Examining Global Sourcing Methods and Procurement Strategies for Tesco

This report provides an executive summary of global sourcing methods, project risk, and procurement management, focusing on Tesco as a case study. It examines various sourcing methods, including low-cost, global, operational, and manufacturing, and their impact on procurement. The report analyzes Tesco's global sourcing strategies, emphasizing the importance of cost analysis, limited supply chains, and primary sourcing. It also discusses trends in global sourcing, such as the decrement in exchange rate determinism and the enhanced role of purchasing managers. The report proposes a global procurement strategy for Tesco to achieve excellence and improve its competitive advantage, highlighting the need for clear strategies, digital tools, and senior-level engagement. It explores different procurement models and the benefits of global sourcing, such as improved production capacity, access to new markets, and the adoption of new skills. The report concludes by emphasizing the importance of strategic procurement to maximize brand value and image in the global market.

Assessment

Executive summary
In this assessment, the methods of global sourcing, project and procurement management is been
determined. In this, models, concepts and strategy of global sourcing and procurement
management is been explained and discussed by this explanation, it is been come out that if the
company is using these models and strategies for sourcing globally, then it will be beneficial for
them as it lead to achieve excellence in their procurement management. Lastly, it is been
explained that by focusing and improving their strategy and focus on their competitive
advantage, they can gain more benefits, and lead to maximizing the brand value and image in the
global market.

Table of Contents
INTRODUCTION ..........................................................................................................................4
TASK...............................................................................................................................................4
To critically examine the global sourcing methods....................................................................4
To propose a global procurement strategy which can lead to procurement excellence and
improve the company’s competitive advantage..........................................................................8
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Global sourcing refers to sourcing of goods and services globally, so as to achieve high
efficiency in business. Global sourcing is beneficial for a business as it lower down the cost of
manufacturing, they can able to learn global business skills and it helps in dealing and surviving
in the global market. In this, chosen company is Tesco, a multinational company, formed in the
year 1919 by Jack Cohen. It is an grocery and general retail merchandiser company, and it is
considered as the largest retailer in the world. In this assessment, proper understanding of
procurement management and project risk is been clearly illustrated. Its need, importance,
models and theory a company may use for their global sourcing and procurement is explained in
details. This can help in gaining knowledge about the procurement and project risk (Airike and
Mark-Herbert, 2016).
TASK
To critically examine the global sourcing methods
Procurement generally refers to obtaining goods and services by taking help from other
organisation. It helps in reducing the cost and price of production. Thus, it helps in improving the
profits of a business. Tesco procures goods so as to supply their goods and services globally in
efficient way and can help them in generating revenues with low cost of production. In context to
Tesco, procurement have so many importance which are like it plays a vital role in increasing the
economy of the country. It maintains trade relation with other countries, this increase their GDP
(Alhola ,and et.al 2019).
Project risk refers to uncertainty that can be present or occurred while doing the project.
Various external factors can occur situation, by which projects can be affects as before
completion it can not guarantee success. Procurement management is an strategic approach,
which involves acquiring the quality goods and services from other suppliers within a limited
budget. So, as to reduce the cost of production of raw material and spend limited budget on it.
There are different types of sourcing methods, which helps company to procure from others,
which are discussed as below:
 Low cost sourcing methods: This method emphasis basically on procuring goods from
countries, which has lower labour cost so that reduce the cost of production. The main

aim of using this method is to minimize the operating and manufacturing expenses
(Buciuni and Finotto, 2016).
 Global sourcing: This can be defined as a practice in which there are practice of
sourcing that is from global market where goods and services are from geopolitical
boundaries. This method not just focuses on reducing the cost of production, but this also
focuses on, adding the quality of taste of other country's market, so that they can get an
addition of international market in their business.
 Operational sourcing method: In this method, machines, their usage and maintenance
is commonly outsourced. It gives control to the the outsider or external provider to do
specific task in relation to manufacturing (Dhir and et. al., 2019).
 Manufacturing: In this , the goods are been manufactured by other country's company.
The company needs to provide the specific design to that product and the other
manufacturer prepares or supply it with someone else.
In context to Tesco, the company uses methods of global sourcing, manufacturing,
operational sourcing so as to procure their goods from other country or from different supplier.
By this it reduces the risk of project as by this, then it reduces the chances of involving high cost
of production. It gives opportunity to them to add the taste of other market in their business
operations, so a to bring something different and build good trade relations with other firm. The
chosen company, sources funding ,from different countries. Most of the procurement of goods
ans services of Tesco, takes place from China and Hong Kong. From these two countries (Donzé,
2016). They procure goods, as these countries has high technology services, which has lead bring
efficiency in their productivity and thus save cost of production as it is been outsourced. Through
this company can improve their profitability ad it gives an opportunity to develop and build more
relations with countries and suppliers for gaining more benefits. There are various global
sourcing strategies for managing procurement which are discussed further.
 The company needs to make corrective decision to while making or buying the product.
They need to do a proper analysis, for the same as it is necessary for the company to
measure all the factors and then decide what is to be done to carry on the manufacturing
process (Fratocchi and Di Stefano, 2019).
For this they needs to considered the cost best while sourcing the product. They mainly
emphasis on the cost which is been associated with the labour and the usage of capital assets. If

