Analyzing Tesco's Operations: Supply Chain, Capacity & Quality Mgmt

This report provides an analysis of Tesco's operations management, focusing on key areas such as supply chain, capacity, and inventory management, along with quality management methods. It discusses the evolution of Tesco's supply chain, highlighting supplier relationships and the impact of competition from companies like Aldi and Walmart. The report also examines Tesco's capacity management strategies, including the closure of smaller stores and the opening of larger supermarkets, as well as its IT capabilities. Furthermore, it assesses Tesco's inventory management practices, pointing out issues related to inventory accuracy and shrinkage, while also acknowledging the company's efforts to reduce costs and improve customer service. Finally, the report explores the quality management methods employed by Tesco, such as customer-focused strategies, leadership, people engagement, process methods, and continuous improvement, to ensure consistent product quality.

Management of operations

Table of Contents
INTRODUCTION...........................................................................................................................3
Supply chain management:..........................................................................................................3
Capacity management:.................................................................................................................5
Inventory management:...............................................................................................................5
Quality management methods......................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Operations management means applying such business practices to reach towards the
efficiency in terms of using the resources of the company. It involves the management of
machinery, labour, materials, technology etc so that good quality of products and services can be
made which will give advantage to the company. Tesco is a multinational grocery company
having its headquarters in England. It deals in food, clothing, financial services. Telecoms etc. it
is also listed on London stock exchange. This study will discuss about the supply chain and
capacity and inventory management. Further, discussed operations improvement and quality.
Supply chain management:
There is an evolution in the Tesco supply chain management.
According to the views of the Evans and Mason (2018) suppliers have all the control and
company have very little or no control. Operation checkout hitting, the company continuously.
Company is very much dependent on their local market which is the UK market. Company have
huge bad debts from the financial service companies which include credit cards and insurance
companies. Company is not able to recover money from that, its credit card business is not
giving the profits which is expected by the company and insurance company are also not able to
sell policies which is predicted by the company.
It is argued by the Heller (2017) that suppliers are very loyal with the company. Suppliers deliver
the products to the Tesco's distribution centres and good quality of products are supplied to the
company by the supplier. Tesco is the very popular and trustable supermarket chain. It is the
valuable brand and its products sold out just with tag of the company which means that it is a
very strong brand. Its financial sector is delivering good profits like they are providing loans to
many business or household sectors and generating good revenue from that in terms of interest
from the loans.
SPARKS (2018) stated that the company is having online presence as well. On which they do
selling and marketing activities. Company is even selling through its own website and other
online platforms , through which they are able to generating good revenue and marketing is done
by the company with help of company's website and social media. Social media is cheap and
attract huge customer base.

While Pham, Darabi and Wilmot said that niche markets of Tesco are targeted by other big
companies like Aldi. Which gives the downfall to the company. Company's profits and revenue
also got shaked. Company is also getting tough competition from the company like Walmart
which are resulting in lowering the market share of the company.
As per the views of Fernie and Sparks (2018) company is launching stores in the developing
countries as company believe that the markets in the developing countries are the growing
markets like in the country China or India so, company can capture good market share in that
market. Company has done the partnerships with local company of the country so that they can
get competitive advantage and can expand their business easily. They know that if they will do
partnership with the local business then they will get relaxation from the government of that
country because they will get the benefit of the advantages which local business get over foreign
companies. The product portfolio of the company will become strong as the company will get the
support of the local company so Tesco will come to know about the taste and preferences of the
local company and will manufacture the product according to that so as a result increase the
product portfolio.
The Evans and Mason (2018) critically discussed that Tesco had go through the difficult tax
implications which affect the financial statement of the company. Just by doing partnership with
the local business Tesco cannot get relaxation form all the rules and regulations which is
implemented on the foreign company and have compulsory to follow that. It is not easy that
customer will accept all the new products which are launched by the company. There are
consumers who buy only that products which is manufactured by the local brands only, and they
never accept products from the foreign brands.
Heller (2017) said that company is excellent in making such cost effective strategies which will
help the company in gaining more customers and helps in becoming the cost leader. It has its
presence internationally which help the company in getting loyal customer. Because customer
will recognize the company from its name as it has presence globally.
On the contrary Fernie and Sparks (2018) said that the company is bearing huge logistic costs.
Goodwill loss also faced by the company due to the product recalls. Company has adopted the
cost effective strategies as per that strategy, company is selling goods at the low price as
compare to their rival companies but company is cutting their costs in doing that which is
lowering the overall revenue of the organization.

