Tesco’s Supply Chain Management: Strengths, Weaknesses, And Competitive-Advantage

ES972 Supply Chain Management

Supply Chain Strength

The network between the organization and its suppliers for formulating and distributing specific products or services is considered to supply chain management. Tesco is a retail organization performing its operations and functions at a global level through managing its global supply chain. Lean thinking, complexity management and vertical integration are the major aspects of Tesco’s supply chain (Evans and Mason, 2018). In this report, the strength and weaknesses of the organization and the ability to accomplish competitive-advantage are also included in the report.

• Higher Efficiency- Supplier relationship is the first strength of Tesco supply chain and to associated with traders effectively organization utilize electronic data system. It support organization to connect with supplier that recited dealers to collect effective information. Tesco’s supply chain operations and functions include logistics, procurement and delivery systems and all of them are effectively planned and executed specifically, according to the strategic plans. Tesco suppliers predict the demand accurately and its support to adjust disruptions and fluctuating industry trends Furthermore, higher efficiency also minimizes the wastage of resources through storing products according to the social demand.    
• Customer Retention and experience-Supply chain management supports an organization for establishing a strong reputation in the market and context of Tesco, complexity management results in maximizing system effectiveness that supports to respond towards customers demand quickly and effectively. Technology is the other aspect of complexity management and it works as strength of organization through providing fast and effective solution of supplier complexity. TESCO not attract only new customers through the implementation of the new system but also increase the loyalty of customer towards the organizational brand. In simple terms, prioritizing customer service through supply chain management ensures a seamless flow of products all over the market.   
• Improved Relationship-The primary purpose of supply chain management is to foster a profitable relationship with suppliers and distributors. For this respective organization implement effective strategy that work as a strength for management to engage tactics that are effective to build better relation with customers. TESCO engage vertical integration in the organization and it increases the collaboration strength of the organization with vendors by engaging in effective communication. Moreover, improved relationship strength results in increasing productivity and cost-cutting for the organization (Sparks, 2014). The main advantage of Tesco’s supply chain management is to generate meaningful decisions by utilizing the performance metrics and business software. This also results to select appropriate suppliers based on data interpretation and analysis.   
• Cost-effectiveness- Tesco supply chain management engage inventory management and it is effectively planned as well as executed that result to minimize the operational cost through cutting the unnecessary expenses related to business. Moreover, the supply chain management of Tesco also engage inventory management software and it allows the manager to generate benefit by delivering products as per demand.

All the above strengths of Tesco’s Supply chain management directly impact the quality of products and it supports to perform operations according to the global CSR guidelines and standards. This results to achieve customer gratification and sustainability by implementing responsible supply chain management in an organization (Chkanikova and Sroufe, 2021). On the other side, organization strengths such as higher efficiency develop standards metrics for timely deliveries and quality assessment. It results that Tesco selecting and deciding suppliers that match with the organization-based standard.

• Lack of visibility- One of the major issues or weaknesses related to Tesco’s supply chain is the lack of visibility because of its large size. Due to vertical integration management identify weakness in supply chain because changes are complex to adopt. This determines that it is difficult for Tesco to monitor and track parts from the manufacturing unit to the final destination. The respective weakness results in the formulation of massive consequences such as delay in delivery of products impact on quality and life of products. On the other side, the supply chain team also face problems related to real-time visibility and it is a major reason to increase the liability of the organization.

To overcome the weakness Tesco adopts artificial intelligence and other technology that helps to analyze and understand the analytical value.  

• Less accountability-The term accountability refers to the responsibility of an individual to complete an organizational task. In case of complexity management less accountability create problems for Tesco because in such situation this is difficult to identify the individual who create barrier in logistics management. Tesco’s supply chain relates to various geographical areas and due to this management does not generate accountability for the supply chain disruption and it hinders the reaction time of the organization. Moreover, to minimize the weakness of less accountability Tesco’s supply chain manager include logistic providers, account manager and suppliers as coordination among them result to handle disruptions effectively (Waters, 2019).
• Reactive instead of proactive- The manager does not look forward to anticipating the changes related to the current market uncertainty. According to this, most organizations will not be looking forward to proactive planning. Tesco management also faces problems to manage the supply chain in uncertain conditions because of no pre-plan actions.

Building redundancy help Tesco supply chain management to respond to uncertain events. Furthermore, Tesco’s supply chain manager establishes an ever-advancing technology system to anticipate real-world complexity.   

Weakness in the supply chain directly impacts the functions and operations of the organization. Therefore, clearly stated action plans perform an important role for management to develop well-thought-strategies that resolve the disruptions related to delay in delivery, quality issue and equipment failure (Sparks, 2019). Along with this artificial intelligence and technical tools helps to minimize the quality issue.

Supply chain steps are required for the transfer of product or service to customers but, in the present scenario global operations generates challenges for the organization. Furthermore, the supply chain is more recognized as the key source of competitive advantage because it supports management in delivering all products effectively. In the case of Tesco, increase in rail distribution network and engage of government in supply management supports to generate competitive-edge in market. In simple terms, Tesco is a large organization that perform work in a larger area and as a large enterprise, more complexity exists in the supply chain. So, with an effective supply chain system, Tesco gains a competitive edge through offering fresh products to the buyers as compared to other organizations.

