Operations and Supply Chain Management
Posted: January 4th, 2023
Operations and Supply Chain Management
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Operations and Supply Chain Management
The study pays attention to operations and supply chain management practices at Tesco, which is a leading retailer in the UK. It illustrates how the company’s business strategy influences its organisation’s operations and supply chain management and strategy , and how consumer service strategy impact on Tesco’s OSCM and strategy. The report highlights the major operations management tasks and responsibilities, as well as major supply chain management roles and responsibilities. It sheds some light onto the nature of Tesco’s supply chain structure, and the nature of organisational relationship with supply chain partners. Tesco has significant plans to enhance its OSCM practices, but increases its avenues for being more influential by making some adjustments on its core features.
Part 1 – Strategy
Tesco is a multinational operator in the retail sector focusing on general merchandise and groceries. The corporation in Hertfordshire, England ranks among the leading operators in the UK and the world, and effectively competes with industry leaders such as Asda, Sainsbury’s, and Morrison. The corporation focuses on expanding its activities and currently has strong presence in various countries besides the UK, including Thailand, Ireland, and Hungary. Tesco has continued to make considerable strides since its foundation in 1919 when it began as a simple market (Tesco 2020). The company runs supermarkets, hypermarkets, superstores, and convenience stores, and manages various subsidiaries, including Jack’s, Booker Group, Spenhill, Dunnhumby, Tesco Bank, Tesco Stores, Tesco Ireland, and Tesco Mobile (Tesco 2020). The company pay much attention to its engagement with the communities where it operates, and often gives grants worth millions of pounds to affected groups and families. The company stands with the highly vulnerable, especially during this time of COVID-19 many things have stalled. The retailer strives to ensure that each buyer gets the attention they deserve, and they enjoy high quality products. It knows that meeting consumers’ expectations and being able to adapt to adjustment provides it with a suitable opportunity to strengthen its brand (Tesco 2020). The urge to maintain the leading position compels the firm to adopt a strategic direction that boosts its operations, making them efficient and competitive.
Tesco’s business strategy is organized around three pillars, consumers (customers), product, and channels, and use six key performance indicators to measure its progress. The company seeks to provide the best services to its buyers, listening to them, and striving to act on what is most essential, however they choose to shop with the retailer. Its attention is always on making the company the best it can for buyers because of its belief that the better a job it performs for consumers, the more organisational sales improve, and the more it gets the chance to reinvest in further advancing their shopping experience (Tesco 2020). The company focuses of acquiring products of the highest quality that is why it builds close and mutually beneficial with its vendors and suppliers, source the best possible products that satisfy consumers’ needs. Also part of the business strategy is the urge to create effective channels that facilitate transaction across all levels. The group hopes to avail the best products to its buyers using a range of channels – from small to large outlets, and through its online platforms (Tesco 2020). Tesco measures whether it performs well and is in line with its business strategy by examining if it is heading towards forming a differentiated brand that creates long-term values for each stakeholder in the business. Also, the company considers whether its strategy helps it to lower operating costs by considerable margin, and if it gets the opportunity to generate enough money to conduct its operations (Tesco 2020). In addition, the company estimates whether its business strategy leads it to maximise value from property, and helps it to become innovative. Tesco continuously review its business strategy to ensure that it is always relevant in all the markets where it operates.
Tesco’s business strategy has considerable impact on the company’s operations and supply chain management (OSCM) and strategy. Consequently, the group focuses on creating an OSCM structure that sources materials from credible vendors, who use effective channels to avail their products. The strategy leads the firm to form stronger partnerships with its supplier partners with the objective of acquiring the best possible that that anticipate and meet the purchasers’ requirements. The strategy guide the company to establish an effective materials management plan, which is a vital aspect of supply chain, which entails supply chain planning and execution (Tesco 2020). The group understands that acquiring products of high quality using appropriate channels gives it the chance to plan for total materials needs (Graham & Hardaker 2000). The group believes that focusing on acquiring proper products and establishing effective channels will its OSCM because it gets the chance to develop effective operations planning mechanisms that give a clear image of how a department, section, or particular team contributes towards the attainment of the company’s aspirations. Moreover, the strategy provides the opportunity to effective distribution and logistics operations, thanks to the connection with reliable distributors and highly developed channels (Tesco 2020). Thus, Tesco focuses on advancing its storage, packaging, and processing processes that are essential in promoting the delivery of products from the point of production to the customer effectively and in real time. Besides, the business strategy that pays much attention to improving OSCM provides the chance to improve practices such as order fulfilment, retail, forecasting, and demand that play significant roles in promoting supply chain and logistics operations (Tesco 2020). The retailer constantly reviews its business strategy to ensure it is relevant and helpful in facilitating OSCM.
