Discuss about the Analysis of Tesco Plc Operational Procedure.
The present study provides an overview on the analysis of Tesco Plc operational procedure, strategic management and personal development of Tesco. Tesco plc is one of the biggest multinational groceries and merchandise retailer with it’s headquarter in England and United Kingdom. This company has been ranked as the third biggest retailer in the globe as accounted by profit margin and ninth biggest retailer in the globe as measured by revenue. Tesco’s operation management has made huge contribution to the competitiveness in UK’s industry. With the rising competition worldwide, the retail industry of UK has developed its operations capability for meeting the varying requirements of consumers and outperforms their rivalries. Fundamentally, this company has effectively responded to competition, complexity and risk under effective strategies of operations. The first segment of this study focuses on the operations management activities of Tesco contributing to its business strategy and consumer demand (Bryson 2018). The second section of this report evaluates on the quality of operations as well as systems in Tesco and Morrison. The role of Tesco’s values in formulation of strategy is discussed in this section. The strategic position of Tesco is assessed by using PESTLE and five forces analysis. Stakeholders analysis is also used for identifying the requirement of stakeholders and further impact on strategic position for Tesco is also analyzed in this segment. The third section of this study analyzes on the contribution of information system to supply chain efficiency in Tesco. Furthermore, the advantages of IT systems and e- procurement in Tesco are also evaluated in this study.
Quality management is crucial in enterprises owing to different reasons. It basically aids to reduce wastage and ensure quality of products relating to its durability, reliability and performance. This is essential to operations management especially continuous management. Current advancements in the quality such as TQM ( total quality management) and benchmarking have led to huge advancements in the operations management (Early 2012). In today’s world, the enterprises are adopting various approaches of solving quality issues with the target of creating high quality product or services in conformity with expectations of customers. The two organizations that are chosen for analyzing quality of systems and operations are Waitrose and Tesco.
Waitrose is another leading chain of food retailing supermarket situated in England and UK. It is one of successful company in UK as it differentiates itself from rivalries by providing good quality commodities and customer service. This company has been ranked as the sixth biggest retailer in this nation. Tesco, Sainsbury are some of the major competitors of this enterprise. Waitrose has attained huge reputation in the market due to its high quality product and premium price. It mainly targets high income people for attaining higher profitability in business. On the other hand, quality philosophy of Tesco is to provide better service to their customers by providing quality goods at low price. Its targets middle income customers and thus produces product based on their preferences.
Although Waitrose and Tesco cater to various segments of the income group consumer, both of them stress on producing quality products. In fact, they take into account various aspects while selecting those products that are required to be displayed on stores. Tesco’s operations involves attaining customers feedback regarding their product quality and services offered to them. Additionally, the operations management of Tesco constantly monitors quality as well as life of products and also checks sample product during different supply chain process. Apart from this, Tesco’s management tests their product independently each month. This in turn ensures them that the products delivered are of high quality (Fitzroy, Hulbert and O’Shannassy2016). This enterprise also has technical standard guidelines that every employee follows during the supply chain procedure. Besides this, they also consult with environmental experts, food safety professionals and industrial bodies for advising on the production aspects. Over the last few years, Tesco has successfully integretated six sigma methodology across different departments and also successfully declined emission of carbon di –oxide (Goetsch and Davis 2014) Similar to Tesco’s approach, Waitrose also takes into account customer feedback while testing quality of the product. Waitrose hires those manufacturers who can provide quality products as well as set high standards during manufacture of products. They even uphold high standards of safety as well as hygiene for products, by utilizing effective farming method. These involve HACCP (Hazard analysis and critical Control Points) systems, LIFE (Linking Environment and farming) and ICM (Integrated crop management) system (Setia, Venkatesh, and Joglekar 2013). They use HACCP in producing product for identifying potential hazards as well as control risk. Additionally, ICM is also used for ensuring best practices of horticulture are followed while LEAF being an independent charitable association also helps the farmers to decline environmental impacts.
Presently, Waitrose have effectively adopted SAS software for improving the stockholding as well as reducing wastes. This also aids them to predict consumer demand and assure that appropriate product is provided to their customers at specified time. According to Waitrose, this has also facilitated them in reducing stockholding by near about 8% and wastage by about 4%, thereby increasing consumer satisfaction through availability of high product. Quality approaches of Waitrose and Tesco are slightly different from each other. For instance, Tesco launches a particular application by integrating club card with barcode reader. This application helps their customers to select product and scan it via barcode reader app. On the contrary, Waitrose uses quick check technique where consumers scan and packing the products purchased.
