Case Study: Tesco PLC - Logistics and Supply Chain Analysis

This case study analyzes Tesco PLC, a leading UK food retailer, focusing on its logistics operations. It details the key processes, including inventory handling, procurement, warehousing, transportation, and distribution, highlighting the composite distribution system. The study also identifies major logistics challenges, such as transportation costs, store size constraints, vehicle emissions, supplier relationships, and the need for a just-in-time system. Additionally, it addresses challenges related to consumer behavior and the evolving product delivery systems. The analysis underscores the importance of efficient supply chain management for Tesco's continued success and offers insights into potential solutions for these challenges.

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TESCO PLC
(Case study)
This case study is about the Tesco food retailer with a sales turnover of more than 567.5 billion.
There describe the key logistic processes at Tesco & the main logistics challenges in running the
Tesco operation. And there describe earlier how Tesco was performed faces issues & the current
situation of the Tesco food retailer.
Tesco is the UK's biggest food retailer offering a variety of services for food and nonfood products to
include insurance, entertainment, electrical goods and many more. It employs over 440,000 people around
the world with over 280,000 in the UK. It has over 2,000 stores in the UK and a growing number of stores
abroad in countries such as Thailand, China, Hungary and the United States.
Tesco is the biggest private sector employer in the UK and offers a competitive package of pay
and benefits for all jobs, whether as assistants or managers in stores and depots. More specialized
roles such as finance and HR are based at its head offices based in Hertfordshire.

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1. Describe the key Logistic processes at Tesco
The logistics are the function of supply chain management consists of the tasks involved in
moving & positioning inventory throughout the supply chain. And they are mentioned logistics is
about material & about information flow. In the logistics there are five functions in the process.
They are inventory handling / material handling, procurement, warehousing / storing,
transportation & distribution.
According to the inventory handling, there is a huge product range & it is impossible for the
individual store to recorder across the whole range (store based ordering). Instead, sales of each
product line are trashed continuously through the till by means of electronic points of sales
systems. As a customer’s purchases are scanned through the bar code trader in the till, the sale is
automatically recorded for each unit.
Procurement currently stands at 65000 stock keeping units depending on the size of the stores as
Tesco broadens its presence in the ‘non food’ market for electrical good, stationary, clothing &
the like this massive range is supported by 3000 suppliers who are expected to provide service
levels (correct time & quantities) of at least 98.5 percent by delivering to Tesco within a half
hour time ‘windows’. Volumes are equally impressive. In a year; some 2.5 billion cases of
product are shipped from suppliers to the stores. Cumulative sales are updated every four hours
on Tesco information exchange. This a system based on internet protocol that allows Tesco & its
suppliers to communicate trading information. Based on the cumulative sales, Tesco places
orders with its suppliers by means of electronic data interchange.
The warehouse building comprises 25000 square meters divided into three temperature zones
from(25 c),2 c(chilled)and 12 c 9 semi ambient).Each distribution centre secures a group of
between 100 and 140 retail stores. Currently stands at 65000 stock keeping units depending on
the sites of the store as Tesco broadens its presence in the ‘non food’ market for electrical goods,
stationary, clothing and etc.
According to the transportation, delivery vehicles for composite depots can use insulated.
Trailers divided into chambers by means of movable bulkheads so they can operate different
temperatures. Deliveries are made as agreed, scheduled times. Ambient goods such as cans &
clothing are delivered through a separate grocery distribution network which relies on a stocked

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environment where orders are pitched by stores. This operation is complemented by a
strategically located tracking station, which operates a pitch to zero operation for fast moving
grocery on merchandise units that can be placed directly on the method of transporting goods
from supplier through to the stores.
In the distribution in the early reform for supermarket operation was to have suppliers deliver to
distribution centre rather than to every store. During the 1980 s, distribution to retail store was
handled by 26 depots. These operated on a single temperature basis and were small and relatively
inefficient. Delivery volumes to each store were also relatively low and it was not economic to
deliver to all stores each day. Goods that required temperature controlled environments had to be
carried on separate vehicles. Each product group had different ordering systems. The net worth
of depots simply could not handle the growth in volume& the increasingly high standards of
temperature control. Then Tesco implemented the ‘composite’ distribution system & under this
many small depots with limited temperature control facilities were placed by composite
distribution centers, which can handle many products sat several temperature ranges. The
opportunity is to provide a cost effective daily delivery service to all stores.

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1. There are main Logistic challenges in running the Tesco
operation
The company faces following challenges, such as,
 Transportation
In a year some2.5billioncases of products are shipped from suppliers to the stores. For
that the transportation cost is very high. So it also a big challenge for running in Tesco
food retailer operation.
 size of the stores
The currently stands at 65000 stock keeping units depending the size of the stores in the
Tesco; It is a big challenge for keeping the products. So have to expand the stores
because rapidly the product range held by stores has growth.
 Vehicle uses for distribution to stores
It grantees a major proportion of Tesco’s indirect carbon footprint. It is a big challenge
for Tesco & it must reduce its environmental impact at the same time. If the company
fails in controlling the emission of pollutants, the growth of Tesco will be destroyed. And
also the vehicles using for transportation the natural gases.
 Transportation cost
To overcome Biodiesel or even electric trucks can help reduce fuel costs, and they are
becoming more affordable every year.
 Supplier relationship
The supplier relationship also big challenge for Tesco food retailers. To overcome this
challenge to build and maintain amount beneficial business relationship, & the foundation
of that relationship is open communication. And the Tesco can take that open
communication to understand the supplier’s goals, business & it will help to strong
relationship to allow both parties to succeed.
 Lacking the just in time system
In their management process Tesco is lacking the IIP system .The Tesco has maintain the
huge inventory & it hidden there problems such as break down products, delay products
etc. It is a big challenge for the Tesco & over this problem law inventory& it will be
helps to identity the problems for success their operation.

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 Challenging the consuming buying behavior.
Due to that the retailer companies’ demand can be increasing. So the increasing demand
is a huge challenge for the Tesco food retailer to succeed their operation.
 Product delivery system
The Tesco food retailers deliver the products through the door step concept for their
customers. If the other companies delivery their products through the online system, It
can be a huge challenge for the Tesco because they delivering the doorstep from the
orders of their customers. The Tesco will change their delivery system via the online /
internet system. It will be a big challenge to them.