Also, the customer service strategy at Tesco has much effect upon the firm’s operations and supply chain management and strategy. The retailer uses its expertise to understand and meets its purchasers’ requirements better than anyone else, which provides the chance to deliver products that meet their specific demands. The company uses digital platforms such as its website and social media avenues such as Twitter and Facebook to interact with their buyers and promote its services and products (Tesco 2020). Consequently, it focuses on establishing proper communication channels, which is part of its business strategy. Proper communication compels the company to facilitate order fulfilment, and to enhance distribution channels that facilitate delivery of products to buyers. The group seeks to establish consistent buyer experience throughout the consumer journey because it understands that increased buyer experience results in a more loyal buyer base where they purchase more often, refer their family and friends to the company, and spend more money on the company’s products and services (Burgess, Koroglu & Singh 2006). Therefore, the firm encourages accountability with all vendors to ensure they deliver materials in time, and that buyers do not experience much delay. Also, the seller-buyer relationship at Tesco encourages it to engage in proper demand forecasting to know what their buyers may want in future, thereby providing the chance to make timely preparations (Tesco 2020). Moreover, the urge to provide buyers with the best experience encourages Tesco to facilitate order fulfilment to ensure that customers get all their requirements in time. The customer service strategy at Tesco play essential functions in developing OSCM at the company.
Part 2 – Organization
Operations management has achieved considerable significance among business practitioners and academicians in recent years because handling business operations appropriately influences the business’ costs, and is therefore essential to attaining the competitive advantage. An organisation can conduct its activities well only if it has the ability to perform its operations effectively and efficiently by appropriately using the available resources and making sure its purchasers get services and goods of high quality (Ronoh 2016). Many businesses perceive operations management as a strategic connector between senior management and buyers, with the aim of achieving consumer needs in a way that they feel satisfied (Ronoh 2016). The important functions of operation management compels Tesco to assign a specialist to oversee activities in this area.
Operations Management Roles and Responsibilities
Tesco has an Operations Manager who functions on a national basis to oversee improvement and non-standards functions across the business. The manager ensures that the Operations team functions effectively, and that 3rd party contractors perform their functions effectively. The Manager acts as the guardian of the company’s legal compliance across all aspects, to promote the welfare of the company’s buyers and colleagues, which is at the foremost of its priorities (Tesco 2020). The Operations Manager plays other essential functions that facilitate operations at the company. The Manager provides assurance of development works, revenue, and capital delivered by the company’s external and internal supply base, and performs a periodic review of contractor daily performance, and conduct regular review of the contractor’s everyday performance as well as representing his team at various meetings, including contractor performance conventions (Tesco 2020). The Manager ensures the company has consistent approaches across its processes, and takes charge of resolving major incidences, and provide exceptional guidance on how to reduce costs in some key areas. The Operations Manager plays essential roles in promoting communication with team members to facilitate operations across the firm (Tesco 2020). The leader performs other important roles such as providing guidelines on how to deal with political, economic, social, and technological factors, building effective relationship with all stakeholders, and monitoring accident patterns to develop an appropriate plan.
Supply Chain Management Roles and Responsibilities
Supply chain processes at Tesco has transformed substantially in the past recent years, and tries to develop a management structure that would sustain operations in this area. The company has instituted four teams to oversee supply chain management practices. One of these teams is the development and blueprint team, which mainly focuses on sustaining availability while minimizing food waste (Tesco 2020). The body uses innovative techniques, and utilizes technological approaches such as supply chain analytical problem solving techniques, which helps to cut cost. The team works closely with suppliers and other supply chain operators across the world to create and advance the group’s supply chain. The supplier ordering team is part of the management body that manages suppliers and purchasing groups to plan the acquisition and supply of products (Tesco 2020). The team orders more than 30 million foodstuffs cases of foodstuffs each week from the various suppliers. The third component is the store ordering team that maintains the appropriate measure of stock in all ventures. The store managers develop their plans depending on what buyers want to develop consumer satisfaction (Tesco 2020). The group formed the security and loss prevention team to help oversee supply chain management practices. The group ensures that the working environment at the company addresses the safety issues to create a safe workplace for everyone.
