Investigation into Procurement Practices: 1129573

Background

Procurement practice is a part of supply chain management that involves several operations such as purchasing the material from the manufacturer, supply the product to the operational hub of the business through logistics systems. Therefore, the procurement system is highly associated with the supply chain management system in any industrial operation. When it comes to the retail industry, procurement plays a major role, because the retail industry does not produce product for the consumers, rather they purchase products from the manufacturer and distributes across the target market (Haddock-Millarand Rigby2015). The operations of retail industry is highly dependent on the procurement strategies, which also contributes to the profitability and growth of the company.The procurement operations of any industry also depends on external factors such as political factors, legal compliances, economical factors and social factors. For companies that uses international level of offshore procurement system, the impact of this external factors even increase. Apart from that internal factors such as funds, organisational structures, operational integrity and human resources have also high impact on the procurement scopes.

In order to regulate the profitability the procurement and supply chain management procedures can be regulated through different strategic intervention depending on the needs and scopes of the organisation. The standard procurements practice of the retail industry inUnited Kingdom helps in governing and monitoring the quality of the products and how the suppliers of the raw materials would be regulated in the market and how they would be purchased by using their funds with potential benefit. Along with that, the procurement practices influencesthe negotiation with offshore supplier countriesacross the world.Since, when it comes to offshore procurement the procurement strategies are often influenced by the World Trade Organization and European Union Trade Policies, political factors such as BREXIT takes a major part in it. However, when it comes to procuring within the national border, the trading strategies are influenced by Government Procurement Agreement.The retail industry in UK can be considered as the largest private sector employer with almot 300000 employees. It generated GDP as high as 381 billion pounds. From the year 20203, the sector stated recovering as well as grew strong from 2014 until the late 2016. The retail sector grew less strong in the year 2013 and early 2018. Employment in the retail sector in Great Britain was as high as 2.8 million in the year 2027, up to 48,000 or 2 percent compared to the total in year 2016 (Morgan, Tallontireand Foxon2017). The size and potential growth of such international level retail companies such as Tesco, Sainsbury’s, Morrison’s, also depends on the accessibility to all other sectors where strategic negotiation, supply chain model, quality of raw materials and sustainability remain an issue. Tesco and Sainsbury’s are two of the most successful retail organisations in UK.  

1.2 Problem Statement

Because of the changing environment, UK participation in the World Trade Organization and the European Union has generated comprehensive procurement practices, resulting in simple migration to UK’s emerging markets and allowing businesses to gain competitive advantage. The process of tendering and bidding process have been clearly laying out the tendering and bidding processes of all the similar basic steps, irrespective of all the basic concepts. There have been many cases where the various stages have been made for the local and international suppliers in order to select the procurement strategies for the companies to follow while tendering and bidding on projects (Haddock-Millarand Rigby2015). The pre-qualifiers would be based upon the capability of maintaining steady marker growth and help them provide immense revenue in order to reach the profit margin. The national and international level suppliers have been making their bidding through processing with the help of the selected procurement models and their loopholes. In business research journals many conceptual analysis of procurement practices can be found with specific set of advantages and disadvantages. At the same time, the critical analysis of conceptual aspects and practical evidence based analysis taken from business case studies can be also found in business reviews papers and business management based research articles. However, there are very limited number of articles of business research that have been developed as a comparative analysis of two retail industry. Lack of comparative analysis in UK based retail industry limits the opportunity to  explore the critical success factor in procurement operations in UK.

1.3 Research Question

As per the problem statement it can be said that there are several unknown facts in the procurement operations that needs detailed explorations and explanations. The major unknown factors are the different procurement practices, underlying variables in procurement theories, supply chain management practice in Tesco, Supply chain management in Sainsbury’s, their advantages and disadvantages. Hence, the major research questions are:

  • What are the different procurement strategies in retail sectors?
  • What are the advantages and challenges of currently used procurement practice of Tesco and Sainsbury’s?
  • What are the scopes of possible mutual adaptation within Tesco and Sainsbury’s?
  • How procurement practice of Tesco and Sainsbury’s could be improved?

1.4 Research Purpose and Aim

The aim of this research is to conduct an in-depth investigation on the various procurement practices while conducting a comparative analysis of the various procurement practices are used in Tesco Plc and Sainsbury’s.

1.5 Research Objectives

As per the research purpose and aimed identified above the objectives of this research are:

  • To identify the various procurement practices of Tesco
  • To identify the various procurement practice in Sainsbury’s
  • To conduct a comparative analysis between the procurement practice of Tesco and Sainsbury’s
  • To find out the advantages and challenges of different procurement strategies
  • To recommend most compatible procurement strategies for retail industry in UK

1.6 Significance of Study

This study is a comparative business analysis. From the in-depth investigation on the various procurement practices while conducting a comparative analysis of the various procurement practices that are used in Tesco Plc and Sainsbury’s this study can shade lights on effective procurement practices in retail sectors. Apart from that through the exploration of the supply chain management theories and practices with the help of literature review this study can find out the practical scope of improvement. This study will also help to find the current procurement practices in Tesco Plc and Sainsbury’s. Along with that, through comparison of the procurement strategies, this study can find new effective scopes for mutual adaptation for both the Tesco and Sainsbury’s. This study can also help to develop various perspective of effective procurement strategies for UK specially in retails sectors

1.7 Research Overview

This report is divided into four major sections namely introduction, literature review, methodology, analysis and findings, discussion and conclusion. In the introduction part the purpose and rationale of this research have been presented. After that, in the literature review section the reviews of text books, articles, news reports, research papers and business reports have been done in thematic format. After the literature review, in methodology section the conceptual and implemented aspects of the methods used in this study have been discussed along with ethical consideration. After methodology, the data analysis and findings have been presented followed by the discussion where the findings from the results have been critically discussed with the help of other researches and evidences. After the discussion part, the conclusion of this study has been presented with implications as per the research objectives and questions.

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

In this section the literature review has been done on the theoretical and conceptual assessment of supply chain management procedures and their properties. The term literature review does not always refers to reviewing the literatures that includes text books and researches. Literature review process can also include reviewing the news report, organisational reports, business journals and other secondary resources. The literature review can be done through narrative review, thematic review and systematic review format. For this literature review, to keep a simple and segregated structure the thematic literature review has been used. The themes have been chosen from the major subtopics found from the literatures. The major themes of this literature review is Supply Chain, Supply Chain Management Strategies and Retail industry of UK. In this literature review the data regarding theoretical concepts of supply chain management and supply chain management strategies have been collected from the text books of business and operational management including the research papers and reports. For collecting the data regarding the retail industry of UK, the national level business report and industrial reports have been reviewed in this literature review.

2.2 Conceptual Framework

Figure1: Conceptual Framework

2.3 Supply Chain

Supply chain refers to the network of organizations, individuals, technology, resources as well as activities that is involved in the manufacturing as well s sales of a products , ranging from delivery of the manufactured resources from the suppliers to the manufacturer, to the eventual delivery to the end users. The segment associated with the supply chain that includes getting the finished product from the creator to the consumers is called distribution channel.  

Ahmed,Bangassa and Akbar(2019) have defined supply chain management as the process of supervising  and managing  the materials finances as well as information as they move from suppliers to manufactures to wholesaler to retailer to the final end consumer.Carbonara  and Pellegrino(2017)  stated that supply chains are developed by an organization in order to reduce their cost while remaining competitive on the business landscape.  Supply change management thus refers to a crucial process since an optimized supply chain possesses the potential to lower the cost along with producing a faster production cycle.

A supply chain generally includes a series of footsteps that includes moving as well as transforming raw material into the finished products transporting the raw materials as well as allocating them to the end users. The entities that is comprised of the supply chain are comprised of vendors, warehouses, transportation organizations, producers, distribution centres as well as retailers.

