Operation and Service Management: A Case Study of Tesco's Practices

This report provides a comprehensive analysis of Tesco's operation and service management practices. It begins by identifying supply chain management as a key operational practice within Tesco, detailing its evolution and strategic importance. The report then evaluates how this practice influence...Read More

BM563 Operation and
Service Management

CONTENTS
INTRODUCTION......................................................................................................................1
TASK – 1...................................................................................................................................1
Determining one operation management practice within Tesco............................................1
TASK – 2...................................................................................................................................3
Evaluating the ways this operation management practice influences the organisation in
relation with the efficiency.....................................................................................................3
TASK – 3...................................................................................................................................4
Appraising how technology can be entrenched in this process or analysing how this has
already been attained..............................................................................................................4
TASK – 4...................................................................................................................................5
Supporting functions that are linked to this operation management practice and analysing
the manners in which they assist with making sure the success of the organization.............5
CONCLUSION..........................................................................................................................6
REFERENCES...........................................................................................................................7

INTRODUCTION
For each and every business corporation, operation and service management are very
significant for maintaining the effectiveness of the overall performance of the company is a
desired way. The operations encompass all the activities required for creating products and
services that fulfils the needs of the clients. thus, it can be said that operation management is
an important functional area which plays an indispensable role in identifying the manners in
which the needs of the clients are being satisfied (Hill and Hill, 2019). Considering this, the
main aim of the current research report is to identify one operation management practice of
the selected organization which is Tesco, one of the leading supermarket chains of UK. The
report will analyse the impact of operational practice on the efficiency of the firm and will
also throw some focus on technology that is being embedded in this process. the final section
of the report will include discussion in regards with the supporting function which is being
connected with the operation management practice.
TASK – 1
Determining one operation management practice within Tesco
Articulating in relation with the operation management, it is referred as the function
which is majorly concerned with planning, organizing as well as supervising in regards with
production, manufacturing and the provision of services. The operation management is
mainly focused towards delivery and making sure that the firm efficaciously turns their inputs
into outputs in an effective way. The inputs are nothing but materials, equipment along with
the technologies to human asset (Ali and Haseeb, 2019). Furthermore, the operation
management of the firm is responsible for the evolution of the company by controlling along
with management of varied transactions and actions concerning to packaging, shipping,
management of employees, finance and transportation. The pre-determined objectives and
goals of the company are being achieved only when all these activities effectively function
and coordinate with each other.
Supply chain management
For the purpose of the current research purpose, supply chain management is being
chosen as an important operation management practice within Tesco. The process in which
the products and services moves to become a useful product to the ultimate user is being
defined as supply chain. The supply chain is very dynamic due to the fact that it consists of
relentless of movement of goods, data along with the funds in varied processes. Supply chain
1

management in the context of Tesco is referred as the chain of events which flows right from
obtaining the order from the client, commencing the production from the raw-materials,
storing & distributing and finally, supplying to the site of the client. The supply chain of the
Tesco has evolved right from the year 1980s to efficient grocery logistics (Child, 2020).
Moreover, the company has also undertook business transformation which readjust the
structure of the organisation to its supply chain strategy. For example, they have aligned the
head office with the store operations, they have matched the supply chain management with
particular needs of the store and have also reengineered the middle level management for
serving the regional clients in an efficient manner.
Other than this, Tesco has also introduced lean thinking principles and score carding
for reducing the costs along with mitigating the supply chain risks. Lean manufacturing is
being referred as the production process which is based on the principle of maximizing the
production level of the firm and concurrently minimizing the waste within a manufacturing
operation. Besides, the learn thinking considers waste as anything which cannot add value
that the clients are willing to pay for the product. The main rationale of Tesco behind
introducing these changes was to make improvement in the internal as well as external
coordination and to achieve efficiency in production. In addition to this, considering the
globalization and internationalization of supply chains, Tesco coordinates their supply chain
by seeking help from vertical integration and managing complexities. Other than this, the
supply chain management approaches being adopted by the company have resulted in higher
control of their supply chains (Mitchell, 2015). With the expansion of the Tesco’s sourcing
and overseas business, they are compelled to re-organize their international along with
domestic supply chains by considering the altering demand of the market and complexities of
logistics. Further, for monitoring the supply chain performance, the retailer also makes use of
steering wheel approach. This helped them in coordinate with their suppliers and supported in
maintaining high quality standards. The steering wheel approach analyse the four aspects of
the suppliers of the company that is firstly peroneal, operational efficient, finance and
satisfaction of the customer. Through utilization of this method, Tesco is not in a position to
better control their international supply chains and is in a position to generate value for the
client high standards of quality.
2

