Tesco Supply Chain Management
Distribution and physical logistics are the major components of the firms’ supply chain process. According to Fernie and Sparks (2014), a logistic process involves the scheduled planning, implementation, and controlling process of the effective and cost-effective flow of the raw materials along with the storage facilities in the inventories. On the other hand, the distribution process refers to the transportation of the products direct from the warehouse to the end users. Supply chain management integrates all such activities together and transforms the raw materials into the finished products (Power and Simpson 2016). The development of the effective supply chin process helps a firm to achieve the competitive advantage in a competitive business scenario. The report would evaluate the logistic activities performed by TESCO, the retail giant in UK. The study would draw the attention towards the current issues, trends, and implication for development in the field of logistic management. The theoretical and conceptual analysis of the subject context would be discussed to provide the in-depth knowledge in this area of supply chain management.
Supply chain management integrates the logistics and distribution process for securing the competitive edge of the firm (Power and Simpson 2016). In today’s date, Tesco employs more than 450,000 employees across the world. The major motto of the company is to deliver the better shopping experiences to the customers by developing the remarkable organisational practices. Tesco deals with more than 42 million transactions per week in UK market. The annual sales have reached up to almost £1.3bn and captured the leading position as one of the finest brands in UK (New 2015). The distribution team members are based in different location across the world. The food and non-food distribution systems are also available in the different locations of Tesco. The supply chain initiatives undertaken Tesco concentrates on several factors:
- Sale Scanning Point
- Automated Warehouse Control
- Centralized Ordering and Distribution
- Interchanging the electronic data
The report reflects that Tesco sometimes recycle the product waste during the inventory management. The major focus of Tesco is to sell the retail products to the consumers at a reasonable rate. Considering the increasing competition in the retail market, Tesco has developed their operational process both in local and global markets. Tesco continues making improvements in the distribution and operational strategies. Tesco concentrates on demand-driven focus, which generally helps in influencing and managing the demands in a more appropriate way. Identifying the demand level creates the adequate space for the operations and creates the better supply chain procedures (Hingley, Lindgreen and Grant 2015). At the initial stage, the products used to be delivered directly from the suppliers. The use of the vertical collaboration strategy helped the company in facilitating more improved information transmission to the suppliers on the current inventory holdings. Tesco even uses RFID (radio frequency identification) technology to manage the practices at the inventories (Long and Young 2016). The company ensures the firms are full while managing the warehousing operations. In spite of developing the effective supply chain process, it has been observed that Tesco has been facing the considerable challenges in this global scenario (Sparks 2014). The further section of the study would provide the insightful ideas about the current trends, issues, and expected logistic implications in supply chain process.
Current Trends in Supply Chain Management
The ineffective supply chain procedure creates the negative impacts on firm’s operational activities. However, the current globalised business market ensures the diverse trends that contribute towards higher standardization of the business. It has been observed that the operational processes will not be contained within one function. It is noticeable that during the management of each supply chain procedures, it is necessary for the firms to consider some current trends emerge in this current global scenario (Mason and Evans 2015). Considering the relative significance of each trend as well as the included specific activities may depend on the specific situations. Globalised companies are accordingly shifting their views towards the current advancements brought to the supply chain management field. The following trends are observable in the supply chain procedures of the firms.
- Demand plans at the end
Stadtler (2015) implied that many companies have shifted their focus from the efforts on plat-level production to the demand-driven focus due to the increasing level of the capacities and sources. This demand-driven focus generally concentrates on influencing and managing the demands in a more appropriate way. The companies have adopted the clear mindset that such focus is much helpful in developing the customer base. The firms thus analyze the underlying trends in the information systems and develop the appropriate data to develop the better supply chain process.
- Globalization
The current business landscape is becoming more global. The major improvements are observed in the field of technologies and communication systems. Such dramatic transformation in the globalised business practices creates effects on the manufacturing, distribution, invoicing, and material sourcing as well (Brindley 2017). In fact, it is noticed that the existing technologies and practices are not flexible enough to cope with such business environment. This calls for some of the specific issues in the inventory system.
- Increasing Competition and Price Pressure
The pricing structure, brand recognition, and product features are the major components for differentiating products in the market place. The continued commoditization of diverse products is required to be featured in a manner that would help in distinguishing the company’s position in the competitive scenario (Fahimnia, Sarkis and Davarzani 2015). The high prices of the materials and the warehousing process are much costly. Making improvements to the costs around the inventory management would be helpful in rebuilding the logistic operations and develop the profitable planning. There are some of the vendors, which are quite helpful in differentiating the firms’ competency skills in supply chain procedure. The following technicalities can create the additional values for the firms:
- Radio Frequency Identification (RFID)
- Vendor Managed Inventory (VMI)
- Drop Shipping
- Labeling, Packaging
- Collaboration
Logistics and Distribution in Supply Chain Management
It has been observed that Tesco is already using the RFID technologies, which helped in developing the unique supply chain process for the sustainable future. However, it still requires managing the inventory management process in a more specific ways to cut down the cost and make the profitable approach (Christopher 2016).
- Outsourcing
Outsourcing is another trend in the global supply chain process. Many of the companies examine their core competency level by developing the advantageous outsourcing process. In order to develop the better outsourcing process, it is necessary to pay attention towards three major factors, such as the information system or mediums, global manufacturing and distribution quality and cost, and capabilities of the product designing (Wisner, Tan, and Leong 2014). The effective outsourcing process helps in creating the superior level of supply chain network design. However, collaboration with the right partner is essential in such context.