Capacity management:
Capacity management involves the planning. Its objective is to balance the costs which has been
against the resources which are required. And also balancing the supply and demand.
As per the Lin and Peng (2018) with increase in the competition, companies should have the
capacity to meet the competition which is there in the market. Tesco is very efficient in handling
the risk and also solved the complexity by making relevant policies or strategies on time. In the
corporate strategy Tesco shut down all the small grocery stores because company was incurring
unnecessary expenses from that, expenses include rent, maintenance, security etc and had opened
the big supermarkets which is far from the city which give certain advantages to the company
like parking facility, less traffic while reaching towards stores etc.
Martínez-Ruiz and et.al. (2016) stated that although Tesco have strategy to fight against the
competition but Tesco regularly going through innovation which is good but incur huge costs.
Company have to hire experts for that and which are not available at less cost. Experts have
expert knowledge and if company hires them then they have to pay good salary to them.
According to the Lin and Peng (2018) view Tesco have the capacity to fulfil all the IT
requirements to meet all the future needs. They have experts who can handle all the data of the
company wisely and also do effective planning of how to fulfil the future loads.
Martínez-Ruiz and et.al. (2016) said that managing IT is not the easy process. Capacity
management is require in the cloud services. So company should have more advance tools to
fulfil the future needs.
Inventory management:
Rexhaj (2019) analysed that the inventory management of the company is not proper. Company
should do programs like inventory reset and also there should should be no compromisation on
the customer service. The inventory accuracy of the company is not upto the mark. Issues related
to shrinkage is faced by the company and big losses are identifying by tesco.
ALBAR (2016) critically discussed that the management of the company is very dedicated and
have made teams which fulfil all the inventory requirements of the company. Their operational
accuracy reflected their accuracy control. Such inventory management is done by the company
which reduce the costs and also giving better customer service.
As Disney and et.al. (2016) said inventory management is done by such a manner that it prevents
loss, theft or returns. Company have experts which have knowledge as well as skill for the

inventory management. Their staff have the stock of required raw materials all the time so that
company never run out of stock.
Rexhaj (2019) argue that tesco do not have such expertise in the inventory management which is
require. Experts require good salary and company is not willing to pay this much for hiring the
experts. If company face issue of out of stock then it will affect the profit and revenue of the
company which can be huge also. So rather loosing the profits, company should hire experts who
can help them in managing the inventory in effective and efficient manner.
ALBAR (2016) said that managing inventory will help the business to go smoothly and tesco do
not have to bring any hurdle in the business opertaions so they manage it properly. Company is
suppying their products on time eventually keeping their customers happy because customer is
the god for every company so its happiness should be taken care by the company because they
are paying to the company which helping the company in increasing profits.
As per the view of Disney and et.al. (2016) tesco is making inventory mistakes. They are not
planning inventory management in a proper way. They are not able to balance the material
supply and are not doing production on time to meet the demnad of the customer. Demand and
supply of the products should matched because the stock out effects are very negative. This can
effect the growth of the company and evetually affect the profits negatively.
Quality management methods
Quality management: It refers to an act by which the company can ensure that the quality of the
product which was offered by them should be consistent. By adopting quality management the
companies tries to achieve a desired level of quality product for its customers.
Methods:
Since, Tesco is that company who aims to provide the best products to its customers in terms of
its value and Tesco always tries that the customers should not have any doubt in regard to the
offered product and for doing this it adopts many methods like:
Customer focussed strategy:
As the Coughlin and Posencheg (2019) said that it is one of the main and common
strategy used by Tesco in quality improvement and management of its products. By doing the
market research, or understanding the customer needs, Tesco always tries to make changes and