TASK – 2
Evaluating the ways this operation management practice influences the organisation in
relation with the efficiency
The supply chain of Tesco is being composed of unified management of input,
financial movement, communication and information technology from the initial stages of
raw materials abstraction to the final consumer in the chain. The company has adopted supply
chain management system in its business operation every effectively. They have even carried
out survey of more than six thousand suppliers for seeking the feedback in relation with
association and more than ninety percent of their suppliers were of the view that the company
make payments on time, they are professional and are committed for meeting the needs of the
clients (Donati, 2021). additionally, most of the suppliers are quite willing to supply products
and services to Tesco and thus, they will not be going to encounter any shortage in products
for serving the clients in a better manner. Certainly, Tesco has indirectly maintained a cordial
association with the suppliers and this is a good symbol that the firm is operating its business
smoothly with compliance of supply chain management system. Maintaining cordial
relationship with thousands of suppliers is not an easy task and this is being done by Tesco
effectively from years. As such, this has allowed the firm to order products from the suppliers
at the lowest because of the bulk order and good association towards their suppliers. This has
indirectly helped the firm the attaining their overall objectives of minimizing the cost and
maximizing the profits.
Moving further, there are different types of products which are available at Tesco
which have expiry date like drinks, food and other perishable items and it is not possible to
note down all the expiry dates of each and every individual product. This issue has been
resolved through executing supply chain management (Wood and McCarthy, 2014). Tesco
has implemented this system for overcoming such problems as it supports the firm integrating
stock system with the suppliers so that the suppliers are aware about the exact expiry data of
the product which they have supplied correspondingly and thus, take prompt action. It
extemporizes the efficiency level of Tesco in serving the customers in a better manner.
Underpinning the discussion further, the supply chain has contributed greatly to the success
of the outlet chain. It has offered different advantages to Tesco. Firstly, it has allowed the
retailer to efficiently maintain as well as determined the requirements of the clients and
therefore, helped in augmenting their value. Secondly, the growth of information technology
along with communication, for example interent selling, payments and online ordering has
3

allowed high supply chain collaboration activities amid the supply chain tradition partners in
a marketing model. It is being featured by varied philosophy that by failing in carrying out
something, the rivalries of the company will certainly to the same to beat the firm in the
market and therefore, it is important to take each and every prospect that comes in the path
(Mukerjee, 2013). Other than this, because of the increase in the presence of technologies in
relation with the supply chain management along with the products in the markets, Tesco is
now in a position to obtain large range of products such as point of sales, distribution systems
and warehouse control system in the radio frequency identification technologies in the
outlets.
TASK – 3
Appraising how technology can be entrenched in this process or analysing how this has
already been attained
There are different practices being adopted by Tesco in their supply chain
management operational practices. Effective supply chain management can be regarded as
one of the factors which has supported the company in emerging as a leader in the market of
retailing industry in the United Kingdom. There are different technologies being adopted by
Tesco in the supply chain management operations and the very first among them is RFID
(Radio Frequency Identification) technology for making the supply chain of the retailer more
efficient. It is being defined as a technology that utilized radio waves for passively
determining the tagged item or product (Wilson, 2016). This technology is being utilized in
different commercial as well as industrial applications from tracking the products along a
supply chain for keeping the record of products checked out of a library. Tesco take care of
their products through seeking help from RFID technology and thus, their suppliers are at
ease. They also make use of radio bar codes which ash helped the company in not just
promoting quick supply chain however it has also prevented the products from being stolen.
Other than this, any products which are not yet paid are being determined at the exit scanners.
Even the suppliers of Tesco can also get the data of the products being required from the
stores correctly which synchronize its orders and on time deliveries.
The other technology being utilized by Tesco in their supply chain management is
lean manufacturing. The main highlight of this technology is removing wastage and adding
value to each of its level of practices and operations. with this technology in place, Tesco is
been able to generate value for their valuable clients which helped them in earning life time
loyalty (Walley, 2017). Through seeking help from the lean manufacturing, the firm many a
4

times found a manner of reducing the 3Ms that is Muda, Mura and Muri. Waste is known as
muda in Japan which is the one being focused by Tesco. Because of the lean thinking and
manufacturing, the company was able to have different innovations towards its supply chain
operations like primary distribution, sustained replacement on the basis of checkout counters,
cross dock distribution and utilization of individual vehicle for serving different stores. Due
to this, TESCO was able to make improvement in relation with enhanced relationship with
the clients (CRM) as well as the suppliers. Even they were in a position to make use of their
transportation asset efficiently and decreased the inventory costs (Thompson and et.al.,
2018). The lead time along with replenishment time in store was also reduced. even an
important technology known as JIT (Just in Time) was also executed by the company with
the supply chain management operation for letting its suppliers and retailers know about the
demand of the clients. it helped the firm in receiving the order from the customers, producing
the product and finally, distributing the same. JIT in Tesco has popularly been known as
offering what is being demanded by the clients at the right time and place.
TASK – 4
Supporting functions that are linked to this operation management practice and analysing the
manners in which they assist with making sure the success of the organization
There are different supporting functions which can be linked with the supply chain
management operational practice at Tesco. The very first is the marketing function. The
supply chain management at Tesco traditionally has emphasize on sourcing elements,
suppliers and other raw-materials along with distribution. Marketing significantly plays a
crucial role in this process (Mitchell, 2015). The marketing department of the company helps
in balancing the procurement by offering necessary demand data and helps in developing
cordial association with the customers which in turn supports in making improvement in the
efficiency of the supply chain operations and activities. other than this, the marketing
department of Tesco also offers data in regards with the products and their availability, order
tracking, marketing campaigns, prices, incentives and data related to sales. All this helps in
augmenting the comprehension of the demand in the market along with different marketing
initiatives which in turn enhances the planning related to supply chain. Additionally, by
emphasizing attention of the partner on the needs of the clients, marketing department allows
the supply hain to strength the competitive position of Tesco and assist in successful
evolution of the novel items (Rodrigue, Comtois and Slack, 2017).
5