- Complex and Shortened Product Life Cycle
In today’s world, many of the companies face the considerable pressure to develop innovative practices in their supply chain procedures. The technological advancements are much helpful in creating the chief benefits of the product life cycle management. It helps the companies to design the products by sharing the similar operational process, materials, and other necessary components (Monczka et al. 2015). There is a considerable risk associated with such trend. Such well improved procedures of product life cycle management can increase the leveraging costs of the operations. Hence, the company might have to pay extra for developing this operation and the unplanned cost would automatically increase.
These specific trends in current supply chain scenario are both advantageous and disadvantageous for the firms. It can be implied that the lack of the adequate knowledge in terms of using such latest technologies may create the adverse effects on the firms. In fact, if the firm cannot allocate their capital resources in appropriate manner, it would cost them extra that may lead to loss of revenues. Currently, Tesco has been using the Big Data Analytics for improving the supply chain procedures (Sparks 2014). At the primary level, it is entirely focusing on the inventory management. The big data analytics and automated data development is much helpful for Tesco to develop a sound inventory management. However, it is noticeable that Tesco is struggling with the cost structure of the inventory functions. Tesco continues making improvements in the distribution and operational strategies. At the initial stage, the products used to be delivered directly from the suppliers. The use of the vertical collaboration strategy helped the company in facilitating more improved information transmission to the suppliers on the current inventory holdings (Govindan, Soleimani and Kannan, 2015). In order to boost the products and more proactive approach, it is essential for the company to develop more effective services for the supply chain process.
Logistic Process Planning
The global supply chain process includes some of the key processes that develop the core supply chain management. These specific processes are:
- Customer Relationship Management
- Customer Service Management
- Demand Management
- Order Fulfillment
- Manufacturing flow management
- Procurement process
- Commercialization and Product Development
- Returns
Logistics is the part of the supply chain process. It creates the link between the origin level and the consumption level. The following diagram and explanation would provide the basic conept of the logistics functions at the invetory.
Logistic process planning creates the systematic approach to ensure benefits from a supply chain procedure. It generally involves a set of activities that are needed to be adopted to develop a clear and structured distribution of the finished products. The logistics process helps to flow the goods from the origin point and the consumption point. The first step of the logistics management is to identify the target customer and their specific needs. It is necessary to manage the information flow to establish a physical distribution process. With the help of the manufacturing supports and the procurement facilities, the finished products would be distributed to the suppliers. The suppliers play the major role in delivering the finished products to the end users at the consumption level.
The associated business processes with the supply chain activities run the length of the entire process and develop the appropriate inventory system. Some of the functional silos that include Marketing, Finance, Research and Development, Purchasing Production, and Logistics are associated with the key activities of supply chain procedures. Activities associated with these processes develop the systematic functional areas. However, it has been observed that the operational processes will not be contained within one function. Considering the relative significance of each process as well as the included specific activities may depend on the specific situations. The associated sub-processes and activities are designed to fulfill the necessary perspective based on a setting of manufacturing company. These companies are generally sitting near the middle of the supply chain. It is also noticeable that each of the processes is described at operational and strategic levels. In majority of the cases, it is noticeable that the specific strategic portion often consists of the appropriate development and the strategic direction of each process. It provides a clear blueprint for the implementation process. This step is quite necessary for the firm in integrating the firm with other associated members in this supply chain process. In fact, the operational portion creates the actualization of the process if it is developed by maintaining the systematic approaches.
Conclusion
Management recognizes the key customers and customer groups to be targeted as one major aspect of accomplishing the business goals. The development of the demand-driven focus generally concentrates on influencing and managing the demands in a more appropriate way. Identifying the demand level creates the adequate space for the operations and creates the better supply chain procedures (Mason and Evans 2015). It is necessary to pay attention towards three major factors, such as the information system or mediums, global manufacturing and distribution quality and cost, and capabilities of the product designing. Moreover, the procurements help in identifying the basic needs of the customer and manufacture the appropriate products then send it to the distribution department. The companies have adopted the clear mindset that such focus is much helpful in developing the customer base. Supply chain management integrates all such activities together and transforms the raw materials into the finished products (Mason and Evans 2015). The continued commoditization of diverse products is required to be featured in a manner that would help in distinguishing the company’s position in the competitive scenario.
Conclusion
The study describes the logistics and supply chain procedures undertaken by Tesco. The major motto of the company is to deliver the better shopping experiences to the customers by developing the remarkable organisational practices. Tesco deals with more than 42 million transactions per week in UK market. Tesco use RFID technology to manage the practices at the inventories. The company ensures the firms are full while managing the warehousing operations. In spite of developing the effective supply chain process, it has been observed that Tesco has been facing the considerable challenges in this global scenario. Tesco has been using the Big Data Analytics for improving the supply chain procedures. It is entirely focusing on the inventory management. It is necessary to pay attention towards three major factors, such as the information system or mediums, global manufacturing and distribution quality and cost, and capabilities of the product designing. The identification of the current trend and the global supply chain procedure, it is noticeable that the firms need to address these issues and create the specific approach towards maintaining the effective global supply chain process.
References
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Fahimnia, B., Sarkis, J. and Davarzani, H., 2015. Green supply chain management: A review and bibliometric analysis. International Journal of Production Economics, 162, pp.101-114.
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