A Cross Industry Comparison Of Customer Satisfaction – A Case Study Of Tesco

Methodology

Describe about A Cross Industry Comparison of Customer Satisfaction?

TESCO is an international general merchandising and grocery retail organization, founded by Jack Cohen in the year 1924, now has an employee turnover of over 240,000 and has 2184 stores in only UK. It operates in six different formats of store which ranges from Tesco Express to Tesco Extra (Adebayo and Olonisakin, 2014). Over 75% of the group sales and the profits come from UK business only. The expansion of the operations comes from:

Reaching over non-food retail services

New space

Multi-format approach

Extensions to the existing stores

The company operates in 15 markets worldwide and it highly relies on the ICT infrastructure to deliver steady and profitable operations of the business.

The methodology of the report is based on two forms of data:

Primary Data

Secondary Data

This will help in analyzing the report thoroughly. The primary data is based on the questionnaires and the interviews taken whereas the secondary data are based on the information from company websites, company reports and o5ther related journals and articles.

As the global competition is increasing the industry dealing in retail should continuously expand the capability of its operations and meet the unpredictable needs of the customers so as to do better than their competitors. TESCO in general has successfully been responsive to the risks, complexity and the competition under the ambitious and effective strategy of the company’s operations (Anyesha, Hassan and Aboki, 2014).
Specifically the strategy of operations of TESCO can be evaluated and analyzed from three aspects. They are:

Corporate Strategy

Business Unit Strategy

Functional Strategy

From the corporate strategy perspective, TESCO has closed many grocery stores in the year 1985. It had opened a lot of large supermarkets at the same under t6he CEO LanMac Lurin in the suburbs. Through the restructuring of the operations the company fundamentally established its business directions, format and focus. Currently it majorly operates 4 models of store which are Tesco Metro, Tesco Extra, Tesco Superstore and Tesco Express. These multi-format stores will not only make an increment in the flow of the customers but will also ensure that its total sales increase, that will guarantee profit from low price. Furthermore, with the saturation of the local market, demand of self-development and large competition, the company expanded its operations in the overseas market in due time and converted its format of store to international market such as Poland, China, Turkey. By the year 2005 the company operated in twelve countries. To some degree, TESCO’s success in the expansion in the international market gave some approach in its corporate strategies (Barnes, 2011).

Many companies could not handle its operations in the international market like TESCO. The company not only expanded successfully but it has also grown rapidly. The main factor is that the company treats its oversea markets with double prudence. The company can translate and localize the format of their store with the markets of the host countries which keeps the operation of the company smooth. TESCO depends on their capability which is of more importance than the store scale (Bode and Wagner, 2015).

Operation Management of Tesco

Tesco sticks to the customer-centric perception from the very beginning and has shun many traditional approaches of retailing. The company has always been a step ahead of the competitors. Tesco’s most critical operation strategy states that the company should benefit its customers. Underneath the high concentration of the customer-centric conception, Tesco implements the strategy of low price policy and has initiated the Tesco club card for the loyalty of the customers. The company has been competing on its price from its inception. The vision of the company is to trade a broad range of its products as inexpensive as possible. The company keeps the prices of the products low via bulk purchasing (Govindan and Cheng, 2015). This avoids wastes and enhances the efficiency of the employee and also improves the design of the system of delivery. To realize a low cost in opposition to its competitors, the company has set up an international team sourcing which focuses on non-picking products of food from worldwide. The strategy of TESCO is to curtail the costs of the non-food products and increase the channel of purchase by procuring the items from the developing countries like India and China. Thus the strategy of offering at a lower price becomes a major competitive advantage that provides Tesco with success from the other retailers (Cannella, 2011).

The operation of Tesco requires the direction to manage its activities and resources. Five performance objectives are considered to be the dimensions of the overall performance of a company that satisfies the customers. There are five dimensions which are quality, dependability, flexibility, speed and cost. These dimensions make sure that the service that ids provided will meet the corporate goals and the requirements of the target markets and will distinguish itself from the competitors (Hanner et al., 2015).

Tesco has integrated the objective of its performance by making sure that the goods majorly the food products are of top-quality condition. This is done by efficient selection of the suppliers of Tesco. Furthermore the company makes sure that the goods do not take much time in the warehouses or not in shelves. The expiry dates of the goods are often checked to alleviate sale of substandard goods (Hassan and Parvez, 2013). Tesco performs audit on the suppliers to determine the quality of the products. The issues that the company checks are:

Factory capability

Hygiene condition in the preparation of food

QMS (quality management system)

Management of supply chain

Tesco first does an accurate examine before the consignment of the courier system. This is how the company executes dependability in the organization. Tesco made sure that the delivery system is superior so that the customers can get the products promptly. If the customers wait for too long when the applicants are viable the company informs them quickly so that the customers do not have to9 wait unnecessarily and waste their time (Kim and Hallsworth, 2015). 

