University Assignment: Tesco's Supply Chain Challenges and Solutions

This report provides a comprehensive analysis of Tesco's supply chain management, focusing on its strategies, challenges, and potential solutions. It begins with an overview of Tesco's history and supply chain strategy, including an examination of its strengths and weaknesses. The report then delves into the external and internal environmental challenges faced by Tesco, utilizing PESTLE and SWOT analyses to identify key issues. External challenges include political, economic, social, technological, legal, and environmental factors, while internal challenges focus on strengths and weaknesses within the company. The report also discusses strategies to reduce the cons of the supply chain management and concludes with recommendations for Tesco to improve its supply chain performance and gain a competitive advantage. The analysis covers Tesco's operations in the United Kingdom, providing insights into its market position and future prospects.

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Logistics and Supply Chain Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report helps in analyzing the sustainability of Tesco Company situated in The United
Kingdom. The supply chain management has to be conducted as this helps in understanding the
different external and internal issues faced by Tesco in the last 3-5 years. The different strategies
have to be applied as this helps in solving such issues in Tesco.
The main aim and purpose of the report helps in analyzing the different factors that can have
huge impact on the business of Tesco. The different strategies have to be adopted by Tesco as
this helps in solving such issues in the market.
The conclusion is based on the strategies that have been implemented by Tesco Company
situated in The United Kingdom. The different strategic directions can be adopted by Tesco to
gain competitive advantage.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Overview of Tesco.......................................................................................................................3
3. Supply Chain Strategy of Tesco..................................................................................................4
4. Strategies to reduce the cons of supply chain management........................................................6
5. Evaluation of key environmental challenges faced by Tesco......................................................6
5.1 External environmental challenges........................................................................................6
5.2 Internal environmental challenges.........................................................................................9
6. Strategies adopted by Tesco in addressing the challenges........................................................11
7. Conclusion.................................................................................................................................12
References......................................................................................................................................14
Appendices....................................................................................................................................17
Appendix 1.................................................................................................................................17
Appendix 2.................................................................................................................................17
Appendix 3.................................................................................................................................17

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1. Introduction
The report helps in analyzing the supply chain strategy of Tesco wherein proper analysis
is required to be done in order to understand the different environmental challenges. The external
as well as internal supply chain strategies will help in addressing the different challenges faced
by Tesco in the last few years.
The main aim and purpose of the report helps in understanding the different issues along
with different environmental challenges that are faced by Tesco. Proper analysis is required to be
done in order to understand the different measures that have to be taken in order to make the
business sustainable in nature.
The structure of the report includes the introduction about the company along with proper
analysis of the different environmental challenges that is faced by them. The different
recommendations have to be provided that will help in making the activities of the company
sustainable in nature.
2. Overview of Tesco
Jack Cohen founded Tesco in the year 1910 and he introduced the first Tesco tea in their
first store in the year 1929. The main theme of the respective company was to “Pile it high and
Sell it” ("Tesco PLC", 2018). In the year 1947, the major event of Tesco took place wherein they
went public and after one year, the company started with their own business. In the present era,
Tesco is the best retailer in The United Kingdom wherein they are operating in more than 14
countries with more than 2290 stores across the world.
The number of employees working in Tesco is above 290000 and their focus is to create
value for the different customers, as this will help in earning lifetime loyalty. Tesco strives to be

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innovative as well as energetic in nature as they wanted to be first for their target customers in
the entire competitive market.
3. Supply Chain Strategy of Tesco
The supply chain strategy of Tesco has evolved in a significant manner in the last few
decades. The entire transformation in the supply chain management of Tesco has categorized
into different initiatives that are as follows:
Scanning of point of scale (Stadtler 2015)
Centralized distribution and ordering
Automated control of warehouse (Govindan et al. 2014)
Interchange of the electronic data
Figure 1: Supply Chain Strategy of Tesco
(Source: Turker and Altuntas 2014)