It has been opined by Grattan (2016) that, Tesco has been presently facing intense competition from some new competitors such as Lidl, Aldi, Waitrose etc for entering the industry with low pricing strategy. Tesco’s mission is to create value for its consumers in order to earn their loyalty on lifetime basis. Furthermore, the vision of Tesco is to provide better service to its communities and customers who in return might return value to this company. According to Wheelen et al. (2017), this enterprise also aims to operate ethically with its employees, shareholders and suppliers for growth strategy by using skills as well as knowledge globally. Additionally, entry of these rivalries having low pricing strategy also puts intense competitive pressure on this organization. The management of this company has been successfully operating across the globe, thereby satisfying their customers as well as enhancing the revenue of the company. Besides this, it has been commented by Galliers and Leidner (2014) that, Tesco’s strength mainly lies in its reputable position, servicing their customers, maintenance of better quality products and handling of grievances. Furthermore, their strength also lies in ethical and transparent business, ETI regulations and good enterprise culture. Apart from this, implementation of few innovative strategies including, e-commerce pioneers and loyalty cards also adds up to Tesco’s strength. It has been found out by some researcher that, this enterprise faces huge difficulty to compete with low product price rate of new rivalries, which in turn turned to its weaknesses. Furthermore, Tesco reaching market saturation also impacts its sales and hence turned to another major weakness.
Although this company has been operating globally, it still plans to expand the business in several nations by opening more stores. It has been stated by Kotler (2015) that, as Tesco faces several opportunities and barriers while operating globally, they must focus on formulating strategic plan. As this enterprise has been focusing on creating new e- commerce strategies to reach the customers across the globe, it needs to acknowledge culture, religious beliefs and customs of customers in order to ensured that their emotion are not hurt (Wheelen et al. 2017). Other factor which Tesco needs to focus on while operating in global market is low pricing strategy. This is because customers become inclined towards that enterprise that provides good quality goods at lower price. Moreover, Tesco is required to hire workers and provide them training in order to make them experts. As increase in raw materials, intense competitiveness and fluctuation in taxes impacts Tesco, they needs to adopt effective strategy for attaining success.
PESTLE analysis
PESTLE (political, environment, social, technology, legal and environmental) analysis helps to analyse the strategic position of Tesco in the global market. Political factors are crucial to be taken into account as the enterprise is operating in the global market and different nations have various political issues. Economic factor involves the FDI rates, inflation rates, interest rates and economic growth that is required to be assessed before integrating strategies. Additionally, social factor involves demographics, culture and population of the particular location where it is expanding (Yükse 2012). Technological factors involve utilization of modern technologies to formulate strategies as well as trading. Environmental factor basically involves the geographical areas and climate in which the company makes trading. Additionally, Legal factors also involve labor laws, employment laws and consumer laws etc that Tesco needs to analyze while formulating strategies.
Porter 5 analysis
The Porters 5 force analysis involves bargaining power of buyers, suppliers bargaining power, threats of new players, intensity of competitors and substitute products threats. Buyers bargaining power is concentrated owing to substitute products as well as low price products. It has been viewed by Dälken (2014) that, suppliers bargaining power involves distribution channel strength and the existence of the substitute products. The new entrants threats also impacts strategies of this enterprise. However, low pricing strategy of these new entrants also influences sales of this company to huge extent. Furthermore, threats of the substitute goods also required to be evaluated because if these goods become available at low prices then Tesco will incur loss. Additionally, intensity of rivalries of Tesco has been huge owing to higher transparency as well as expenditure owing to advertisement.
It has been opined by Kotler (2015) that, stakeholders are vital part of an organization and hence their level of interest is required to be taken into account for identifying their need and affect it has on strategic position for Tesco. The stakeholders of Tesco are employees, managers, suppliers, customers and directors. Stakeholder analysis refers to the process where the stakeholders gets affected by the action proposed by the organization and hence are identified as well as sorted out based on how much the proposed action affects them. The information is then used for assessing how the stakeholder’s interest can be addressed. The requirements as well as interests of stakeholders are required to be recognized as it impacts on the strategic position of Tesco. These stakeholders of Tesco plays crucial role in bringing profit and achieving success to business. However, formulating strategies and analyzing these stakeholders will help Tesco to achieve success and retain its reputation in marketplace.
Information technologies system play crucial role in enhancing information sharing as well as collaborating in the supply chain. Rapid development of the information system enables the employees in the supply chain to receive as well as broadcast electronic information immediately. It also helps to enhance information accuracy as well as reliability and provide competitive position of the employees in supply chain through reduced stockouts, shorter lead times, lower costs and quicker response (Goetsch and Davis 2014). Information systems have been implemented in supply chain management for virtual enterprises, strategic planning, virtual enterprises, knowledge management and e- commerce. One of the information systems that are commonly implemented in the supply chain is e-commerce that takes different forms such as, intranet, extranet, electronic data interchange (EDI), intranet and point of sales (POS).