The chief elements associated with supply chain are comprised of all the functions that initiate from receiving an order for meeting the request of the consumers. These functions are comprised of product development, operations, marketing finance, distribution network as well as consumer service.

Copacino(2019) has pointed out that considering the fact that supply chain management is directly associated with the revenue of the organization, it requires a lot of skill an expertise in order to develop an effective supply chain management. The reason behind this is an effective supply chain management possess the potential to lower the overall costs of the company along with enhancing its profitability. Thus, if one link of the supply chain break down, it can directly affects the rest of the chain and thus can impose negative impact on the revenue of an organization.

2.4Components for Supply Chain Management

According to Dubey et al.(2018), the interconnection between teams as well as companies that involves thee supply chain possess the potential to provide a range of various functions. the supply chain for every company is different  that emphasises on the fact that even each product of an organization can have unique supply chain requirements as well as challenges that leads to different players.  However some of the common components of supply chain includes collecting the sources from the suppliers and procurement, planning according to the demand of the market, order fulfilment checking as well as management of the inventory, cargo transportation, warehousing, logistics and Information Management. Sourcing can be defined as the process of finding, evaluation as well as engagement of supplier so that products or service can be provided to a business. Procurement, on the other hand refers to the process of purchasing the product or service. In business to business sale, the procurement function usually means both sourcing and procurement. For instance, Henry Ford, during the initiation of the business, had decided to own as well as control its full supply chain from mines to raw materials. However, in today’s world of high competiveness as well as availability of raw materials, organizations rarely own all the raw materials for its finished product. Even software products are found to be using preexisting software frameworks as well a codes.

Outsourcing raw materials have been proved to be highly successful since it helps that organization to select the best quality of raw materials and focusing specific areas of specialization. Efstratiadi et al.(2019) argued that in case of retail organizations lie Wesfarmers, they are found to avoid outsourcing certain products, which in turn helps them in maintain the quality of their products which impose positive impact on their reputation of the organization.

When it comes to product as well as services, businesses conduct a thorough a analysis of their requirement, evaluation of the material needs, the financial requirements as well as service requirements (Ellramand Murfield2019). In the next step, the organization researches impending suppliers, understanding the offerings that exist in the industry as well as the degree to which seems to match requirements of the organization. Often organizations select the suppliers on the basis of existing relationships as well as on the results of the analysis they have conducted. In other times, the organization may decide for going to a competitive bid as well as solicit proposal from a number of organizations.

The demanding planning, order fulfillment as well as inventory can be considered as the second component of supply chain. demand plain refers to the process for development of business case. However when the product reaches the market the accurateness of the demand forecast has became much more crucial. According to Esmaeilikia et al.(2016) the supply chain organization contacts with the suppliers for meeting the demand that has been projected. in case the high forecast, the organization not only loses the revenue but it may also impose negative impact on the costs of the product s that are not being sold.

The warehousing as well as transportation can be considered as the third component of the supply chain. In the global economy, it is a huge task of transporting as well as storing commercial products. For instance, approximately,eighty one percent of the products sold at Walmart are shipped by the company’s on distribution network.Fernieand Sparks (2018) stated that a distribution centre refers to a warehouse as well as storage facility where the task includes processing as well as moving product to retailers wholesalers as well as consumers.  Warehouses are generally equipped with technology system that possess the potential to support efficient counting, management as well as transportation of products. In warehousing as well as transportation process. In the warehousing as well as transportation process, the goal of the organization is to move the appropriate product to the location where it will be purchased by consumers.

The fourth component of the supply chain includes logistics and Information management as well as transportation. The physical movement of the goods is known as logistic (Gao et al. 2017). It can be defined as highly complex as well as crucial function. in order to ensure effective functioning of the management, organizations needs to keep appropriate track of their production, warehouse and transportation.  

2.5 Supply Chain Management Strategies

The chief purpose of Supply Chain Management is to enable organizations for developing as well as execute strategies that possess the potentiality to efficiently integrate the management of all the contributors in a supply chain, that includes suppliers, distributers, consumers as well as manufactures, so that the production as well as distribution can be accomplished at minimum investment cost while ensuring consumer satisfaction. However, a good number of organizations are found to struggle when it comes to achieving success in managing their supply chain.

Gopal and Priya(2019) pointed out that some of the chief factors that results in failure of the management to successfully manage the supply chain includes complexity in mass customisation shorter product life cycle, product line proliferation, pressure for faster innovation, tougher, non negotiable  service levels. Stress from quicker life cycles, abundant market and channels, extended global supply chain as well as variability in the business cycle.

According to researchers, adopting a planning which is demand driven as well as business operating model on the basis of the real time demand insights along with demand shaping can ensure effective planning of the supply chain (Heckmann, Comes and Nickel 2015). The right prediction as well as continence planning equipments can ensure a complete view as well as effective response to the risk associate with SCM like suppliers not available political upheaval as well as natural calamities that can affect the manufacturing. A good number of organizations adjust their pricing and promotional strategies for shaping the demand, move the additional product on a quick basis drive the growth of the revenue along with farther expanding the margins for high demand product with limited amount of market supply (Heizer, Render and Munson 2017). The management of an organization needs to possess excellent foresight for levering opportunities along with mediating the challenging events so that the business can not only service but can also experience rapid success. With the arrival as well as maturation of cloud supply chain technologies, a good number of organizations , now a days possess the ability for viewing exactly here all of their inventory is form the store shelf to the manufacturers.

According to Jayaram(2016), building an adaptive as well as agile supply chain with rapid planning as well as integrated execution. Once the executives obtained the ability of understanding as well as shaping the demand as well as risk in a better method, they need to emphasis on their skill of adapting the supply chain for changing the opportunities as well as events.

Another strategy to ensure effective supply change management includes optimising the product designs along with product management for effective supply, manufacturing and sustainability for accelerating profitable innovation. With the enhanced competition between organizations in a specific industry, innovation can be considered to be crucial for being one step ahead of the competition.  For becoming successful, products needs to be manufactured at the right cost, place as well as time (Laari, Töyli and Ojala 2017). It needs to be understood that decisions that re made in the early cycles of the product development possess the potential to make or break the product. Additionally, product innovation along with competitive advantages stem from the management as well as selection of the suppliers as well as technologies.

Aligning the supply chain with the goals of the business by integrating sales and operation planning with the corporate business planning possesses the potential to enhance the capability of the management of an organization to effectively management the supply chain,. In spite of the fact that sales as we as operational planning processes provide coordinating amongst sale manufacturing as well as distribution, there still exists gaps amongst finance, operations as well as strategies of several organizations. One of the methods of bridging these gaps includes integrating business planning that includes employees, processes as we as technology elements of the business. this process not only integrate financial strategic budgeting, but also includes forecasting stages with operation planning along with allowing smart trade off decisions that needs to be made for the business.

Li and Mathiyazhagan, (2018) stated that embedded sustainability into supply chain operation can be considered as one of the major strategies for improving the supply chain. Studies demonstrate that organizations striving from environmental and social sustainability possess the potential to achieve major competatiive advantages especially with respect to the production efficiency, attractiveness of the employees as well as suppliers management. The manager of the organisations must incorporate sustainability in the organisational principles as a core strategic component of their supply chain strategy in order to increase the capability and profitability.

2.6 Retail Industry of UK

The retail industry involves business are people who are involved in selling products to the consumers directly. Retail sectors are comprised of wholesale sectors, logistic sectors as well as manufacturing sectors. These include shops, department stores market stalls, supermarket , door to door sales people as well as internet retailer.

The retail industry in UK can be considered as the largest private sector employer with almot 300000 employees. It generated GDP as high as 381 billion pounds. According to Ueno, Sharma and Kingshott (2018), the retail sector is going through a long period of upheaval. Factors like changing consumer behaviours, enhanced internet shopping as well as strategy retailers used to operate as well as engage with their consumers. In the year 2007, the annual output of retail sector was 92 .8 billion pound while the total employment was 2.8 billion inn the same year. Till 2019, the total number of businesses existing in UK includes 319, 0000 retails.