Supply Chain Structure
The supply chain structure at Tesco is complex, and the management employs an equally intricate system to manage all aspects. Regarding facilities, the company runs many large distribution facilities in its supply chain. The distribution facilities have substantial impact over the overall performance and production of the retailer. The multinational firm has distribution centers in multiple locations in the UK, including Livingston, Belfast, Donabate, Ballymun, Hinckley, Magor, Southampton, Middleborough, Goole, Unity, Fenny Lock, and Thurrock among many other places (Tesco 2020). The group recently opened a distribution center in Khon Kaen Province, Thailand, which is the fifth distribution facility in the Asian country. On the other hand, structure of the company’s stores also play a significant role in its supply chain driving factors. The firm has six forms of stores in its supply chain to serve consumers, which include superstore, metro, express, hyper market, online stores, and Extra. For example, Tesco metro gives solutions for urban residents, while Tesco express attends to buyers in small spaces in collaboration with Esso (Tesco 2020). The company has passed the obligation of handling inventories to distribution centers, which permits stores to utilize their spaces more efficiently with manageable inventory inside. Moreover, transportation is a vital component of Tesco’s supply chain that delivers up to 30 billion products worldwide each year. The company utilizes multimodal transportation to make sure its buyers get what they want at the cost, time, and place of that suit them (Tesco 2020). The group handles all its transportation activities in house and they employ supply chain analytics to conduct transportation appropriately. The supply chain structure utilizes automatic data generation software that feed data to its servers, and focuses on its sourcing activities from about seventy countries to ensure that the consumer purchases the best quality goods. Also part of the supply chain structure is pricing which happens keenly to attract consumers throughout the year. The comprehensive supply chain structure enables Tesco to handle operations in this division without much challenge.
Relationships with Supply Chain Partners
Tesco strengthened its relationship with supply chain suppliers after adopting the vertical collaboration and lean supply chains models in the 2000s. The era paid much attention to minimizing the waste in the company’s supply chain by adhering to lean supply chain concepts and practices. The company was successful in transforming the value stream into an efficient and easy-to-use structure while upholding transparency behind its functioning (The Grocer 2020). The efficient planning method resulted in a situation where stocks do not remain in the distribution centers for long. The retailer also focused on creating an ordering system for replenishments, which was based on the buyer demand (The Grocer 2020). The group knew that the only way to succeed with the plan is to form strong ties and agreements with its suppliers to enhance just-in-time (JIT) environment and technology developments (The Grocer 2020). Being open and straightforward with partners ensures steady supply of products, and minimizes chances of losing valuable vendors.
Part 3 – Processes
Process Models and their Development
Tesco adheres to an appropriate process models with the objective of facilitating the activities required to operate the supply chain. Basically, a sale begins once store demand is generated, and the need to avail particular goods exist. The store demand prompts a purchase order directing suppliers to deliver the particular items to the depot. The team at the respective stores receive the items and unload them before storing them temporarily. Workers at the depot notify the buyers who come for the goods before loading takes place (Tesco 2020). The group replenishes the store before scanning the sold items at checkout. The final process is the sale updates the depot focus. The primary objective in developing the supply chain model is to sustain flow of goods while knowing the needs of their purchasers. Besides, the company performs an in-depth investigation about its suppliers and their products to avoid any inconveniency, especially when handling urgent orders (Tesco 2020). The process model promotes supply chain excellence in three primary ways. It wants to increase availability for its buyers, and seeks to use the business scale to minimize food wastage while maintaining freshness and quality (Tesco 2020). Tesco also strives to formulate a practical process model that improves the overall effectiveness through creating stable business operations while strengthening partnerships with vendors.