Tesco, manufactured product from supplier, then they need to considered and analyse the cost
which will be associated with the supplier. It the company is not familiar or aware with the
competitors, they need not to do use the external sources or supplier for procuring their products.
 A company needs to have limited supply chain in their operations, as it becomes tough to
manage a lots of supply chain at the same time and this can involve a lots of cost for
producing and supplying their good. Tesco purchase goods as procurement, by limited
supplier as this can reduce their purchasing price as repeated purchase reduces the
supplier cost (Gil-Garcia and et. al., 2018).
 There are two types of sourcing, company can opt for either primary or secondary
sourcing. This is basically used if any supplier is not reliable, then company may not
want to procure from them. Tesco uses primary sourcing in which they generally deals
with supplier for longer term duration. So, as to meet with the requirement of
procurement and supply. Other than that, in secondary sourcing, a company must do it or
opt for it, if they want to receive or deliver quality or wants to procure goods for short
durations form fulfilling or meeting with the supply of procured goods for limited
durations (Gleich and Zschoche, 2017).
There are various trends for global sourcing strategy which can be implemented or taken
in use by the Tesco, which are stated here:
 The decrement in the exchange rate determinism of sourcing: The foreign costing is
generally occurs for the non cost reason mostly. They focused on the usage of access to
technologies. Due to decrement in exchange rate, the domestic suppliers increases their
price of supply, as the companies are left with no other choices rather then supplying or
procuring goods to them. The long term relationships often tends to survive the
fluctuations of exchange rates. It impacts the economy of the country too (.Jia and et. al.,
2017).
 Enhanced role of purchasing manager: The production process requires constant
supply of raw material, to maintain a proper flow in the operation and manufacturing of
the product. The strategies will be considered more, as this can maintain a good flow of
receiving the highest quality of procurement of raw material, in a minimum or at lower
cost. This can even increase their productivity as efficiency will be presented there.

There are various importance of project and procurement management which can help
company in managing and sourcing globally:
 It basically refers to procuring or supply good from their country or places, from outside
sources.
 It includes buying and outsourcing the services from other supplier, so that they can save
their time and money and give it to others for producing at low cost (Kumar, 2018).
 It increases the growth of businesses well as the profits. This can have positive impact on
the overall market. It can even involve a lots of undertaking in the new market as it helps
in gaining market share by building good trade relation with the supplying country.
 Procurement management is important as it can add on the international market systems
and material which can produce and make it more valuable and suitable. This can meet
the requirement of the market in terms of productivity and profitability.
The procurement management has five type of model, which are discussed below:
 Local: In this type of model, the decision making an the control is done locally ans are
autonomous in nature. The procurement activity is also done locally.
 Central: In this type of model, basically the procurement activity and the decision
activity are centralized. The authority do not delegate these powers.
 Network: In this model, decision making power is not independent, but it remain in
control in some structure or as per various nodes of the network (Lysons, 2016).
 Federal: In this model, some of the categories of local level are centrally controlled. The
autonomy at the local level is been determined either by using some mutual agreement or
mandates.
 Centrally-led network: In this approach or model, all the activities of procurement are
coordinated in all the local units. The centre operates it as the the primary.
In context to Tesco, for procurement management, the company uses federal model for
managing the project and procurement. They generally use it, so that the authorities are
controlled by the central nods. The company usually do some mutual agreement, so that the
autonomy can be given till the local level.
There are variety of benefits of global sourcing for Tesco company, as it provides them a
better production capacity. It enables to produce huge number of products in short span of time.
It helps in doing multiple production at different locations. It is beneficial as the company

receives high quality products by manufacturing are recurring the raw material from different
countries (Nath, 2019). This gives them a guarantee of receiving good and quality products
which involves less cost of production and can give opportunity to take mover advantage of
getting high profits. Global sourcing gives opportunity to adopt new products before any
competitor can launch it or bring it in the market. By this, Tesco can bring something innovative
product by procuring from others. This can help in giving a competitive advantage as thy can
bring unique in the market, thus it increase their chance of profits (Donzé, 2016).
By using global resourcing, Tesco gets advantage to add and adopt new skills and
development for the benefit of their employees and companies, which is not presented before in
their local market.
To propose a global procurement strategy which can lead to procurement excellence and
improve the company’s competitive advantage.
Strategy leads to procurement excellence
It is necessary to use global procurement strategy in effective way so as to achieve
excellence in global procurement. There are various ways which can be used by Tesco. So, as to
bring excellence in their procurement management, which are discussed below:
 They need to define their global sourcing strategies and procurement strategy clearly, and
use digital strategies, so as to use it to meet with their future targets (Nicoletti, 2020).
 By emphasising more and engaging more at the strategic and senior level, it will ensure
optimised procurement. It helps in building the credibility for the updated and improvised
procurement management, thus it leads bring excellence in the procurement, by
encouraging new approaches.
 Plan for skills development programme for Tesco can help in developing their employees
skills and it improves the strategic sourcing and build good relation between Tesco and
the supplier management.
 Using high and advanced technology, for procurement can improve it and helps in
bringing excellence in Tesco's procurement and global sourcing strategy, by increasing
the efficiency in their performance and maximizes their value.
 By determining cost, time and continuously tracking, measuring the reports can give
timely updates, thus it can help in tracking the overall procurement and give updates. By