Varzandeh,Farahbod and Zhu (2016)  stated that with the enhancement of technology, internet shopping in the retail industry has got increased to a good extent. in the year 2008, internet sales accounted for only 5 percent. However the same accounted for as high as 18 percent in 2018. Walton, Petrovici and Fearne(2017) pointed out that internet retaining more popular in UK compared to other countries of Europe. In UK, 82 percent of the residents are found to make at least one online purchase in the year 2017, which is similar to the proposition in Sweden, Denmark, Luxemburg as well as Netherland. In Germany, 75 percent of the residents have made online purchases in the year 2017. When it comes to Ireland 53 percent of the population is found to conduct internet shopping.

Wang et al. (2016) stated that with the enhancement of online shopping, the competition between the organizations has got increased to a tremendous level, which in turn has resulted in several store closures. According to the local data company, 11.2 percent of the retail premises  were found to vacant in the second half of the year 2017.

The retail sector in UK is considered to be the sector that impose high impact on the nation’s GDP. The economic output of the retail sector in the year 2017 was 92.8 billion pounds which indicates 5 percent of the total GVA of UK. Witkowski(2017) stated that, a major fall in the economic output of the mentioned sector has been noticed in the year 2008 due to recession  and the impact had continued on the nation’s economy till the late 2012. From the year 20203, the sector stated recovering as well as grew strong from 2014 until the late 2016. The retail sector grew less strong in the year 2013 and early 2018. Employment in the retail sector in Great Britain was as high as 2.8 million in the year 2027, up to 48,000 or 2 percent compared to the total in year 2016.

2.7 Summary

From the literature review it has been found that supply chain is a network of all the organizations, individuals, resources , technology as well as activities that is involved in the manufacturing as well as sales of a products , ranging from delivery of the manufactured materials from the suppliers to the manufacturer, to the eventual delivery to the end users. From the secondary data it has been also found that the common components of supply chain includes collecting the sources from the suppliers and procurement, planning according to the demand of the market, order fulfilment checking as well as management of the inventory, cargo transportation, warehousing, logistics and Information Management. In today’s world of high competiveness as well as availability of raw materials, organizations rarely own all the raw materials for its finished product.

Strategy of supply chain management and procurement has been also found as a major part of business operation from the literature review. It has been found that some of the chief factors that results in failure of the management to successfully manage the supply chain includes complexity in mass customisation shorter product life cycle, product line proliferation, pressure for faster innovation, tougher, non-negotiable service levels. It has been also found from the literature review that the responsible persons of the organisations must incorporate sustainability in the organisational principles as a core strategic component of their supply chain strategy in order to increase the capability and profitability. Apart from those internal factors such as funds, organisational structures, operational integrity and human resources have also high impact on the procurement scopes. From the literature review it has been also found that The size and potential growth of such international level retail companies such as Tesco, Sainsbury’s, Morrison’s, also depends on the accessibility to all other sectors where strategic negotiation, supply chain model, quality of raw materials and sustainability remain an issue. Tesco and Sainsbury’s are two of the most successful retail organisations in UK.  

2.8 Literature Gap

Literature gap implies that limitation of a literature review process that restricts the potentiality of a research to meet the research aims and objectives accurately. In this literature review the thematic literature review structure has been used to simplify the presentation of the major subjects of this study namely supply chain, supply chain management Strategies and retail industry of UK. However, this thematic review structure limits the ability to compare and contrast the data found from different literatures. It has made the review less measurable and less precise. Instead of the thematic review systematic literature review could has been used for more critical comparison based analysis. Therefore lack of critical and systematic analysis is the major limitation of this literature review.

CHAPTER 3: METHODOLOGY

3.1 Introduction

The methodology of a research refers the procedure of conducting the research considering the theoretical and practical aspects of the research including the data collection and data analysis procedure to form the implication. The research onion represents the conceptual framework of the research where the outer layers represent more conceptual aspects of the research and internal layers represent more practical aspects of the methodology. In this section the methodology will be discussed as per the outer layer to inward progression in the research onion which will consist of research philosophy, research approach, research design, selection of data collection tool, sampling, data collection procedure and data analysis method (Sahay2016). Apart from that the ethical consideration has been also discussed in this methodology section.

3.2 Research Philosophy

Research philosophy implies the philosophical aspect of viewing the research problem in order to find the proper perspective to solve the problem. As per the epistemological segregation, the research philosophies are positivism, interpretivism, realism and pragmatism. Positivist research allows large number of data collection and analysis of those data in a collective perspective. On the other hand, interpretivism allows the research to analyse in depth data collected from stipulated resources from different perspective. Realism is a philosophy of crucial analysis of reality and the pragmatism is a mixed concept of positivism and interpretivism (Glesne2016). This research aimed to explore and compare the supply chain procedures and strategies of two companies. Therefore, this research needs interpretation of large number of data through various perspectives. This research does not include multiple resources based comparison and empirical experiment. Therefore the chosen research philosophy for this research in interpretivism.

3.5 Research Approach

The research approach is the approach of a study to solve the problem. Different research approaches can be used based on the nature of the problem and availability of the initial knowledge. The major types of research approaches are inductive research approach, deductive research approach and abductive research approach. The inductive approach allows exploring the topic without having any perception about it. On the other hand, the deductive approach is useful when a theory or pre-assumption known as hypothesis needs to be testified. Abductive approach allows a logical predictions against a problem by abducting the concepts of other problem solving approach (MacLure2013). As per the research purpose and the objective of this research the data has been collected and analysed to explore and compare the supply chain procedures and strategies of two companies. This research does not have any pre-determined assumption or hypothesis. Therefore, the chosen research approach of this research is indicative. This indicative approach allowed the research to explore the variables and compare them in an exploratory perspective while finding the most strategic and beneficial techniques of supply chain management. Therefore, the chosen research approach for this research is inductive research approach.

3.6 Research Design

The research design implies the selection of research environment, study method and tools for collection the research in an experimental or non-experimental focus. The major research designs are experimental research, cross sectional research, observational study, case study, reflective study, systematic review and others (Taylor, Bogdanand DeVault2015). Depending on the aim and the scope of utilising the tools for a research the design of the research has been chosen in this study.According to the research aim and objectives this research needs data of organisational operation for both chosen organisations. Clearly it is an exploratory study where the purpose is to find working procedures of two organisations where analysing them by comparing with each other. More than the primary data, this research needs secondary data resources and business review (Houghton et al. 2013). Therefore, the chosen research design for this research is case study. The business case studies of both chosen organisations will be considered to measure the effectiveness of their supply chain strategy. On the other hand, the data regarding the supply chain operations of the respective companies have been collected from the business reviews and research.

3.7 Data Collection Procedure

The data collection procedures implies the process of collecting the data from the appropriate and authentic resources for analysis. The data collection procedure can be primary or secondary based on the requirement. Primary data collection is based on field based data collection and experiment. On the other hand the secondary data collection procedures allow the research to collect data from various secondary resources such as previous literature, news reports, and business review, government reviews and others (Hyett, Kenny and Dickson-Swift 2014). In this research the data collection will be done for two purposes namely for exploring the supply chain management of the company and for finding the effectiveness through case studies. In this research, business reviews, news reports, business annual reports and other secondary resources will be considered for data collection. Therefore, for this research the data collection procedure is based on secondary data collection procedure.