The existing supply chain performs a crucial role in the global economy and it includes individuals, vendors, suppliers, processes and systems that relate to designing, selling and delivering products. The powerful supply chain system of Tesco enables management to provide fresh products to customers through its fast delivery systems. Roles of Tesco supply chain in competitive advantage are considered as follow:

Supply Chain Weakness

Optimizing the supply chain- The term supply chain work as a network or relationship between the up and downstream activities of stakeholders. Invested supply chain, strong supply infrastructure and strong relation with partners is the key to generate competitive-edge for Tesco. In the context of Tesco’s supply chain system, efficiency is identified from the supply of raw materials to the delivery of products. Therefore, in contemporary times, Tesco’s supply chain works as a source of competitive advantage because it leads the organization towards cost-saving through managing and reducing wastage of resources that generate between the ordering and delivery of products (Chkanikova and Sroufe, 2021). Moreover, the existing supply chain is identified as the arteries of the global economy and it empowers international trade flow in the organization. Tesco’s super-connected network also establish a competitive edge by predicting and adopting changes according to the global environment.

Supply chain as strategic levers- Economic recession is one of the major factors and aspects that generate challenges for industry and organizations to retain in the market. In such situations, the supply chain is used by Tesco as a strategic lever and it helps management to do better by utilizing the JIT and inventory methods. Engage of technology in the supply chain strategy supports to improve inventory store to place them appropriately on store shelf. It results buyers are more attracted towards Tesco products instead of competitors. It also helps to reduce the cost of goods through rationalizing the expenditure and components of the supply chain. Tesco considered its supply chain as an effective method of the supply chain because a major portion of COGS relates to the supply chain and logistic expenses (Sanders, 2020). In the existing market, this is identified by the management of TESCO that the profound interdependencies are the key aspect of organization strategy and it facilitates trade between organizations, countries and cities through engaging multiple stakeholders in the supply chain system.

Role of technology- Software is the key for an organization to initiate and appreciate competitive advantage from receiving the order and its shipment. TESCO supply chain system considers and engages all those similarities that offer a specific and unique combination to the manufacturers by understanding the data and information which is stored in the software. In simple terms, Tesco management use complexity management step and inventory control software for generating the unique and specific combination of products, logistics and organization that leads to managing and controlling change in demand and supply management. The supply chain enables the organization through a connected world with the use of technology. Moreover, most of the existing Tesco operations are performed in a broader market by offering products according to the buyer’s requirements. Furthermore, vertical integration components provide a value proposition among products and services of Tesco by interlinking all functions with the supply chain and it also helps to store all user data and information related to products among the existing software which results to predict the demand according to the previous data-basis.  

The Ability of the Supply Chain to Gain Competitive-Advantage

Integrated Logistics- With the establishment of an internal logistics and warehousing system, Tesco management select the distribution and logistics on a self-basis and it results to fulfil all logistic requirements effectively (Hines, 2014). Furthermore, integrated logistics perform a crucial role to generate a competitive edge because it supports management to manage and distribute all products in a downstream manner that match the needs of end customers. Moreover, Tesco order products in bulk quantity because of its larger size so with an integrated logistics system this is easy for Tesco to store all raw materials and products safely and effectively. Moreover, appropriate distribution systems minimize unnecessary costs such as reducing the overhead cost of the organization. TESCO supply chain delivers products according to their types like, lean thinking utilizes just-in-time and lean principles to overcome the risk of the supply chain. On the other side, integrated logistics support the organization to manage the close relationship with perishable products and it supports to speed up the delivery of the products so the buyer can collect fresh fruit easily. It results that brand image, as well as a competitive edge, are achieved by Tesco through maintaining its product quality.

Supply and Demand management- Appropriate and effective supply and demand management are one of the most essential factors to manage the inventory levels (Lan, Li, and Papier, 2018). Tesco software and managers focus and predict accurate supply and demand management factors and it results to keep enough products, ensuring productive as well as less costly manufacturing cycle. Also, to formulate the competitive-edge Tesco establish a supply chain to deliver products in the hands of customers in minimum time. It results from customers preferring Tesco as compared to other options because of good product quality and less time delivery.

Conclusion

Based on the above report, this is concluded that the supply chain system performs unique and constant roles such as managing the appropriate balance between demand and supply for delivering the products on time. With the analyses of the supply chain system, this is also identified that to overcome the challenges of the global economy the business needs to induce and develop an operating system to deliver products in a better manner as compared to competitors. Furthermore, supply chain strength increases the geographical presence as well as the customer base for products by improving the products delivery system. Similarly, technology and strategic implementation in the supply chain results to develop a competitive-edge against the rivals.  

References 

Chkanikova, O. and Sroufe, R., 2021. Third-party sustainability certifications in food retailing: Certification design from a sustainable supply chain management perspective. Journal of Cleaner Production, 282, p.124344.

Chkanikova, O. and Sroufe, R., 2021. Third-party sustainability certifications in food retailing: Certification design from a sustainable supply chain management perspective. Journal of Cleaner Production, 282, p.124344.

Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan Page Publishers.

Hines, T., 2014. Supply chain strategies: Demand driven and customer focused. Routledge.

Lan, Y., Li, Y. and Papier, F., 2018. Competition and coordination in a three-tier supply chain with differentiated channels. European Journal of Operational Research, 269(3), pp.870-882.

Lertchaiprasert, B., Termthavorn, N., Yingyongyos, W. and Punnakitikasem, P., 2012. Enhancing Competitive Advantage in Retail Industry with Supply Chain Management: Case study of Tesco Lotus.

Mesa, J.C.P. and Galdeano-Gómez, E., 2015. Collaborative firms managing perishable products in a complex supply network: An empirical analysis of performance. Supply Chain Management: An International Journal.

Sanders, N.R., 2020. Supply chain management: A global perspective. John Wiley & Sons.

Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.

Sparks, L., 2014. 07 tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.

Sparks, L., 2019. Tesco: how supply chain strategy supports retail success. The Business & Management Collection.

Waters, D., 2019. Supply chain management: An introduction to logistics. Bloomsbury Publishing.