Operations Management
Discuss about the Geography of Global Supply Chains.
A business organisation sells products or services to the end customer to earn revenue and generate funds for the company. Operations management looks after the day to day fuctions of the business. it is a part of the administrative function of an organisation which deals with the planning monitoring as well as delivering the process of manufacturing of a product or provisions of a service. It is concerned with the day to day running of the business and focuses on the efficiency of the process without compromising with the quality (Brown and Bessant 2013). The operations of the business are the most important aspect that ensures revenue and consistent flow of finance in the company. The operations are directly responsible for the flow of funds within the organisation. Strategic management allows every business operation to build objectives which has to be achieved, these objectives depend on the values and principles that the organisation follow, operations management play an important role in achieving these operatives. One of the major roles of operations management is to ensure optimal and efficient use of resources in terms of raw material as well as labor, technology or any other kind of input in order to maximize the output in terms of value and quality as well as number. Inventory management, operations planning, production or manufacturing management, distribution and logistics, organisations of training and program are some of the functions of an operations manager (Jacobs et al. 2014). Randall Schaeffer has states the following as some of the principles of operations management:
- Reality. Focus on the barriers and use logical reasoning to plan and design the policies and procedures
- Organization. In order to achieve a common goal it, it is essential to interconnect all the process of production as the alignment of the interest of each of the department will only ensure success.
- Fundamentals. Values and principles of the company form the fundaments of the organisation. 80% of accomplishment by maintaining records and disciplines, and only 20% comes from applying new techniques to the processes.
- Accountability. People recognize their responsibility with the help of constant monitoring, support and guidance from the management and supervisors.
- Variance. Creativity and innovation is the process of development and success.
- Causality. Issues have to be tackled by the company with the help of attacking the underlying cause or it will reappear.
- Managed passion. Motivation is important to generate passion among the employees
- Humility Acknowledgement of issues and grievances and working towards solving them is the duty of the manager
- Success. This is achieved when all the aforementioned principles are implemented
- Change. Stability is essential in the organisation but changes are also important to meet the dynamics of the industry.
Established in 1919, Tesco has grown to be one of the leading retail organisations in the industry. It is a multinational organisation that employees and serves a number of people and thus has an impactful presence on the economy as well. The company operates in more than 12 countries. The company has expanded exponentially and today they have 6,809 stores around the world. The organisation has also changed and adopted with the dynamics of the industry, they have presence both in physical retail as well as in the e-commerce platform (Tescoplc.com 2018). The revenue of the company is £55,917 million (2017) and TESCO is listed in London stock exchange. The management of the company follows the triple bottom line business model where they recognize the duties the corporate has towards the well being of the society and the environment apart from the growth and expansion of the business. The company focused on grocery items when it fist launched but eventually the management decided to diversify the line of products and services that they offered to electronics, apparels, books, toys, furniture, software, petrol, telecommunications, financial services etc (Tescoplc.com 2018). The current market share of the company as of 8th April 2017 is 204.70p. The company has a comprehensive code of conduct stated in order to protect the interest of the employees.
About Tesco
The mission of the company is to provide the customers with the best quality of products and services so that they can enjoy a better and easier way of living (Tescoplc.com 2018).
The department of the company that is going to be focused upon in order to analyze the operations is the retail unit. Therefore, in order to understand the people target market of the company market segmentation is implemented below. These are the eternal customers of the company.
Demographic: the company targets the people who are in the age group of 18-50, these are the people who go for grocery shipping for the family. The income groups in which the customers fall are in the low to medium as the products that are showcased in the stores are not luxury and high end items. The occupations of these people are mostly students, professionals, housewives. The social status of the people is lower middle class and middle class people. Based on this the company focused on the products price and range (Anyesha et al. 2014).
Physiographic: The lifestyle of these people are simple and non-complicated, these are regular people with normal lifestyle who are themselves in charge of the daily grocery of the household. The people who are targeted by the company are not driven by extraordinary preference or tastes as they are aware of the fact that grocery items utility are basic in nature.
Behavioral: For the grocery stores the people who have been targeted by the company is concerned with savings and is particular about the budget that they have set for the groceries. Therefore the company has several promotional methods of discounting and other such policies.
Geographic: the location of the stores depends on the availability of the service. But with technological advance the company has achieved a position in the e-commerce model as well, which broadens the geographical boundaries and limitations of the physical stores (Rodrigue 2012).
