Operations management assignment on: Tesco Company

Introduction

This report gives the brief overview about the Supply Chain performance of the Tesco Company. It is evaluated that the Company has achieved a strategic fit between its competitive strategy and its supply chain strategy because of its cost leadership strategy. This report identifies the major drivers of the Supply Chain Management such as Pricing, Facilities and Innovation. At last, it is advisable to the management of the Tesco to follow ABC and Score Card methods to improve the performance of the Supply Chain.

Cost Leadership

It could be stated that the Tesco Company has achieved a strategic fit among its competitive strategy and its supply chain strategy (Tesco, 2009). Being the international Company, Tesco forms several programs on supplier management to survey basic suppliers and their activities. It is examined that the Company has taken part in Ethical trading in order to maintain the relationship with Suppliers. The first cost leadership is one in that Tesco may strive to have lower cost in the Retail Industry and provide its services and products to the broad market at the lower prices (Boselie, Paauwe, & Jansen, 2001). This strategy shall be based upon the ability of the Tesco to monitor their cost of operating so they become able to price their goods competitively and able to create higher margins of profit and having a great competitive advantage. It can be said that cost leadership strategy followed by the Tesco helps in achieving a strategic fit among its competitive strategy and its supply chain strategy (Tesco, 2010).The approach of the company is to maintain unique association with the suppliers. Applying latest technology in its communication and coordination with suppliers and the Company aims to monitor the activities of its suppliers and greatly depends upon their efficiency. In simple words, it could be stated that the Tesco Company is having an effective supply chain with the focus on the capability to create low-cost products by maintaining economies of scale.

Restructuring of Supply Chain to support the Competitive Strategy

Generally, strategy of supply chain determines the behavior of the buying of the raw materials, transportation of the materials from the warehouse to the Company, manufacturing of the operation or product to offer the service and distribution of service and product to customer along with the follow –up services (Lindgreen & Hingley, 2003). On the other side, functional and competitive strategies should fit together in order to develop an overall strategy. As per the strategic fit, both supply chain and competitive strategies should have same objective. The matter of accomplishing strategic fit is the basic consideration throughout the strategy of supply chain and design phase. If the mismatch exists among what the supply chain does well and the desired customer needs, then in that situation the Company needs to restructure its supply chain to support the competitive strategy of the Company. The Competitive strategies made by the Company in order to face the competition from the competitors. It is advisable to the Tesco Company, that they should alter the supply management strategy in order to remain competitive in market.

Major Drivers of Supply Chain Management

It has been examined that major drivers of the supply chain performance comprises of three cross –functional and logistic drivers. Logistic drivers consist of facilities, Inventory and transportation whereas cross-functional drivers consist of Information, pricing and sourcing. After the evaluation of the supply chain performance of the Company, it has been examined that pricing of the Company helps in creating a strategic fit among the company’s supply chain strategy and its competitive strategy (Lindgreen, & Hingley, 2003). In today’s changing market companies may no longer utilize the similar drivers or should utilize them differently to remain competitive in future. Three major drivers of the Supply Chain Management have been identified such as Pricing, Facilities and Innovation.

Ø  Pricing

Pricing finds out how much the firm shall charge for services & goods which it makes accessible in supply chain. Pricing impacts the nature of the purchaser of the services or goods and therefore affecting the performance of supply chain. Cross- functional drivers like pricing helps in meeting needs of the Tesco’s customer (Johnson & Scholes, 2003). Cost minimization is a basic driver behind the concern in the primary distribution. In meeting, needs of the customer, customizing service, better prices, better choices and constant flow of the in-store promotions make brands like Tesco to retain and control their base of the customer. In current years, a significant change in the food retailing has happened because of the large demand of the users doing the majority of its shopping in the supermarkets which reveals a higher need for the supermarket to sell the items of non-food.  The vision of the Tesco for the primary distribution is in-bound supply chain that is low-cost, visible, effective and efficient. The driver like pricing helps in maintaining the balance among responsiveness and efficiency.Ø  Facilities

 Facilities are considered as real physical locations in network of supply chain where products are assembled, stored or fabricated (Drejer, 2000). Other driver is Tesco which helps the Company in maintaining the balance among responsiveness and efficiency. From the last many years, the Company Tesco has been supporting expertise and British jobs by motivating great branded suppliers to form exclusive facilities of production (Boxall, 2000). But in current years, the Company has experienced the need to view abroad for goods which are no longer accessible in U.K, but made to do it with the help of long-established partners of U.K. The foods remained to be UK-based because of the successful variety of the prepared foods. Ø  Innovation

 On the other side, innovation also plays an important role in the competitive arena. Initiation of the new technology and widening of the product portfolio helps in making the relationships with the customer and positioning the brands (Lindgreen & Hingley, 2003).In current time, two main sources of technological innovation are enhanced supply chain-focused technology and online provisions markets like smart tags. Both are resolving enhanced efficiency of the goods provision and supply and regions of the consumer-related innovation around traceability and convenience.

Major Obstacles faced by the Tesco Company

Ø  Carbon Footprint

Ø  Energy Consumption

It has been examined that Tesco is the largest retailer in the super market of U.K. The Company wants its users to fill up their trolleys and remains to be friends with Earth (Finch, 2004). The Company is informed about the climate change because the effects of the climate change impacts the whole supply chain. It is required to reduce the carbon from the cradle to grave of products on its shelves. It becomes necessary for the Company to reduce its carbon foot print (Boselie, Paauwe, & Jansen, 2001). It is examined that products of the Tesco are transported by the train not by the road. Tesco must look for the alternative modes of transportation. It is advisable to the Company to take care of the carbon footprint in order to manage the supply chain of the Company. The Company is also required to cut the energy consumption in order to manage the company supply chain.  Tesco must encourage the users to reuse their bags and if users do that then the Company rewards them with the loyalty points.

 Measures to Improve the Supply Chain Performance

Ø  ABC

Ø  Balance Score Card

Improving performance of the supply chain has become as one of the major issue for attaining competitive benefits for companies (Drejer, 2000). Several metrics utilized in evaluation of supply chain performance and have been made to compute operational performance, enhance effectiveness and evaluate strategic coordination of entire management of the supply chain. Individual procedures of the supply chain performance have been categorized into 4 categories such as time, flexibility, cost and quality (Lindgreen & Hingley, 2003). The management of the Tesco Company may utilize ABC and Balance scorecard methods to examine the performance of supply chain. On the other side, in order to maximize the competitive advantage, the entire supply chain is required to be coordinated with the demand schedules of the consumers and this should comprise primary distribution. It is examined that Balance scorecard suggests the utilization of EIS which track the limited no. of the balanced metrics which are closely related to the strategic objectives.

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