), p.100.
Liu, J., and et.al., 2018. Green supply chain management and the circular economy. International
Journal of Physical Distribution & Logistics Management.
Maditati, and et.al., 2018. A review of green supply chain management: From bibliometric
analysis to a conceptual framework and future research directions. Resources,
Conservation and Recycling, 139, pp.150-162.
Marchi, B. and Zanoni, S., 2017. Supply chain management for improved energy efficiency:
Review and opportunities. Energies, 10(10), p.1618.
Mosteanu, and et.al., 2020. Sustainability Integration in Supply Chain Management through
Systematic Literature Review. Calitatea, 21(176), pp.117-123.
Oelze, N., 2017. Sustainable supply chain management implementation–enablers and barriers in
the textile industry. Sustainability, 9(8), p.1435.
Singh, A., Shukla, N. and Mishra, N., 2018. Social media data analytics to improve supply chain
management in food industries. Transportation Research Part E: Logistics and
Transportation Review, 114, pp.398-415.

Yu, Y., and et.al., 2017. E-commerce logistics in supply chain management. Industrial
Management & Data Systems.