With the help of the analysis of the target market the company takes decisions such as pricing the product, communication strategy, determines the needs and requirement etc. The expectation of the customers from Tesco’s grocery line is to get good quality items at a reasonable and discounted price (Ryle 2013). As grocery items are some of the necessities of the customer in their daily life they do not want to spend a lot of money in it therefore, the company has discount coupons, reasonable pricing and a wide range of products in the same category. As the target market is a wide group of people the range of product is also broad. In order to cater to this wide range of customers the company uses a through TQM policy as quality is the focus of the objectives throughout the organisations operation. Total quality management is the process by which a company can improve the process of operation in a holistic approach. This process ensures that the issues are analyzed form the root and measures are taken in order to completely irradiate the problem (Ryle 2013).
Target Market Analysis
The objectives of the organisation are as follows:
- To offer the customers best quality product and service at the most reasonable price
- To ensure sustainable growth
- To expand and grow the business
The operations objectives of the company are:
- To provide the customers with new and improve products
- To increase the efficiency of the customer services
- To determine the consumer’s demand
- To maintain a consistent flow of goods
- To become zero carbon business by 2050
- To reduce waste
The services of a retail store is based on the kinds of products that the company showcase, in this case the product type is grocery items which can be divided in two segments perishable items and non-perishable items. Integrated operations among the various functions of the store are essential in order to co-ordinate the process effectively. The operations of a particular store includes: administration, finance, customer service, management of the inventories, managing the receipts, promotional and communication management. In the process of operations supply chain management play an important role in ensuring the inventories are properly managed (Tao and Hung 2013). With the help of the Just In time Approach which helps the company to ensure there is flexibility in the process of operation, maintaining the quality as well by keeping up with the speed and price consistency. This also helps the company to reduce the amount of waste reassuring the process of lean which is maintained in the stores as well. With the help of the data which is received from the point of sale the manager of the store forecasts the demand and order the inventory accordingly. The company has adapted to managing complexities in the recent times firstly the company developed stores with various capacities depending upon the location. In order to improve the reach the company introduced the online facilities, balance score card and steering wheel are some of the approaches that was introduced in order to improve the performance and the measure the outcome of the employees (Sparks 2010).
Transport: In order to improve the process of supply chain Radio-frequency identification (RFID) technology is also implemented in the logistics and distribution process s of the supply chain, it not only improves the process of distribution it also ensures that that the time taken to deliver products from one point to another is also reduced. The company uses intermodal freight transport strategy in order to gain cost advantage (Rodrigue 2012). This will improve the availability for the customers and keep the shelves stacked all the time. Tesco maintains a stable business relation with the third party suppliers in order to maintain the efficiency. Tesco manages all the transportation by the management and does not use any third party vendor. The company is determined to reduce the carbon emission from the process of the supply chain and hence has opted for rail road and shipping on a large scale. In 2014 it was reported that Tesco has reduced 14 percent carbon emission. In order to reduce the journey of the trucks there are distribution centers build very close to the stores (Tescoplc.com 2018).
Supply Chain Management
Collection of data: Big data analytics is used in the company since 2006, focusing on inventory management as the objective is to reduce waste in the operation this process is useful. It also helps in achieving the objective of determining the customers demand as it process analyses the sales and the demand among the target market. The company also uses the analysis to forecast the demand and order the inventory to ensure the Just In Time approach (Xie and Allen 2013).
Logistics: Tesco procures the products from the third party suppliers and store them in the regional distribution centers. From the distribution center the products are prepared and sent to the stores as per the orders placed. Tesco uses logistics to design, incorporate and monitor the storage of goods and associated information to meet the customers’ demand (Sparks 2010).
There are mainly four departments in the process of the supply chain of UK first is the store department: this department looks after the stores; the people working in this department are in the close proximity with the customers who are deemed as the main stakeholder of the company. The warehouse department: the people working in the warehouse are responsible to keep a track of the bulk of the products which is coming in and going out. They coordinate with the suppliers, distributors and the store managers in order to ensure that the supply chain is running smoothly. The distribution department: The distribution centers are a large part of the supply chain, as the company operates in a number of formats the distribution centers help in keeping the shelves stacked with products. This is the department which ensures that the stores are equipped with the right stock at the right time. In this case the transport and warehouses play a key role. There is a group of people who looks after the stocks in the warehouses and the order to stock is placed by the manager of the stock. The stock of the perishable items, are refreshed on the daily basis and for others the order is placed once in a week. One of the major objectives of the operations is the reduction of food wastes. The stores do not stock any inventories all the stock is in the distribution centers or warehouses. The process ensures that the products are available as needed and the operations are running smoothly. The RFID technology that has been aforementioned is used in the process of distribution (Retailgazette.co.uk 2012). The suppliers: they are the third party vendors who list their items on the stores. The suppliers work closely with the distribution department in order to maintain their business as well as make the products available for the customers when they are in demand. The suppliers send the products to the warehouses from where they are dispatched to the stores (Ryle 2013).