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From the above diagram, it can be analyzed that the supply chain strategy that is followed
by Tesco from the last 3-5 years is complex in nature wherein in the last year Tesco dispersed
more than 3 billion cases of different goods to the different stores all around the world. The main
target of Tesco is to maintain proper flow of goods and services as this will help them in
satisfying the different requirements of the customers (Brandenburg et al. 2014). Tesco regarding
the different suppliers and the products as well does proper investigation. The division of the
supply chain of Tesco includes ships, trucks as well as trucks in the global supply chain
management (Touboulic and Walker 2015).
However, few cons in the supply chain strategy that is followed by Tesco are described as
follows:
There is low contribution to the business development strategy in Tesco and this makes it
complex and the process of planning of the entire supply chain management is complex
in nature (Turker and Altuntas 2014)
Secondly, the measurements that is relating to the performance of supply chain
management is not comprehensive in nature and the entire work is performed manually
as well
Thirdly, the targets prepared by Tesco do not produce any proper development over the
time.
Fourthly, the targets that has been set by Tesco do not meet the requirements of the
customers and the targets are not achievable by Tesco as well
Lastly, the metrics do not help in measuring the different levels, it is difficult in nature as
well, and there is deployment of use as well (Wang et al. 2015).

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4. Strategies to reduce the cons of supply chain management
These are the cons of the supply chain strategy used by Tesco and these are becoming the
weaknesses of the company as well. The realized strategies that can be adopted by Tesco are as
follows:
There should be proper level of improvement in the process of communication as this is
one of the key components in the analysis of the cost of logistics. It is necessary to
improve the entire communication between the external suppliers and the internal
departments as well (Mangan and Lalwani 2016)
Proper reduction in the on the non value adding activities is essential in nature and roper
implementation of the ones that will help in contributing towards the effectiveness of the
infrastructure of the company is required (Taticchi et al. 2015)
Proper effectiveness is required as this will provide proper visibility on the entire market
and there will be efficient sales order management process such as E-commerce
Proper lowering of costs is essential to be done by Tesco to ensure proper and timely
availability of the different materials and parts in order to satisfy the demands of the
different customers
5. Evaluation of key environmental challenges faced by Tesco
5.1 External environmental challenges
The proper analysis of the PESTLE helps in analyzing the external environmental
challenges along with different global factors that can affect the business.
Political

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The entire European Union as an essential tool provides the different concessions in order
to diversify the different European countries. However when they are entering into the European
countries, Tesco has to consider the local governments rule and regulations. There can be
different regulations that will help in protecting the local supermarkets and this will analyze the
political situation of the entire country as well
Economic
The entire British pound is becoming stronger that is making the different supermarkets
weaker with the respective different local competitors. This can help in negating by supplying
from Wal Mart with established connections. The rise in the cost of the labor is the major
concern in the business of Tesco and negates the influence of Tesco, can help in sourcing the
goods from the different countries that are low in cost such as China and India. The proper
automation of different services will help in reducing the cost of the labor.
Social
Proper sustainability is required in the business, as this will help Tesco in changing the
perceptions of the customers towards the business. Tesco does not respect the cultural and social
values wherein it operates and this is affecting the entire business in The United Kingdom.
Proper value of understanding the business is essential in nature, as this will help Tesco in
enabling to penetrate the entire market (Coyle et al. 2016).
Technological
Proper emergences of the small firms are operating online has huge rate of impact on the
Tesco. The online shopping has distracted the different customers from the Tesco supermarket.

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The entire authority of Amazon is the good example of creating technological influence over the
business of Tesco (Schoenherr and Speier‐Pero 2015).
The automation of the replenishment and packaging systems in the supply chain
management can be fastened over the other competitors in the entire market. The different
advancement in technologies has to be adopted by Tesco supermarket, as this will help them in
making their presence in an effective manner in all over the market against the competitors.
Legal
The control of price that is imposed by different regulatory bodies is one of the main
factors in creating huge impact on the business of Tesco. The entire law can control two ends of
the prices and these acts as the restrictions to charge more in the entire market and this will avoid
monopoly through proper cost leadership (Monczka et al. 2015).
The different tariffs as well as other regulations create huge impact on the business of
Tesco and this can have huge impact on the reputation of the business as well. The safety
standards as well as minimum level of different wages while handling the business in an proper
manner.
Environmental
The entire impact of the environment is one of the essential topics in the business of
supermarket. With proper consideration of different number of stores of Tesco, the environment
impact is huge in nature. The carbon footprint is becoming attraction for the different customers;
however, the customers will like to choose the different goods and services that has minimum
amount of carbon dioxide present in it. Tesco is withdrawing large amount of carbon dioxide in