those updates it become easy to analyse and perform well. This can help in achieving
excellence in the procurement (Pheng, 2018).
Improving competitive advantage of Tesco using global procurement strategies
 They need to put their prices slightly high, as they offer high quality products to customer
so it is acceptable to charge slightly high prices. This can increase the image of the brand
din the competitive market and attracts more customer, as they may also found something
unique and better than their competitors (Raff, 2016).
 Adopting and using new technology, can help in increasing the efficiency in the
productivity, through this Tesco can design and develop new innovative products. So, as
to attract more customer, in the market. If customer find it worthy and innovative and
worthy, they will be ready to avail it and show interest. This can increase the sales and
they find a great reason and prefer to shop from the company, then their competitors
(Torres-Ruiz and Ravindran, 2018).
 It is necessary for Tesco to develop more and deeper relationship with the customer. So
that, they can avail the product of the company. They must give them discount, referral
codes, and many other benefits to them, so that customer can get quality products at low
cost or at discounted rate. This can build the trust of customer and hence it generates
repeated sales from the same company (Wang, 2017).
 Customers generally prefer to buy products from company, which has good work
efficiency. Tesco needs to identity and analyse their working efficiency, as well as treat
their employees in well manner, so that they can attract best talent in their company. This
can help to provide great and expected services to their customer than their competitors.
This can improve their brands image and it increase the value of brand in the competitive
market (Wieland and et.al., 2020).
 Tesco need to create and generate their own data and content for the marketing of their
product globally. For that, they needs to follow and abide by the rules and regulations of
the company. Tesco neds to focus on improving and taking their packaging of products in
consideration. So, that it can give exact detail easily to the consumer, so that it can attract
towards their product rather than the company's competitors (Signor and et. al., 2020).
 Tesco needs to gather and compile their market analysis data, so as to reach toward the
conclusion and produce it as per the requirement and demand of the customer. To meet

with their demands and gain competitive advantage by developing them as per the
customer requirement (Ogunsanya, 2019).
 The chosen company Tesco, needs to make their sites more flexible, user friendly and
easily accessible. So that, it can help in gaining more public insights. They need to create
attractive and unique appearance of their sites, so that it can compete with their rivalry
and gain more attraction them them , so as to target and gain more audience then their
competitor.
 Tesco need to keep focus on the activities, strategies and performance of their competitor,
sop that they can track it. Through this they can analyse, plan and develop some more
better strategies then them, to stand in the market and survive in the competitive
environment.
 The company can even improve change their locations of operation and select it by
doing a good and proper analysis before selecting the location. They need to select
location, which can attract more market attraction and serve to more people.
 Tesco needs to improve their schemes of their offers of club cards, vouchers. So that it
can serve more and better quality services of company to the customer. This can increase
their competitive advantage,and develop good relation with the customer (Ashenbaum,
2020).
 The company needs to use digital marketing tools in effective and efficient manner, to
promote their products and websites. It can bring attention of consumers more than their
competitive companies. This can increase the customer base and make them capable to
fight in the competitive environment.
 There are various strategies of competitive advantages which needs to be used time time
by the company. Also needs to be modified as per the requirement. This can help in
developing more reputation in the firm. Thus improves the competitive advantages.
By all this it can be analysed that if Tesco, using all these strategies of global sourcing, in
an effective manner it can help in increasing their performance and brings excellence in their
procurement and they can perform their operations in a flexible and better manner. The
company, can improve their competitive advantage by promoting them using effective digital
marketing tools, they even needs to develop their and plan different strategies which can
influence their customer. They also develop their interest in their product by making those

product by analysing their needs and demand and serve them accordingly. The uniqueness of
product can draw attention of the people and prefer to buy products of their companies, rather
than their rivalry. By all this, Tesco can improve their competitive advantages and can maximize
their profits and bring efficiency in their work (Sharma and et. al., 2019).
CONCLUSION
It is been concluded that global sourcing can help global sourcing can help company to
procure raw material from outside, from some other countries which has low cost of production.
This can be beneficial, as it reduces the cost of production of company, thus increases the profit
margins. There are various strategies and theory of global sourcing, which found beneficial for
company to perform their work. They can help in solving the company's problem related to
procurement and project risk at these both factor are considered as important for sourcing the
product.