improvise the quality of its products so that it can more satisfy the customer's needs and achieve
the stage of zero defect.
Leadership:
As per the Dixon-Woods and Martin (2016), leadership also plays an important role in
quality improvement and good management of the products which Tesco also use. Under this
method, by using the leadership skills, the internal management and the employees working
under Tesco are motivated and become more aware and conscious about their actual potential
and capabilities and this will finally lead the achievement of company's goal which is again
offering the quality and best products to its customers.
People engagement:
As the Radej, Drnovšek, and Begeš (2017) said, that people engagement will leads to
create high motivation which is again very beneficial for the production of quality products.
Under this the Tesco, empowers the employees by providing them best training and learning
about the best skills for performing the work, and also when employees will be involved and
when freedom is given to them to share their views about the product manufacturing and
improvement then employees fell motivated, and they start contributing more towards the
company which will again leads to the quality improvement of the products of Tesco.
Process method:
According to the Martin (2016), process method is always beneficial for quality
improvement and its management. Tesco always use this method and try to select that best
process which will increase the efficiency and leads to effective utilization of resources so that,
the cost will be reduced, wastage will be avoided and quality will be improved.
Continuous improvement:
As per the Radej (2017), continuous improvements is that technique which was adopted
by Tesco to have a continuous check on the quality of the products and methods of production so
that this will leads to the production of more improvised and best quality products.
CONCLUSION
Through this report it can be concluded that supply chain management should be proper
because it shows the efficiency of the company that how the company is having the supplying
power. Inventory management of Tesco is good but not upto the mark according to some authors

and recommendations are given to correct that. It is also understood that capacity management
should always be followed by the company which ensures that maximum output shall always be
achieved by putting the maximum potential. But at the same time, it should also be considered
that production of goods is not only enough for any company its quality and its continuous
improvement is also equally important so that consistency can be achieved.

REFERENCES
Books and journals
ALBAR, D., 2016. INVENTORY MANAGEMENT SPARE PARTS WITH MIN-MAX METHOD
(studi kasus di pt. tesco indomaritim) (Doctoral dissertation, Universitas Mecu Buana
Jakarta).
Coughlin, K. and Posencheg, M.A., 2019. Quality improvement methods–Part II. Journal of
Perinatology.39(7). pp.1000-1007.
Disney, S.M. and et.al., 2016. Inventory management for stochastic lead times with order
crossovers. European Journal of Operational Research, 248(2), pp.473-486.
Dixon-Woods, M. and Martin, G.P., 2016. Does quality improvement improve quality?. Future
Hospital Journal.3(3). p.191.
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Heller, F., 2017. Technological innovation applied to walmart and tesco’s supply
chain (Doctoral dissertation).
Lin, C. and Peng, J., 2018. Analysis and Solution of the Problems in the Distribution of Suning
Tesco. Transportation Management, 1(1).
Martínez-Ruiz, M.P. and et.al., 2016. Private labels at the service of retailers' image and
competitive positioning: The case of Tesco. In Handbook of research on strategic
retailing of private label products in a recovering economy (pp. 104-125). IGI Global.
Pham, T.S.H., Darabi, F. and Wilmot, N., International Supply Chain Management Case Study.
Radej, B., Drnovšek, J. and Begeš, G., 2017. An overview and evaluation of quality-
improvement methods from the manufacturing and supply-chain perspective. Advances
in Production Engineering & Management.12(4). pp.388-400.
Rexhaj, B., 2019. Perishable Inventory Management Solutions and Challenges of Kosovo FFRs:
Avoiding Product Expiration at Retails Shelves.
SPARKS, L., 2018. Tesco’s chain management supply 07. Logistics and Retail Management:
Emerging Issues and New Challenges in the Retail Supply Chain, p.183.
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