3.8 Data Analysis Procedure

The data analysis procedure implies the process of analysing the collected data from the data collection procedures. The collected data can be qualitative or qualitative and based on the collected data the analysis procedures can also be quantitative and qualitative. The quantitative analysis is based on mathematical and statistical analysis of numerical data whereas the qualitative analysis is based on the analysis the non-numerical data through logical reasoning and conceptual analysis. As per the research method and data collection procedures discussed earlier, the data analysis procedures includes both numerical data and non-numerical data (Choy 2014). The non-numerical data analysis includes the analysis of strategies, flowchart and design of the supply chain management. Whereas, the numerical analysis consists of financial comparison of effectives between two chosen organisations. Therefore, this research has used both quantitative and qualitative data analysis procedures where qualitative data analysis procedures has been used for financial analysis and qualitative data analysis procedure has been used for conceptual analysis organisational procedures.

3.9 Ethical Considerations

The ethical consideration of any research holds the authenticity, reliability and credibility of a research. The ethical consideration of a research is based on three major aspects namely consent of the participants, confidentiality of the data and the health impact of the procedure on the participants (Njie and Asimiran2014). This study is based on the secondary data collection and therefore this study does not need any of these considerations. However, the secondary data collection for this research should be credible, authentic and reliable. Apart from that, it has been also ensured that the source of these data are highly valid. It has been also ensured that for data collection no data piracy has been used. Most of the data used in this paper are either freely available on internet or being paid to get the information.

3.10 Summary

This research aimed to explore and compare the supply chain procedures and strategies of two companies.Therefore the chosen research philosophy for this research in interpretivism. At the same time, the chosen research approach for this research is inductive research approach. Depending on the aim and the scope of the research the design of the research has been chosen in this study. The business case studies of both chosen organisations will be considered to measure the effectiveness of their supply chain strategy. On the other hand, the data regarding the supply chain operations of the respective companies have been collected from the business reviews and research. In this research, business reviews, news reports, business annual reports and other secondary resources will be considered for data collection. As per the research method and data collection procedures discussed earlier, the data analysis procedures includes both quantitative and qualitative data analysis.

3.9 Limitation of Methodology

The limitation of this methodology implies the boundaries of the methods chosen for this research that limits the research to meet its objectives and aims correctly. The limitations of this methodology can be viewed from two aspects. Firstly the research is entirely based on secondary data which lacks the practicality of the data presented here. With primary data collection through interview more practical evidences could have been collected. Apart from that, the case study method used for this research is not based on recent cases or individual cases. This case study analysis is based on the progression and development of supply chain and logistics system of the business. Therefore, it also lacks the current evidences of success of failure. From both of these aspects the data collected and presented in this research lacks practicality and recency of data.

CHAPTER 4: ANALYSIS AND FINDINGS

4.1 Case Study of Tesco

Tesco was founded by Jack Cohen in 1919 as a grocery stall worth of 30euro. Tesco has made their first own product and associated supply chain for tea (Sparks2014). With their own products and own supply chain administration Tesco opened their first store on 1929 and started to expand their supply chain to make their stores supermarkets. After 1947 Tesco became a public sector and they have started self-service stores and eventually they expanded it to a supermarket in 1956. To keep a price effective supply chain management from the beginning of their exposure as supermarket they had to comply with the regulation named Retail Price Maintenance or RPM Act. However, after abolishing this act in 1964 they started to offer product with competitive pricing which increased their demand and sales margin enormously. Within 1967 they became able to develop their own superstore with the area of 90,000 square-feet. Because of their strategic supply chain management to keep competitive price, within 1970, Tesco became famous for their “cheap but high quality” products (Zhao 2014). The second major changes in the supply chain of Tesco occurs after the economic advancement in Britain. With the increasing income level and lower unemployment rate, the demand of the luxury and high priced item increased significantly. As a result within 1975, the supply chain management added new chains for luxury items and costly products. At that time, a large number of Tesco stores were distributed as smaller stores near petrol pumps, amusement parks and others. To keep their supply chain efficient they shut down a large amount of small stores and made some small stores larger stores with at least 30000 square feet area through refurbishment within 1978.

Tesco has a very unique supply chain management strategy known as “Tesco’s SCM”. The main agenda of their SCM is to keep their ‘Process Improvement’ running, where they can continuously improve their supply chain management to more modernised, efficient and cost effective process. Within 1983 and 1996 Tesco made a new changes in their SCM by through introducing point of sale scanning, centralized ordering, centralized distribution, automated warehouse control and electronic data interchange known as EDI (Hooker and Monteiro 2013). They started to focus on customer triggered replenishment method. In this method, the same set of suppliers are used with cross dock distribution centres or DC. Vehicle are used to supply the materials to stores in a particular framework for entire business expansion. Purchasing bulk supplies by stores can cause high level discount. During the distribution the replacement package are picked up by the vehicles. This procedure is also known as continuous replacement procedure or CR (Hookerand Monteiro2013).

Tesco has also focused on lean management where only the required amount of supply delivery operations are done to ensure zero waste of products and other resources. For supplying the cola Tesco first started their lean supply chain management process, which also contributed to their business sustainability. By assessing the warehousing system in regional DC the management system found out that defective machineries and procedures that were causing bottle spills and waste (Varley2014). Tesco started a regular warehouse assessment procedure where bottles were sorted in very strategic way with the help of automatic loading and unloading technologies for ensuring zero wastage of product. Tesco adopted the lean management strategy from the Toyota and applied it in their almost all supply chain procedures from beverage and food products to garments and luxury products (Evansand Mason 2018). To manage the resource used for their supply chain system Tesco reviewed their Supply trucks and they found that in some short supply channels where trucks needs frequent transportation with lower volume of products, were requiring surplus amount of fuel and maintenance while wasting the additional expenditures. To change this, Tesco sorted their logistics transportation system based on the requirement of the regional DC and distribution channel distance while changing the capacity of tracks accordingly. It increases the frequency of delivery while having higher demand coverage and increasing sales margin. This new logistics sorting reduce their average supply chain logistics time between two warehouses from 15 days to 5 days (Haddock-Millarand Rigby2015).

Tesco now has more than 3000 stores worldwide where around 1800 stores are in UK. Now the supply chain of the Tesco involves more than 12 countries (Xie and Allen 2013). The sourcing of Tesco follows a three step procedures that includes selecting the source, assessing the quality of the product and negotiating with supplier. To keep a lower price margin Tesco prefers procuring product from local areas. Currently a large section of the supply Tesco is making from United Kingdom that includes, Scotland, Ireland and Great Britain. However, for non-food and non-beverage items international level procuring serves a major role on Tesco. Tesco UK directly works with sourcing hub to procuring products from the local regions and same goes to other part of the globe such as Asia and other part of Europe (Christopher, Mena and van Hoek2018). The distribution channel in Tesco is based on nested structure where for national distribution they use cross dock distribution centre and for overseas supply and distribution the Consolidation Centres or CCs are used. Through this CC the smaller loads from the offshore suppliers in that region are consolidated before being shipped to UK. The distribution fleet of Tesco controlled and contracted directly by Tesco, which adds extra advantages over costing and process controlling. This strategy of Tesco is also known as Primary Distribution strategy that is helpful for both inbound and outbound logistics (Xie and Allen 2013). To keep their logistics and supply chain management optimum they use a demand analysis procedure named Collaborative Planning Forecasting and Replenishment or CPFR. To keep an integrated distribution and supply system they uses data sharing method using Point of Sale data or POS data, which also helps in continuous replenishment system in order to reduce the replenishment time and increase the non-faulty product ratio throughout distribution.

The information sharing system is very essential for the supply chain operation of Tesco where a continuous information flow is required for CC, CR, DC and CPFR systems. Hence, Tesco keeps their information sharing and management system advanced through their Tesco Information Exchange Program or TIE. TIE also an integrated information exchange system that connects the operations to suppliers and even farmers regarding the current demand level and required supply related information sharing. As electronics advancement and digital integration Tesco has adopted RFID or Radio Frequency Identification system it order to track the product, packages, transports, product quality, properties and other essential information through radio frequency based transmission and reading system (Doherty, McConnell and Ellis-Chadwick2013). To keep a strong integrity among the supply and distribution logistics system Tesco uses a radio frequency based broadcast system. It helps the logistics systems including warehouse, cargo vehicles, and resource management unites such as CC, DC and others to keep a balanced and profitable flow of goods while having a well understanding of the product flow and control over logistics system.