The above process model depicts the main activities of Michael Porter’s value chain, which the company considers to be essential in creating a process model. As a multinational retailer, the major operations at the company fall under; inbound logistics, operations, outbound logistics, marketing and sales, and consumer services. It focuses on the movement, storage, and receiving of products into the corporation at the inbound logistics phase. It entails receiving goods into a warehouse directly from a supplier or manufacturer using trucks, trains, ships, planes, and other modes of transportation. Employees in the operations stage focuses on procedures for changing raw materials into a finished service or product. The phase involves converting all inputs into outputs such as buyers can purchase them. Bichou and Gray (2014) identify some operations to include labelling, packaging, and branding, and repackaging to add value to the product. The next stage is outbound logistics, which involves all activities aimed at distributing a final product to customers (Wanitwattanakosol, Tapanyo & Teepruksa 2019). The team in charge of SCM at Tesco pays much attention at this stage by developing as many distribution centers and channels as it can to improve the speed at which buyers receive their orders. The seller considers the storage of products awaiting purchase to be part of outbound logistics. The firm believes that putting more effort at this stage is important in determining its relationship with buyers because the faster it dispatches the goods the more buyers are likely to be satisfied. Tesco knows the values of enacting superior marketing and sales approaches, and puts adequate investment in creating an effective marketing mix. Marketing and sales are important because they help convince buyers to purchase an organisation’s service or product (Wirtz, Kuppelwieser & Tuzovic 2014). Tesco now pays much attention to digital marketing practices that have the power to reach more people compared to traditional techniques (Desai 2019). For example, the company continuously updates its website to make it more interactive and appealing to buyers. Besides, the group uses social media marketing to attract younger buyers who are increasingly gaining buying power (Tesco 2020). Customers can view some of the products and promotions by Tesco on social media avenues such as Facebook, Twitter, Instagram, and can interact with marketers on Skype and YouTube (Tesco 2020). The final stage is services, which includes activities to maintain goods and improve customer experience. Some of the activities at this stage are exchange, repair, refund, maintenance, and customer service. The value chain is a vital process model at Tesco that facilitates supply chain activities.
Equally important in facilitating activities in the value chain are the support activities. Supply chain operations work effectively when the firm infrastructure are effective and capable of supporting advanced and enormous undertakings. For example, it is easier to handle inbound practices when the firm has storage facilities and outbound logistics when it owns several trucks. A well-equipped human resource team that employs modern management techniques increases the chances of achieving the best results (Gomez-Cedeno et al. 2015). Moreover, the company performs well in its supply chain practices when it uses advanced technology to conduct its activities. Also, an organisation has a higher chance of succeeding in supply chain practices if it procures all the necessary requirements (Anca 2019). Tesco pays focuses on both the primary and support activities that contribute towards creating a workable supply chain process model. The following diagram presents an overview of the supply chain model at Tesco;
Prach 2019
Managing Operations and Supply Chain Processes
Tesco applies all features that promotes the flow of services and goods as well as manages all activities that pass finished products and other fresh items to buyers. The management engages in active streamlining of its supply chain activities to increase consumer value and to achieve competitive advantage in the local and global markets (Tesco 2020). The four teams that oversees supply chain operations at the company take time to plan, source relevant materials, make, deliver, and return defective products. The effective management structure contributes towards the group’s success in managing the supply chain process.
Process Improvement
Tesco engages in active process improvement to make it practices more effective and competitive. It is the proactive function of identifying, assessing, and advancing upon existing business structures for optimization and to attain new measures of quality. It often entails a systematic process which adheres to a specific structure, but there are dissimilar designs that a company can use (Matthews & Marzec 2017). Process improvement is a continuous practice that a company should monitor always with the examination of tangible areas of growth (Matthews & Marzec 2017). The practice is important because when executed properly, the outcomes can be measured in the expansion of buyer satisfaction, product quality, increased productivity, consumer loyalty, increased efficiency, and more profits (Matthews & Marzec 2017). Tesco pays much attention to lean manufacturing as a strategy for process improvement. The approach involves reducing waste in a system without affecting productivity. Tesco tries to avoid overproduction and defects as part of practicing lean manufacturing, and also use JIT to avoid handling unnecessary inventory. Tesco also employs total quality management (TQM), which is a progressive process of identifying and minimizing errors in manufacturing, streamlining SCM, and ensuring that workers deploy advanced techniques. Tesco considers process improvement to be important because provides the chance to improve organizational processes and to meet consumers’ needs.
Part 4 – Information
Information Infrastructure
Information infrastructure must be strong for a company to perform its activities effectively. The aspect involves all the interactive approach and data the organisation handles in the course of its operations. The foundation comprises of vital communication networks, data warehouses, hardware, software, and various procedures handled by IT specialists. Business globalization requires businesses to acquire and use superior information infrastructure to reach beyond national borders, and to perform activities that would not be possible using traditional or less superior technology. Information infrastructure comprises of key features such as information and database management systems, data interactive networks and related services.