Tesco has initiated their performance level by introducing new products and services continuously in line with the change in the tastes and preferences of the customers. Irish Yogurt can be one good example of Tesco’s innovation. When the company anticipated the modern trends of the customers progressing towards the natural products, it introduced Irish Yogurt. This yogurt is made by total natural ingredients. With the introduction of the products Tesco demonstrated its flexibility by considering the needs of the customers in the current scenario.
Another flexibility example can be the introduction of the company’s product line. The company’s expansion and merger programs are also an example of flexibility which is why many stores are found outside UK (Plimmer, 2010).

Perspective of Corporate Strategy

Tesco has commenced the objective of speed in its daily customer handling in a faster pace when they are procuring items in the store. The attendants of the store are trained to be prompt in their service. Tesco also initiated online services which enable the customers to make the transactions over the internet. The customers can now avert wasting time in queuing while making their payments in the store or when trying to shift from one aisle to another for searching an item, they can do this by selecting their goods they want from the company’s website simply (Rexhausen, Pibernik and Kaiser, 2012).

The objective of the speed is also initiated in the process of Tesco’s operations in regard to the internal customers. Tesco is aware of the fact that the operation speed will directly affect the speed of other departments.

Tesco has initiated the objective of the operation by making sure that the objective of the performance are met by spending less on correcting the mistakes and making improvements in the efficiency of the process. Tesco has kept its costs at a level which is quite affordable for its customers which in turn made the customers loyal to Tesco (Tesco and Morrisons school report, 2014).

There are ten major replenishment activities that is followed by Tesco. The following diagram will show the same.

Figure 1: Replenishment Cycle

Tesco’s replenishment cycle sees the ten aspects of the cycle where it starts with merchandising and ends with building capacity (The entrepreneur’s guide to financial statements, 2014). The following chart will explain elaborately.

Merchandising	Ordering	Delivery	Warehouse	Stock Handling
·         Correct space in every store. ·         Completion of merchandise planning accurately ·         Correct records of stock	·         Forecasting of sales. ·         Management of event ·         Short lead time of the order	·         Visibility of the schedule of the delivery. ·         Accuracy in delivery. ·         Confirmation of delivery automatically	·         Layout of the warehouse. ·         Design of the warehouse. ·         Management of damages and wastes. ·         Stock level in the warehouse.	·         Pre and post sorting of the product
Set Up	Stock Movement	Filling	Routine of Stock Control	Building of Capacity
·         Setting up of the aisles. ·         Process of handover between day and night.	·         Congestion plan all hours. ·         Movement of stock of the stores	·         Process of filling. ·         Plan for filling in days and nights ·         Use of retail ready packaging.	·         Counting of routine. ·         Completion of the scanning of gap routine. ·         Scanning of low line.	·         Management of effective store duty ·         Increment of capability of manager. ·         Removal of absence and vacancies

This is a relation between demand and supply within a time period. The principle of such planning is to make sure that an optimum match on capacity is there with demand. When it is reaches the optimum match, flexibility and dependability will increment (Xie and Allen, 2013).

              Figure 2: Capacity Strategy of Tesco

Tesco follows Lead Strategy as a part of capacity planning because they anticipate when there is an increment in demand. It is an aggressive strategy with an objective of attracting customers from the competitors so as to progress in the service level and reduction in lead time.  It is a strategy of the company to reduce the stock out costs. A high capacity of the do not essentially mean that there is high inventory level, but it may entail in the costs of large cycle stock. Tesco ensures that it has sufficient capability to meet all the demand, even in the time of high growths. Tesco stays in an advantage by use of this strategy in a way that they can obstruct the competitors who may think of capacity expansion (Xie and Allen, 2013).

This is the maximum output obtained or the usage of an operation that the designer had in mind at the beginning (Zhao, 2014). Tesco’s design capacity is to serve as many customers as 300 per hour which means every customer will take 1 minute to get served and there will be 5 checkouts along with it. So in one day, i.e., 16 hours Tesco can serve 4800 customers. The following diagram will show this elaborately:

Figure 3: Design Capacity

Tesco to improve can make the managers measure the performance. There is an advantage in this organization that they can detect direction and make changes simultaneously. Change can be employed after considering the key performance objective of Tesco (Hanner et al., 2015).

Tesco can improve its process by creativity from the staff. As the people who handle the process everyday they will know what is good. Tesco can discourage the idea of only marketing department planning the process.

Tesco can try to benchmark. The company has many competitors both in the local and the international market. It can seek to evaluate the performance of the process and compare it with the competitors and then do the identification of the areas which need improvement.

Staffs are available at the opening hours of Tesco so there should be staffs working at both the check outs.

The physical space of the stores of Tesco should be increased as it limits the product amount which the company can stock (Barnes, 2011).

References

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Zhao, S. (2014). Analyzing and Evaluating Critically Tesco’s Current Operations Management. Journal of Management and Sustainability, 4(4).