4.2 Case Study of Sainsbury’s

Sainsbury’s Plc  is one of the largest retail organisation in Uk and it was founded in 1869 by John James Sainsbury and his wife Mary Ann. Currently Sainsbury’s has 150000 employees with 500 supermarkets across UK and 290 smaller stores. The product of the Sainsbury’s mainly includes the grocery products, electronics, garments, household equipment and others. From the history of the business development and growth Sainsbury’s utilises its supply chain management system to maintain competitive advantages. The focus of the supply chain management and procurement strategies of Sainsbury’s is always on reducing the operational and procurement cost to maintain a good return on investment form the sales. At the beginning of the Sainsbury’s business and supply chain operations the company had six channels form suppliers to regional distribution centres (Hookerand Monteiro2013.). The company also uses Primary Consolidation Centres, and cross docking to ensure efficient logistics and distribution services across the United Kingdom. From the very beginning of the procurement channel development Sainsbury’s focuses on the information management and product flow system, where physical storage system and distribution channels take a major part (Ali 2018). The distribution channels of Sainsbury’s are distributed in specific order that can balance the efficiency of low cost product supply and market demand. For this the company always ensures that some of their high demanded products are always available to the local market. For this, Sainsbury’s follows a demand focused procurement strategies, where the most demand products are sorted as the top priority of the logistics and distribution system and the suppliers are informed accordingly. The products are initially collected through the suppliers by truck where they use cross-docking. Cross-docking is a strategy of transporting ample amount of goods through cargo vehicles without using any intermediary warehouse or storage, which is known as nodes (Smith-Gillespie 2014). Here, the transfer of goods executed through directly unloading the goods from one vehicle and loading to another cargo vehicle. Through cross docking the goods come to the regional consolidation centres where the goods are sorted and warehoused properly and distributed to regional distribution centres as per the demand. After distributing the goods the regional distribution centres the products are then distributed to stores and supermarkets based on the demand, lower price availability.

The procurement operations executed by the Sainsbury’s is also known as cost controlled procurement. However, before making investment to have supply of a particular product from supplier the company executes an in-depth market research to find the optimum suppliers that can supply the product with optimum balance in cost and quality. Since, the target of this business is always keep the product price lower than the competitors, the company’s procurement operations are mainly distributed with UK and associated European countries. For the same reason, the company never tries to expand across the globe as well. However, the focus of this company is always to make the suppliers as a part of organisational operations, development and sustainability (Morgan, Tallontireand Foxon2017). Therefore, Sainsbury’s uses a unique strategy where they targets low costly suppliers that have high potentiality to improve and after integration the company starts to strengthen their supplier in every way.  

The current procurement functions work under tight demands, because most companies are struggling to emerge from recession cost controls. That’s why Sainsbury invested in a procurement plan that focuses on reducing costs associated with procurement such as administrative costs, increasing buying efficiency and reducing the maverick purchasing while ensuring that the interest of shareholders is continuously increased (Nicoletti2018).The supply chain employees of the Company are expected to work diligently to ensure that goods and services are available at lower price compared to competitors to more than 17 million clients who frequent the Sainsbury supermarkets on a weekly basis. In reality, Sainsbury has taken an aggressive approach to low-cost sales. The company’s policies require procurement staff to support this strategy, while store development personnel seek alternative strategies to attract and retain customers.

Unless the company operates effectively, procurement cannot deliver low cost. In 2010, the company’s CEO, Justin King, therefore spent approximately EUR 40 million to provide farmers with IT services. Such services will make the supply chain more effective by enhancing the buying network. Sainsbury’s believes it can create an opportunity to simplify the operations of the organization through cost-saving strategies for enhancing the efficiency and efficiency of the supply chain.This strategy helps in turn to improve the “customer shopping experience,” according to Sainsbury (2011), as well as to simplify things to colleagues, while also achieving significant cost savings. The organization has taken measures to reduce the quantity of paperwork to minimize the cost of deliveries, which must be extended to the customers through higher prices of products and services. The self-scan checkouts in about 700 stores are a good example of this attempt.Sainsbury, too, (2011), tells us that the company, “by way of double-sided printing, decreased by two fifths the amount of paper used for shop receipts equivalent to over 350 tons annually.” The company has also managed over the last three years to save around 16 percent of the energy consumed in every store. 90 stores can be powered by energy saved. Through capitalizing on incentives to lower the direct cost of materials, the company is willing, in contrast with its rivals, to produce its goods at much lower costs. Therefore, Sainsbury’s overall supply chain approach is guided by the competitive advantage principles.

In Sainsbury, integrity sourcing ensures that the company is collaborating with all suppliers to ensure ethical supply chains are integrated into the environmental, economic and even social implications of supplier sourcing. This is because one provider is willing to provide large amounts of products and services. The company can therefore fulfil its procurement strategy to purchase cheaply at low prices. With this in mind, Sainsbury asserts that it aims to value “the communities we produce from, promote high standards of animal welfare and responsible sources,” in its supplier relationships management strategies. The supplier development strategy is structured for Sainsbury to help them develop the business of the suppliers, such as to analyze it and to update the company strategy of the suppliers. The growth of suppliers is key to Sainsbury’s potential prospective performance.It aims to help an organization reduce costs, improve supply performance, solve quality issues and identify new supply pathways.

A continuous communication process with its supplier base to share Sainsbury’s business strategy and targets. In this particular case, the key suppliers participated in their SRM program and a number of others. Sainsbury’s 20×20 sustainability plan is one of the five values that provide the plan framework, namely “Sourcing with Integrity.” The 2013 supplier award recognizes suppliers ‘ contributions to 5 key areas (pillars): risk and governance; trade; innovation; quality and service; and 20x 20 (Flynnand Bailey2014).

Suppliers constitute one of the Sainsbury’s key stakeholders. They offer food and non-food products sold at Sainsbury stores for profit. Therefore Sainsbury must ensure that it maintains positive relations with the large pool of suppliers in order to sustain the growth of the organization’s business. With this group of suppliers, the company shares its excellent practices by training various new farming technologies and by helping to introduce technologies to boost production wherever appropriate.In 2010, Sainsbury offered to give farmers, who have implemented good agricultural practices that mean sustainable and ecological farming techniques, cash bonuses to develop positive supplier relationships.Indeed, in 2006 Sainsbury invested over EUR 30 million to improve these relations. This move was strategic to develop suppliers, since it can lead “in product or service offering, business processes and performance improvements in the overall added value of the suppliers.” (Fernieand Sparks2018) The development groups ensure that many of the products sold via the labelling of organizations come from different supply chains dedicated mainly to the organization and that they are ethically and environmentally sustainable and are fitting well for future Sainsbury goals and targets.The policies of the organization are found to impair the contributions identified. A policy review is considered with the aim of building the confidence of strong suppliers.

4.3 Supply Chain Map of Tesco

In the following section the Suppliers Model for TescoPlc has been developed form the above findings and presented in tabular form.

Suppliers
SuppliersLocal or regional focused to keep price low
Local ResourcesFood and beverage products, beef, fish, groceries,  vegetables
Local Suppliers RegionsScotland 95%
 Ireland
 Britain
Local Supplier Farms, fisheries, beverage distributes, broachers  
International ResourcesGarments, luxury products, electronics
Offshore Suppliers Asia, Europe, Japan, India, China etc. Offshore distribution hub

Table 1: Suppliers Model for Tesco

In the following section the Supply Chain Logistics Model for Tesco Plc has been developed form the above findings and presented in tabular form.