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the logistics supply and there are different environmental groups such as Green Peace can
highlight the entire fact and they are tempting the different customers to boycott Tesco.
5.2 Internal environmental challenges
Proper SWOT analysis has been conducted in order to understand the different internal
challenges that are faced by Tesco. The SWOT analysis is as follows:
Strengths
It is one of the best supermarkets in The United Kingdom
It has strong financial power
This company has highly valued brand name
There are different schemes on loyalty
The company is using new technological schemes as well as innovative strategies
Their global presence is in 12 countries
They are the cost leader in the entire global market
Weaknesses
The global expansion of Tesco reduces the entire focus on the core business
They are highly dependent on the market of The United Kingdom
The logistics cost is high in nature
There are continuous loss makings of Tesco in last few years
There is lack of proper experience in the smart phones and tablets market
There are huge amount of bas debt as well as insurance claims that is based on
households

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Opportunities
The online presence of Tesco as they are marketing and selling FMCG goods
Proper opening of different stores that are new in nature in different markets of China and
India
Building product portfolio that will be strong in nature
Proper and strategic partnerships in with different local super markets in order to properly
expand the business
Threats
There is fierce level of competition from Carrefour and Wal Mart
There is high implications of tax that will affect the financials of Tesco
There is objection of the different customers against the usage of big data
Rising cost of the different raw materials
The niche kind of marketing is targeted by AlDi and Lidl
There are other innovative supermarkets such as Asda
From the different external and internal environmental analysis of Tesco, it can be
analyzed that there are different external environmental issues that are faced by Tesco from last
3-5 years along with internal environmental issues that are the weaknesses of the respective
company (Wisner, Tan and Leong 2014). The respective supermarket in The United Kingdom
requires understanding the different strategies that can be utilized by Tesco. This will help them
in maintaining proper reputation in the market and this will help them in creating proper
reputation in the competitive market as well.

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6. Strategies adopted by Tesco in addressing the challenges
The strategies that can be used by Tesco Supermarket in The United Kingdom are as follows:
The political support has to be adopted by Tesco as there are different competitors such
as Wal Mart who are having huge support from the government and other regulatory
bodies as this will help Tesco in enjoying concessions in the taxes
The labor cost has been reduced and has to be kept low as this will help Tesco in being at
par with the other competitors in the market and this will help in growth of the company
as well (Brindley 2017)
Tesco requires to respect the different social kind of values as well as the culture of the
entire society wherein it operates as this will help them in gaining strong customer base
Proper advancement in technology is essential and is required in nature as this will help
Tesco in trending I the global market like Wal Mart
In order to avoid the financial losses and reputation, Tesco will have to abide with the
different laws and maintain proper safety standards in the environment as well
Tesco has to deliver environmental friendly goods and services to the different target
customers, as this will help them in gaining and generating a strong customer base. The
emission of carbon has to be reduced as this will help in reducing the carbon footprint
(Fernie and Sparks 2014)
Tesco has applied the Six Sigma concept, as this is an approach data driven in nature. The
Six Sigma helps Tesco in eliminating the different defects that has to be adopted by Tesco. The
RFID technology has to be adopted by Tesco as this will help them in easy tracking of the goods

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and this helps in measuring every aspect of supply chain management. Proper promotion of
faster processing of goods as this helped in increasing the efficiency of the employees in the
organization (Beske, Land and Seuring 2014).
There are different issues that have to be addressed by Tesco that will help in choosing
the right kind of strategies and this will help Tesco in execution of the proper strategy in the
entire competitive market (Martínez-Jurado and Moyano-Fuentes 2014). Tesco has to maintain
competitive advantage with the help of lowering the costs and simultaneously improving the
satisfaction among the customers.
Figure 2: Supply Chain Drivers of Tesco
(Source: Carter, Rogers and Choi 2015)
7. Conclusion
Therefore, it can be inferred that there are different strategies that can be applied by
Tesco in order to improve the supply chain structure of the company. Proper usage of the