Secondly, the finance department of Tesco can also be linked with its supply chain
management operational practice. Supply chain management focuses on eliminating the
waste in the pipeline. However, considerable cost reduction can be attained only through
integration of finance function and supply chain management practice. Finance department
plays a very important role in this operational management practice of Tesco. It has the
capability to input and upload the production cost per unit in contradiction of every product
in each production unit and bind it to the total profit and loss. All this helps the planners to
look at the influence of their forward-looking alterations on margins in real time (Zokaei,
Hines and Peter, 2017). With this, Tesco was able to focus on the cost reduction and
maximize their contribution through optimizing the utilization of the present resources and
production facilities or other premeditated investments. In addition to this, finance function
also helps in working capital optimization, inventory management and asset management in
the supply chain operations of Tesco. For carrying out different activities in the supply chain
management such as inventory, capacity planning, production, sourcing of raw-materials. All
these things require working capital and financial budget which is being passed out by the
finance department of the company. Thus, it can be said that without suitable budget and
working capital, the supply chain operational practices of the retailer will not be carried out
efficiently. Thus, overall, it can be said that individually any operational management
practice can not run smoothly within an organization. there is a requirement of collaboration
and linkage of each and every department for effective and smooth flow of operations and
activities (Prange and Pinho, 2017). Integration of both marketing and finance function with
the supply chain management practices of Tesco helps in attaining the goals of maximization
of profit and minimization of cost along with waste of resources.
CONCLUSION
From the above analysis and discussion, it can be concluded that operation and
services management is regarded as an important function in each and every organization. it
has been originated that the firms are required to comprehend different strategies and
approaches related to operation management for effective functioning. When effective
planning of each and every activity is being done then final objectives of the company can be
accomplished effectively in respect with the planned projects. Furthermore, the report has
also identified the manners in which the support functions are linked to the operation
management practices and helps in making sure the success of the business corporation.
6

REFERENCES
Books and journals
Ali, A. and Haseeb, M., 2019. Radio frequency identification (RFID) technology as a
strategic tool towards higher performance of supply chain operations in textile and
apparel industry of Malaysia. Uncertain Supply Chain Management. 7(2). pp.215-
226.
Child, P., 2020. Taking Tesco global. Mckinsey Quarterly. 1(1). pp.137-138.
Hill, A. and Hill, T., 2019. Essential operations management. London: Palgrave Macmillan.
Mitchell, A., 2015. With chains and loops, Tesco is surreptitiously reinventing retail’,
Marketing Week. 17(3). pp.33-39.
Mitchell, A., 2015. With chains and loops, Tesco is surreptitiously reinventing retail’,
Marketing Week. 17(3). pp.33-39.
Mukerjee, K., 2013. Strategizing for CRM to Leverage its Benefits. Business Strategy Series.
14(4). pp.118-122.
Prange, C. and Pinho, J.C., 2017. How personal and organizational drivers impact on SME
international performance: The mediating role of organizational innovation.
International Business Review. 26(6). pp.1114-1123.
Rodrigue, J.P., Comtois, C. and Slack, A.B., 2017. Cross-docking Distribution Centre. 4thed.
New York: Routledge.
Thompson, C., Clarke, G., Clarke, M. and Stillwell, J., 2018. Modelling the future
opportunities for deep discount food retailing in the UK. The International Review
of Retail, Distribution and Consumer Research. 22(2). pp.143-170.
Walley, P., 2017. Introduction to operations management’, in The Open University (2017)
B207 Readings Block 1: Big ideas in Organisations, Milton Keynes, The Open
University.
Wilson, N., 2016. Supply Chain Management: a case study of a dedicated supply chain for
bananas in the UK grocery market. Supply Chain Management: a case study. 1(2).
pp.28-35.
Wood, S. and McCarthy, D., 2014. The UK food retail ‘race for space’ and market saturation:
A contemporary review. The International Review of Retail, Distribution and
Consumer Research. 24(2). pp.121-144.
7

Zokaei, K., Hines, and Peter., 2017. Achieving Consumer Focus in Supply Chain.
International Journal of Physical Distribution & Logistics Management. 37(3).
pp.223-247.
8

Online references
Donati, M., 2021. Tesco's supply chain helps it 'outperform' the market. [Online]. Available
through: <https://www.cips.org/supply-management/news/2021/october/tescos-supply-
chain-helps-it-outperform-the-market/>. [Accessed on 26thMay 2022].
9