Supply Chain and Logistics
Local DistributorsLocal Distribution Centres DC
Offshore DistributersConsolidate Distributors of CC
Strategic ModelContinuous Replacement  or CR, Collaborative Planning Forecasting and Replenishment CPFR
Flow Controlling InfluencerPoint of Sell or POS
ProcedureSuppliers receives orders more than once a data
 Primary distribution occurs through smoothed goods and profiling that eliminates traffic issues
 Depots stores orders, assembles when sock arrives.
 Delivery done by multiple deliveries, efficient fleet utilisation, faster replenishment
Logistics TransportationTransportation cargo vehicle allocation to ensure high frequency and low cost operations
 Maintaining integrated smart cargo transportation fleet with total governance and control.

Table 2: Supply Chain Logistics Model for Tesco

In the following section the Information Management System in TescoPlc has been developed form the above findings and presented in tabular form.

Information Management System
Data processing system Electronic Data Interchange
Information sharing continuous connectivityTesco Information Exchange
Store, Distributors, Supply hubs, DepotsTesco Information Exchange
Logistics tracking Radio Frequency Identification or RFD
Retailer warehousing RFID
Supplier resource receiving RFID
Retailer Store RFID
Supply materials management or Lean managementAutomated loading and unloading to avoid error
Offshore logistics trackingRadio Broadcast System.
 Depots stores orders, assembles when sock arrives.
 Delivery done by multiple deliveries, efficient fleet utilisation, faster replenishment

Table 3: Information Management System in Tesco

4.5 Supply Chain Map of Sainsbury’s

In the following section the Sampler Model in Sainsbury’s Plc has been developed form the above findings and presented in tabular form.

Suppliers
SuppliersOnly local and UK based Supplier are included in procurement
Local ResourcesFood and beverage products, beef, fish, groceries,  vegetables, garments, household equipment’s
Local Suppliers RegionsScotland
 Ireland
 Britain
Local Supplier Farms, fisheries, beverage distributes, broachers, textile manufacturer, electronics manufacturer

Table4: Suppliers in Sainsbury’s

In the following section the Supply Chain and Logistics Model in Sainsbury’s Plc has been developed form the above findings and presented in tabular form.

Supply chain and logistics
Regional DistributorsRegional Distribution Centres RDC
Product sorting and warehousingPrimary Consolidation Centres, Cross-docking
Strategic ModelLow cost product availability and market demand
Flow Controlling InfluencerMarket Demand and Availability of Low Cost Products
ProcedureSuppliers receives orders based on cost
 Primary distribution occurs through cross-docking to increase flow and efficiency
 Primary ConsolidateCentres stores orders, assembles when sock arrives.
 Regional Distribution Centres distributes products as per demand
Logistics TransportationCross-docking for procurement where direct cargo truck to cargo truck goods transfer is executed
 Maintaining integrated cargo transportation with sustainable and environmental  friendly equipment use

Table5: Supply Chain and Logistics in Sainsbury’s

In the following section the Supply Chain Management and Integration in Sainsbury’s Plc has been developed form the above findings and presented in tabular form.

Integrated Supply Chain Management and Procurement
Integrated Supply Chain ModelVertical Integration for groceries, otherwise horizontal integration
Supplier  Integration ModelSupplier Relationship Management or SRM and Sainsbury’s 20×20
Integration ProcedureFinding lowest cost suppliers with potentiality
 Developing lifetime integrated agreement with suppliers
 Upgrading and facilitating suppliers to improve efficiency of supplier
 Communicating directly with primary level manufacturer and farmers
 Promoting innovative interventions and encouraging for implementation
 Subsidising primary level manufacturer and farmers through IT advancement
 Reword and recognition program for suppliers
 Ensure Sustainability through auditing, monitoring and control

Table6: Supply Chain Management and Integration in Sainsbury’s

CHAPTER 5: DISCUSSION

5.1 Introduction

After presenting the analytical findings from the case studies of Tesco Plc. and Sainsbury’s Plc., in this section the critical analysis has been done to answer the research questions. The purpose of this discussion is two, comparing the procurement procedures of these two companies and finding the scopes for mutual adaptation. The business process comparison is a very useful method of business study that provides a real in-depth view regarding the advantage and disadvantage of currently used business strategies. It can be also used to predict how much effective the business operations can be in near future or for long term. In the findings section of this study where the case study analysis has been done the six major sub-factors can found as a pillar of procurement strategy analysis. These pillars are supply materials or goods, supplier selection, supplier location, logistics, technological use and Integration. Therefore, in section the comparison between the procurement strategies of Tesco and Sainsbury has been done through using these six major factors of procurement.

The mutual adaptation is process of adapting properties or specific pattern of existence from another entity. This term is commonly used in the study of biology and anthropology. However, in business study the term mutual adaptation is used when a business can adapt one or more strategies from another business while that business can also adopt strategies from it simultaneously to improve their business efficiency, operational effectiveness, profitability and overall growth. Throughout the history this procedure is used within different organisations and even within different industries. In this discussion the purpose is to find out the effective procedures or procurement strategies in Tesco that can be adapted by Sainsbury’s for their holistic improvement while finding the efficient strategies in Sainsbury’s that can be adapted by the Tesco to improve their business operations as well.

5.2 Comparison of Procurement Strategies

Supply materials or goods is the major attribute of procurement operation that defines the field of operation by an organisation and the scope of further improvement.  In simple words the supply materials or goods in retail sector refers to the products that the retail organisations procure from different manufacturers and bring them in the stock of the retail organisation for final merchandising or retailing. As per the above comparative analysis it can be said that the basic products of retailing for Tesco and Sainsbury are same, those are groceries, household items, garments, beverages, packed food (fish, beef, meat and others), electrical items and electronics. However, the major difference in products stocked and sold by both of these companies is that Tesco Plc focuses on different types of product where electronics goods and even electronics accessories take a major part. However, Sainsbury’s procures mostly the grocery products, such as fruits, vegetables and apart from that beverages, packed food, meat and other raw food materials. Textile is another major focus of Sainsbury’s however, the company never utilised electronics goods for retailing properly. A major reason behind this is that Sainsbury’s is mostly dependent on the local manufacturer based procurement, whereas Tesco allows a worldwide trading route for its procurement. The differences regarding procurement from different location will be discussed in the following sections separately.

The selection of supplier location is a major factor in procurement operation. Selecting supplier location refers to geographic location of supplier. In this world of globalisation, people are having idea of a product or service immediately after launching the product in the market anywhere across the globe. Through social media advertisements, digital networking system people are becoming aware of global level products and services and the demand of global level product is increasing day by day. Therefore, it is becoming a procurement strategy of every organisation of the retail industry throughout globe to procure from offshore manufacturer and supplier to fulfil the demand. In this context, Tesco Plc. Uses global level procurement strategy where the company procures raw material or manufacturing products from Asian countries (such as China, Japan, etc.), European countries and other parts of the world. On the other hand the Sainsbury’s always focuses on the regional procurement where almost all the suppliers of this company are geographical distributed within the UK that includes England, Scotland and Ireland. Because of this regional supplier selection Sainsbury’s has to face some challenges to compete with competitors through product diversification. At the same reason the company has focused on the cost based procurement. This strategy will be furthered compared with Tesco Plc in the following section.