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strengths is essential in nature, as this will help them in maximizing the profits of the company.
These kinds of strengths will help in improving the sustainability of Tesco in the entire
competitive market. As per the SWOT and PESTLE analysis, it has been seen that the strengths
can be used by Tesco in such a manner that this will help them in targeting the niche markets
through different model of stores and this will help in creating a strong customer base in the
market as well.
Similarly, the sustainability is required to be adopted by Tesco, as this will help them in
opening different stores in China and India as this can minimize the dependence of Tesco on the
market of The United Kingdom. The supply chain management of the respective company
named Tesco is appropriate; however, there are changes that have to be amended by them in
order to gain competitive advantage. The complexities have to be reduced in such a manner that
this will help them in developing the global supply chain management and strategy in the entire
market.
The different advantages of the cost that is obtained by Tesco can help them in reducing
the cost of the material and this will help in benefitting the customers as well in the entire
competitive market. Lastly, Tesco can focus on their business as this will help them in handling
the core businesses in the end and this will help them in being at the top against the different
competitors in the market. The Tesco’s supply chain management is a long term goal as this will
help in making different improvements in the operations and be competitive in nature than the
other competitors namely Wal Mart.

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References
Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and
dynamic capabilities in the food industry: A critical analysis of the literature. International
Journal of Production Economics, 152, pp.131-143.
Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for
sustainable supply chain management: Developments and directions. European Journal of
Operational Research, 233(2), pp.299-312.
Brindley, C. ed., 2017. Supply chain risk. Taylor & Francis.
Carter, C.R., Rogers, D.S. and Choi, T.Y., 2015. Toward the theory of the supply chain. Journal
of Supply Chain Management, 51(2), pp.89-97.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK. (Christopher 2016)
Coyle, J.J., Langley, C.J., Novack, R.A. and Gibson, B., 2016. Supply chain management: a
logistics perspective. Nelson Education.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Govindan, K., Kaliyan, M., Kannan, D. and Haq, A.N., 2014. Barriers analysis for green supply
chain management implementation in Indian industries using analytic hierarchy
process. International Journal of Production Economics, 147, pp.555-568.
Mangan, J. and Lalwani, C., 2016. Global logistics and supply chain management. John Wiley &
Sons.

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Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain
management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-
150.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and
supply chain management. Cengage Learning.
Schaltegger, S. and Burritt, R., 2014. Measuring and managing sustainability performance of
supply chains: Review and sustainability supply chain management framework. Supply Chain
Management: An International Journal, 19(3), pp.232-241. (Schaltegger and Burritt 2014)
Schoenherr, T. and Speier‐Pero, C., 2015. Data science, predictive analytics, and big data in
supply chain management: Current state and future potential. Journal of Business
Logistics, 36(1), pp.120-132.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Taticchi, P., Garengo, P., Nudurupati, S.S., Tonelli, F. and Pasqualino, R., 2015. A review of
decision-support tools and performance measurement and sustainable supply chain
management. International Journal of Production Research, 53(21), pp.6473-6494.
Tesco PLC. (2018). Tesco plc. Retrieved 5 January 2018, from https://www.tescoplc.com/
Touboulic, A. and Walker, H., 2015. Theories in sustainable supply chain management: a
structured literature review. International Journal of Physical Distribution & Logistics
Management, 45(1/2), pp.16-42.

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Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion
industry: An analysis of corporate reports. European Management Journal, 32(5), pp.837-849.
Wang, Y., Wallace, S.W., Shen, B. and Choi, T.M., 2015. Service supply chain management: A
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Wisner, J.D., Tan, K.C. and Leong, G.K., 2014. Principles of supply chain management: A
balanced approach. Cengage Learning.

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Appendices
Appendix 1- Framework of Tesco
Appendix 2- Growth of Tesco in last few years
Appendix 3- Annual Report of Tesco

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