Tesco understands the importance of improving its information infrastructure, and is continually pacing considerable investment in this area. The company invested up to $45 million in its IT infrastructure in 2011 with the aim of solving problems more effectively and to elevate consumer service. The retailer understands that a system that will give the seller an easy view of international IT infrastructure will reduce costs and make it easier to handle its expanding business (Thompson 2011). The retailer is integrating different systems into a single unit to improve activities. Previously, different vendors monitored distinct components of the business, but after the firm outsourced its IT operations to CA Technologies it became easier to manage and follow up the company’s networks, suppliers, and transactions across the firm, including its mobile, banking, and website operations (Thompson 2011). The company’s Chief Information Officer, Mike McNamara, said in a conference that the objective is to develop expansive and heterogeneous IT infrastructure (Thompson 2011). He said that the organisational IT infrastructure need to work out for the IT team to increasingly interact with suppliers, colleagues, and buyers. The company instituted the role of a Technology Manager Infrastructure and Technical Delivery Manager to organise, plan and lead IT projects to come up with proper solutions for the firm to achieve the desired quality, within specified budgets and timeframes.
Effectiveness of IS for Operations and Supply Chain planning and Decision Making
The information systems at Tesco play important functions in improving operations and supply chain planning, which encourages the management to put more investment in this area. Advanced technology boosts OSCM because it is possible to handle the big data, emanating from various transactions. Furthermore, information system makes it possible to retrieve valuable data without much challenge and delay (Ronoh 2016). With the digitized product management, Tesco uses a barcode system and RFID chips to achieve better visibility that can sustainably enhance supply chain efficiency by identifying any errors in an order as they happen permitting workers to immediately rectify blunders and minimize similar errors. The company would not want to remain behind because the adoption of ICT is spreading fast in supply chain management. The urge to use superior techniques to facilitate operations management drives the retailer to embrace concepts such as enterprise resource planning (ERP) and supply-chain management (SCM), which require the use of advanced technology to achieve the best results (Tesco 2020). Tesco attributes part of the success it achieves in its supply chain practices to the advanced technology it uses to improve key activities.
Part 5 – Performance
The group considers several key performance indicators to determine whether its OSCM practices work well. The group considers whether the strategy helps it to develop a strong brand that fosters long-term value, taking into account that its purpose is to serve buyers in the way they deserve (Xie & Allen 2013). Tesco considers whether using effective techniques provides it with the chance to cut operating cost, which is a major concern among many operators. Also important, is that Tesco considers whether the approaches it uses to conduct its OSCM help it to become more innovative in its activities (Xie & Allen 2013). Increased innovation over some time indicate that the company is heading towards the right direction while little progress indicates that the firm is yet to achieve its aspirations (Xie & Allen 2013). The KPIs are important as they help the company to understand what it needs to do better to attain impressive results in the long-term.
Part 6 – Action Plan
Tesco is in the right path in managing its OSCM, but it can make the processes much better by taking several important measures. An effective option would be to consider improving the level of technology at the company such that it is possible to perform some operations that were previously impossible. For example, Tesco can embrace drone technology that other leading retailers such as Amazon are already using (Amazon 2020. Drone technology provides the opportunity to distribute products to areas that are difficult to reach using a track or car due to poor road network. Also, the group should consider employing artificial intelligence (AI) that is rapidly changing supply chain activities (Wamba-Taguimdje et al 2020). In addition, the company should consider equipping its workers with better skills and information through training. Failing to embrace these vital factors may deny Tesco the chance to improve its OSCM.
Conclusion
The study focuses on Tesco’s operations and supply chain management, and describes how the company relies on effective structures to facilitate its processes. The company’s business strategy that seeks to satisfy buyers, form proper distribution networks, and use effective channels has considerable impact on its operations and supply chain management and strategy. The retailer has a dynamic consumer service strategy that has considerable effect on the firm’s OSCM and strategy. The paper describes how the leading retailer establishes clear operations management roles and responsibilities, as well as supply chain management roles and responsibilities to enhance OSCM. The company manages to excel in its OSCM because of the well-defined supply chain structure that addresses various components such as facilities, inventory, transportation, information, sourcing, and pricing. The study illustrates how the company develops process models that helps to boost supply chain practices, and how the group pays adequate attention to process improvement. The report reveals that Tesco uses technology to facilitate its operations and supply chain practices, and relies on key performance indicators to determine its progress. The management should consider various approaches for improving OSCM practices at the company if it wants to be more competitive.
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