Supplier selection is a major attribute of any procurement process and decision making that has huge impact on the total operational and financial efficiency of procurement operations. Selecting supplier can be done in three stapes namely targeting, segregating and selecting. In targeting phase the target suppliers for a particular products have to be selected. Then the segregation process can be done through assessing the reputation of the supplier, efficiency of the supplier, productivity of the supplier, quality of the supplied product, cost of the supplied goods and other attributes. After the segregation, the retail company needs to select the suppliers based on their optimum requirement. For Tesco Plc the selection of the supplier is based on demand and supply balance while keeping the cost of the product at optimum level. Tesco’s first priority is not cost, rather they focus on the point of cell through which they can find the most suitable suppliers, who can deliver right amount of product with affordable price and quality. Therefore the three major priorities sequence wise are demand supply balance, quality of product and cost. However, when it comes to choosing the suppliers for Sainsbury’s they use a different priority sequence. The most significant cause is that Sainsbury’s has cost leadership market competition strategy and therefore their priority is always cost of the supplied materials. To ensure the low cost supply and procurement operation they have limited their procurement operation within UK. Priority wise the major parameters of selecting supplies for Sainsbury’s are cost, quality and demand.

Logistic is a major part of any research that refers to the process of transporting the goods through cargo vehicle and utilisation of warehouse and buffering nodes in logistics network. , Tesco sorted their logistics transportation system based on the requirement of the regional DC and distribution channel distance while changing the capacity of tracks accordingly. It increases the frequency of delivery while having higher demand coverage and increasing sales margin. The distribution channel in Tesco is based on nested structure where for national distribution they use cross dock distribution centre and for overseas supply and distribution the Consolidation Centres or CCs are used. The logistics model that Tesco PLC is currently using is Collaborative Planning Forecasting and Replenishment or CPFR. In this case Sainsbury’s uses similar logistics chain while using Regional Distribution Centres RDC, Primary Consolidation Centres, Cross-docking. The only differences is that Tesco uses their consolidation centres for offshore procurement, whereas Sainsbury’s uses primary consolidation centres for regional consolidation buffer and sorting with warehousing. On the other hand, the use of cross docking operations is higher in Sainsbury’s than Tesco Plc. The logistics model used by Tesco is based on Point of Sale as well as continuous replacement where the logistical model used by Sainsbury’s is based on the demand and cost of the product.

Technology is a major part of procurement operations that ensures the integrity and coordination of entire procurement and logistics operations. Effective utilisation of technology can minimise the error in logistics system that eventual impacts the efficiency and wastage of money and resources during the procurement activities. As per the procurement model analysis of Tesco Plc it has a remarkable technical advantage when it comes to utilisation of the technological advancement in procurement and supply chain management. For data processing, global connectivity and integrity Tesco uses Electronic Data Interchange as core data processing system. Apart from that from information sharing continuous connectivity Tesco uses their own remarkable software intelligence named Tesco Information Exchange. Tesco Information Exchange is in used for entire logistics and procurement operations including Store, Distributors, Supply hubs, Depots and other section of the procurement operations. On the other hand, Sainsbury’s has a dedicated digital server which is integrated to their business operations as well as logistics and procurement. Logistics tracking in Tesco is done through Radio Frequency Identification or RFID. Apart from that, for supplied materials management or Lean management automated loading and unloading equipment is used to avoid error. However, in this context the Sainsbury’s follows a conventional system. The procurement and supply chain operations of Sainsbury’s is not facilitated with the advancements of Industry 4.0. The technical advancement of Sainsbury’s procurement system is aligned with sustainability and supplier integration. The utilisation of technologies in the sustainability can be clearly found from the procurement strategy of Sainsbury’s.  

Integration is a system of making an operations or a set of operations and the respectable stakeholders connected with the foundation operations of the business. In procurement strategy integration can be done vertically, horizontally and agile method. Sainsbury’s executes their supply chain management integration through Supplier Relationship Management or SRM and Sainsbury’s 20×20. The most crucial strategy of the supply chain integration in the Sainsbury’s operations is upgrading and facilitating suppliers to improve efficiency of supplier. Apart from that the company promotes innovative interventions and encourages for implementation. They also subsidise the primary level manufacturer and farmers through IT advancement. They has their own reword and recognition program for suppliers. On the other hand Tesco Plc does not have this much integration with the suppliers. The vertical integration strategy used by the Tesco is not highly beneficial for its supplier. In other words it can be said that Tesco chooses efficient suppliers for procurement, however, Sainsbury’s develops the efficiency of their supplies by themselves.

5.4 Scope of mutual adaptation

From the above analysis it can be said that both Sainsbury’s and Tesco have their individual set of strengths and weaknesses because of their difference in procurement procedure and supply chain management for their retail business. From the above analysis of different procurement strategies of two companies it can be said that both Sainsbury’s and Tesco Plc has severer things to adapt from each other. In the following section these points are discussed.

From the analysis it has been found that Tesco has a global level suppliers. Similar to Tesco Plc. Sainsbury can use global level procurement strategy where the company procures raw material or manufacturing products from Asian countries (such as China, Japan, etc.), European countries and other parts of the world. It will help them to compete the market with product diversity. In this world of globalisation, people are having idea of a product or service immediately after launching the product in the market anywhere across the globe. Therefore, through this strategy Sainsbury’s will be able to meet the demand of the market in every way. Therefore the procurement strategy of Sainsbury’s as a strong member of the UK retail industry should procure from offshore manufacturer and supplier to fulfil the demand. For procurement Sainsbury can utilise similar offshore logistics model like Tesco involving international consolidation centres and integrated fleet control.

The major strategy that Tesco should adapt from the Sainsbury’s is integration of supplier as a part of the organisational procurement operation, which can eventually improve the quality of the product without changing the cost of procuring the product. Tesco should find low cost suppliers with potentiality. After that they should develop lifetime integrated agreement with suppliers. Tesco Plc. can upgrade and facilitate suppliers to improve efficiency of supplier through using their remarkably advanced technologies such as automated loading and unloading, Radio Frequency Identification or RFID and Tesco Information Exchange. Similar to Sainsbury’s Tesco can improve their sustainability strategy as well by auditing, monitoring and control in their procurement operations. Tesco can also utilise Reword and recognition program for suppliers.

From the analysis it has been also found that Tesco Plc. has a very strong and remarkable technological advancement and implementation in their procurement and supply chain management. Therefore, similar to Tesco Sainsbury can improve their Logistics tracking, Retailer warehousing and Supplier resource receiving through using Radio Frequency Identification or RFID. They can also use the Radio Broadcast System for offshore communication. They can also use efficient fleet utilisation and faster replenishment through multiple deliveries and small loaded trucks. Strategic cargo vehicle allocation can be also very effective for reducing cost of the product.  

5.9 Summary

It can be found from the above discussion that both Sainsbury’s and Tesco have their own collection of strengths and weaknesses due to a disparity in sourcing processes and supply chain management for their retail businesses. From the above study of two companies ‘ separate procurement approaches it can be said that Sainsbury’s and Tesco Plc both have more serious things to learn from one another. Such points are discussed in the following section.It can be also found that Sainsbury can use global level procurement strategy where the company procures raw material or manufacturing products from Asian countries (such as China, Japan, etc.), European countries and other parts of the world. Similarly, Tesco should adapt from the Sainsbury’s is integration of supplier as a part of the organisational procurement operation, which can eventually improve the quality of the product without changing the cost of procuring the product. It has been also found that Tesco Sainsbury can improve their Logistics tracking, Retailer warehousing and Supplier resource receiving through using Radio Frequency Identification or RFID.It has been also found that the size and potential growth of such international level retail companies such as Tesco, Sainsbury’s, depends on the accessibility to all other sectors where strategic negotiation, supply chain model, quality of raw materials and sustainability remain an issue. Tesco and Sainsbury’s are two of the most successful retail organisations in UK.  