Conclusion
The operations process undertaken by the company is appropriate given the dynamics of the industry of the current situation. The strategy that the company has used to increase the number of distribution center is appropriate as it meets most of the operations objective that has been stated above, the company can reduce the cost, provide the customers with quality product as well as reduce carbon emission and waste form the supply chain.
Another effective strategy is to remove the process of inventory stocking in the stores, this has helped the company to achieve the Just In time approach in the supply chain.
The operations strategy has enabled the company to achieve the objective of providing the customers with the right products at the right time (Hassan and Parves 2013).
The company should focus on the e-commerce sector as well in the process of delivery to the customers; the logistics that are involved in the online business can be merged with the retail but should have a different department that exclusively deals with the online presence. This will help the company to retain its position in the market as online grocery is gaining significant importance in the retail market. The company already has distribution centers hence the process of delivery can be initiated form these centers, but third party transportation can be used to deliver the items to the door steps.
The company has been focusing on increasing the distribution areas, but they should also increase the number of suppliers especially from Asia, the company will get leverage in expanding in some of the developed and developing countries in Asia as well.
Carbon emission has been the objective of the operations for a long time now the company can also focuses on fuel efficiency, which is a process that will follow the objective of carbon emission as well.
In the store operation the feedbacks of the customers should be taken as a yardstick of improvement, these should be identified and improved in order to ensure the quality of the service. The stores should also focus in innovation and technology driven methods to reduce the time that is taken to complete the buying process. Competitors of TESCO are tapping on this issue that has been one of the major complaints of the customers. For example the format of Amazon Go removes all the hurdles from the customers from picking up a product and walking out. Tesco is an innovation driven organisation with the help of training and implementation of technology the company must adapt to operations procedure that will reduce the time taken by the customer to shop for groceries.
With the help of training and skill development the operations can be improved, communication is something that is essential especially for the ones who are directly in contact with the customers. These people are the image of the company and hence focus should be on the way they communicate with the customers.
The strategies that have been discussed are focused in UK, in order to secure the position in the international platform the company must incorporate some of the strategies in other countries of operation as well.
Conclusion
It can be concluded form the above discussion that the company has a compact and logical supply chain that the retail industry must have. Tesco is an organisation that has traditional perspective in terms of the values and principles but is modern in their approach, this combinations helps in successfully reaching out to the customers. The operations of a business in any industry always have scope of improvement and Tesco strives to provide the customers with the best product at the most reasonable price.
Reference list:
Anyesha, A., Hassan, D. and Aboki, H., 2014. The Conquering Strategies of Oligopoly Firms. A review on entry Strategies of Tesco Company Plc in the UK and beyond. IOSR Journal of Business and Management, 16(8), pp.06-15.
Brown, S. and Bessant, J., 2013. Strategic operations management. Routledge.
Hassan, A. and Parves, M., 2013. A Comparative Case Study Investigating the Adoption of Customer Relationship Management (CRM) The Case of Tesco and Sainsbury’s. International Journal of Managing Value and Supply Chains, 4(1),pp.1.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management,pp. 533-535. New York, NY: McGraw-Hill/Irwin.
Retailgazette.co.uk., 2012. Tesco creates world’s largest supply chain group- Retail Gazette. [online] Available at: https://www.retailgazette.co.uk/articles/40420-tesco-creates-worlds-largest-supply-chain-group [Accessed 9 April 2018].
Rodrigue, J.P., 2012. The geography of global supply chains: evidence from third?party logistics. Journal of Supply Chain Management, 48(3), pp.15-23.
Ryle, S., 2013. The Making of Tesco: A Story of British Shopping. Random House.
Sparks, L., 2010, January. Supply chain management and retailing. In Supply Chain Forum: An International Journal,11(4) pp. 4-12.Taylor & Francis.
Tao, C.C. and Hung, C.C., 2013. A web-based GIS-T data warehouse system for value-added applications. International Journal of Innovation, Management and Technology, 4(3), p.366.
Tescoplc.com., 2018. Our Businesses. [online] tescoplc.com. Available at: https://www.tescoplc.com/little-helps-plan/foundations/own-operations-carbon-reduction/our-carbon-footprint/ [Accessed 9 Apr. 2018].
Tescoplc.com., 2018. Our carbon footprint. [online] tescoplc.com. Available at: https://www.tescoplc.com/little-helps-plan/foundations/own-operations-carbon-reduction/our-carbon-footprint/ [Accessed 9 Apr. 2018].
Xie, Y. and Allen, C., 2013. Information technologies in retail supply chains: a comparison of Tesco and Asda. International Journal of Business Performance and Supply Chain Modelling, 5(1), pp.46-62.
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