CHAPTER 6: CONCLUSION

5.1 Summary of the Study

The purpose of this research was to conduct an in-depth investigation on the various procurement practices while conducting a comparative analysis of the various procurement practices are used in Tesco Plc and Sainsbury’s. Hence this research aimed to explore the supply chain management theories and practices through literature review. Then this research explored the current procurement practices in Tesco Plc and Sainsbury’s. After that, this study compares the procurement strategies to find scopes for mutual adaptation for both the Tesco and Sainsbury’s. Therefore the chosen research philosophy for this research in interpretivism. At the same time, the chosen research approach for this research is inductive research approach. Depending on the aim and the scope of the research the design of the research has been chosen in this study. The business case studies of both chosen organisations will be considered to measure the effectiveness of their supply chain strategy. On the other hand, the data regarding the supply chain operations of the respective companies have been collected from the business reviews and research. In this research, business reviews, news reports, business annual reports and other secondary resources have been considered for data collection. As per the research method and data collection procedures discussed earlier, the data analysis procedures includes both quantitative and qualitative data analysis.

5.2 linking with Objectives

In the following sections the major findings from this research has been presented with the objectives of this research declared in the introduction section in a tabular format to ling the findings with the objectives. The purpose of this procedure is to analyse the credibility of this research to achieve the stated aims and objectives.

Research ObjectivesLinks
To identify the various procurement practices of TescoLocal or regional focused to keep price low, Food and beverage products, beef, fish, groceries, vegetables, UK, International Resources for Garments, luxury products, electronics. Offshore suppliers Asia, Europe, Japan, India, China etc. Offshore distribution hub; Continuous Replacement  or CR, Collaborative Planning Forecasting and Replenishment CPFR, Local Distribution Centres DC, Consolidate Distributors of CC Flow Controlling Influencer Point of Sell or POS, Electronic Data Interchange, Tesco Information Exchange, Radio Frequency Identification or RFID, Radio Broadcast System
To identify the various procurement practice in Sainsbury’sOnly local and UK based Supplier are included in procurement, Food and beverage products, beef, fish, groceries,  vegetables, garments, household equipment’s; Regional Distribution Centres RDC, Primary Consolidation Centres, Cross-docking, Low cost product availability and market demand, Supplier Relationship Management or SRM and Sainsbury’s 20×20, Subsidising primary level manufacturer and farmers through IT advancement
To conduct a comparative analysis between the procurement practice of Tesco and Sainsbury’sFrom the comparative analysis it has been found that because of the cost focused strategy Sainsbury’s has a cost leadership advantage in retail market. On the other hand, Tesco Plc. focuses on technological advancement in the procurement services that helped to advance their efficiency of procurement operation at global level.
To find out the advantages and challenges of different procurement strategiesFrom the data analysis it has been found that improving only the integrity in supply chain management and procurement can enhance sustainability and efficiency while compromising the quality of the logistics operations and profitability. On the other hand improving the effective technological uses can enhance the efficacy of logistics operations however, it cannot improve the quality from the product from grassroots level.
To recommend most compatible procurement strategies for retail industry in UK It has been found from this research that to keep a sustainable, profitable and growing retail industry an organisation has to make offshore procurement while having an in-depth supplier integration and technological advancement.

5.3 Conclusive Statement and Recommendations

From the research it can be concluded that supply chain is a network of all the organizations, individuals, resources , technology as well as activities that is involved in the manufacturing as well as sales of a products , ranging from delivery of the manufactured materials from the suppliers to the manufacturer, to the eventual delivery to the end users. From the above study it can be also concluded that the common components of supply chain includes includes collecting the sources from the suppliers and procurement, planning according to the demand of the market, order fulfilment checking as well as management of the inventory, cargo transportation, warehousing, logistics and Information Management. It has been also found that internal factors such as funds, organisational structures, operational integrity and human resources have also high impact on the procurement scopes.Tesco and Sainsbury’s are two of the most successful retail organisations in UK.   Therefore there have been many cases where the various stages have been made for the local and international suppliers in order to select the procurement strategies for the companies to follow while tendering and bidding on projects. It can be also concluded that in order to make an effective procurement and supply chain management strategy in retail sector of UK a company needs to focus on their Technological advancements, integration of the suppliers, Price quality balance of the goods and the demand of the market.

From the case study analysis of Tesco Plc it can be found that the distribution of the suppliers is local or regional focused to keep price low. In terms of products and services of low cost the procured materials for Tesco are Food and beverage products, beef, fish, groceries, vegetables and these are procurement from the suppliers of UK. International Resources are procured for Garments, luxury products, electronics that includes offshore suppliers such as Asia, Europe, Japan, India, China and others. For this Tesco uses Offshore distribution hub. Tesco has a unique model of logistics which is known as Continuous Replacement or CR and recently the company evolved this model to Collaborative Planning Forecasting and Replenishment CPFR. For logistics Tesco uses Local Distribution Centres DC, Consolidate Distributors of CC. As the flow Controlling Influencer Tesco always uses Point of Sell or POS. The procurement procedures of this company is very much dependent on technological advancement that includes Electronic Data Interchange, Tesco Information Exchange, Radio Frequency Identification or RFID, Radio Broadcast System. From the case study analysis of Sainsbury’s Plc it can be found that, for procurement the company focuses on only local and UK based Supplier. These local suppliers are included in procurement for supplying thefood and beverage products, beef, fish, groceries,  vegetables, garments, household equipment’s and other retail products. The distribution strategy in procurement operationsin Sainsbury’s is mainly based on Regional Distribution Centres RDC, Primary Consolidation Centres and Cross-docking. For procurement and logistics model the tow major parameters that this company consider are low cost product availability and market demand. It has been also found that  Supplier Relationship Management or SRM is very strong in Sainsbury’s and to make it stronger and more sustainable the company uses a program named Sainsbury’s 20×20 which includes a rare however effective strategy of supplier integration that is subsidising primary level manufacturer and farmers through IT advancement

From the above research it can be found that both Sainsbury’s and Tesco have their individual set of strengths and weaknesses because of their difference in procurement procedure and supply chain management for their retail business. From the above analysis of different procurement strategies of two companies it can be said that both Sainsbury’s and Tesco Plc has severer things to adapt from each other. It can be also found that Sainsbury can use global level procurement strategy where the company procures raw material or manufacturing products from Asian countries such as China, Japan, etc. European countries and other parts of the world. Similarly, Tesco should adapt from the Sainsbury’s is integration of supplier as a part of the organisational procurement operation, which can eventually improve the quality of the product without changing the cost of procuring the product. It has been also found that Tesco Sainsbury can improve their Logistics tracking, Retailer warehousing and Supplier resource receiving through using Radio Frequency Identification or RFID. Finally it can be concluded that the scale and potential growth of such international level retail companies as Tesco, Sainsbury’s, depends on accessibility to all other sectors where strategic negotiation, supply chain model, raw material quality and sustainability remain an issue. Tesco and Sainsbury are two of Britain’s most popular supermarket companies.

5.4 Limitation and Future Scope

The limitation of a study implies that limitation of the study procedures and implication process that restricts the potentiality of a research to meet the research aims and objectives accurately. This study has two major limitation that includes limitation in literature review and limitation in methodology. In this literature review the thematic literature review structure has been used to simplify the presentation of the major subjects of this study namely supply chain, supply chain management Strategies and retail industry of UK. However, this thematic review structure limits the ability to compare and contrast the data found from different literatures. It has made the review less measurable and less precise. In future instead of the thematic review systematic literature review will be used for more critical comparison based analysis. Therefore, through this strategy critical and systematic analysis can be used asmajor advantage of the literature review in the future study. This study also has boundaries in the methods chosen for this research that limits the research to meet its objectives and aims correctly. The limitations of this methodology can be viewed from two aspects. Firstly the research is entirely based on secondary data which lacks the practicality of the data presented here. With primary data collection through interview more practical evidences could have been collected. Apart from that, the case study method used for this research is not based on recent cases or individual cases. This case study analysis is based on the progression and development of supply chain and logistics system of the business. Therefore, it also lacks the current evidences of success of failure. From both of these aspects the data collected and presented in this research lacks practicality and recency of data. In future primary data collection will be done through using interview method with semi-structure interview questions or unstructured in-depth interview questions.

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