The main focus of Tesco Plc supply chain management has been in accordance with major principles of this enterprise to offer value to their customer and striving for improvement in supply chain process. As main aim of this enterprise is to attain lifetime loyalty of their customer, they try to bring about changes in the supply chain process. These changes however are mainly targeted at streamlining supply chain process to efficiently as well as effectively deliver products to their consumers. One of the vital features of supply chain management of Tesco is the utilization of bar code scanners (Radio Frequency information Distribution) for tracking real time and products throughout supply chain (Fernie and Sparks 2014). Introduction of RFID technology helps this enterprise to track as well as scan all the goods along supply chain process. This in turn helps this enterprise helps them to improve efficiency as well as reliability of supply chain and thereby enhancing customer service. In addition to this, processing of products by the workers at this company has also enhanced with the integration of this RFID technology in supply chain process. Even the check out speed has also utilized improved with the integration of sale scans. This also enhanced on the services of customers, which augmented their loyalty. Recent studies reflect that this enterprise has also integrated big data analytics for improving the efficiency in procurement and supply chain, generally targeting inventory management system. Furthermore, implementation of big data analytics also facilitates tracking the effectiveness of the sale at their stores. It has been opined by Jacobs, Chase and Lummus (2015) that, the companies usually have oversight over their materials at each point of the supply chain processes in order to enhance its efficiency. In addition to this, integration of EDI also helps this enterprise to transfer the information needed for integration and thus transfer information accurately by eradicating data reentry. This also improves the communication process between their suppliers and purchasers. Thus, it improved their interorganisational coordination and cooperation by automating transmission system, enhancing supplier procedure and involving suppliers in new goods design.
The adoption of these information systems helps Tesco to gain unique competitive advantage from three various aspects that includes better consumer service, higher efficiency in working and high supply chain system. Firstly, development of Tesco’s information technology systems also provides better customer service through improvement of check-out speed as well as decreasing waiting time, and thereby increased their customer retention. According to Kotler (2015), new technology also helps to caters to this company’s concept that identifies on the benefit of customers. Additionally, RFID technology also enhanced employee efficiency via simplification of goods processing (Attaran 2012). However, the staff could find product easily for their customer and hence can spend much time for serving their customer. RFID technology also improved accuracy of data through mechanically tracking the commodities from input to output. Overall it also benefits this company for controlling the whole supply chain.
E-procurement system (Electronic procurement system) refers to a system that is based on technologies as well as computer software. An e-procurement system increases possibility to run as well as control the purchasing procedure through the software. Most of the enterprises uses information system for improving supply chain efficiency, but itself it does not prove to be useful. Stephens and Valverde (2013) opines that e-procurement integration is mainly about implementation of supply chain. The enterprise attains huge benefit when this e-procurement software is implemented with supply chain. However, integration of e-procurement and It system delivers several benefits to the enterprises and its business activities.
For instance, Wal Mart enterprise always emphasized need to decrease cost and provide reasonable price to their customers. This company procured products directly from the producers by passing the intermediaries. This enterprise computer system is mainly connected to that of their suppliers. (Monczka et al.2015) EDI also enabled their suppliers to download the purchase orders and their store-to-store information of sales in accordance with their goods sold. After receiving the information about sales of different goods, the suppliers ship the required products to their distribution centers. This company also integrated JIT (Just In Time approach) for e-procurement that enabled Wal-Mart to decrease prices. This company also implemented cross docking system in the logistics infrastructure. In this cross docking system, the finished products is directly taken up from production plant of supplier, sorts out and then supplies it to their customers (Karthik and Kumar 2013). The system decreased the handling as well as storage of the finished products, virtually reducing the role of distribution stores as well as centers. This company widely invested in Information Technology as well as communication systems to effectively track sales as well as check inventories level in stores around the globe. Wal-Mart has also established automated ordering system along with its main suppliers such as Procter and Gamble (P&G). Furthermore, computer system at this enterprise store would send data to its various distribution centers as well as suppliers if level of inventories is low by using this automated ordering system. This company also installed bar code technology in its computer system for the inventory management. Recent advancement in IT as well, as communication systems also allows this company to move from bar-coding to emerging technology such as RFID. This technology helps their employees to look at tags and annotate data about the products.
Sainsbury enterprise also adopted e-procurement and IT systems for improving their supply chains process (Myerson 2012). This enterprise uses ERP (enterprise Resource Planning) for integrating transaction oriented information as well as business procedure throughout the enterprise. A important move by this enterprise for automating warehouse systems via Global Data Synchronising (GDS) system. It has alleviate these switching issue faced by the managers and has been instrumental to bring this enterprise back on successful track by avoiding any ERP errors. Agents of the supply chain management at this enterprise have been mainly active to ensure that automation create desired outcome. In order to ensure that this company has competitive advantage in supply chain process, there has been incessant integration of information technology.
Conclusion
From these analyses, it can be concluded that information technology as well as e- procurement plays vital part in the supply chain processes. It facilitates the enterprise to attain higher profitability and gain competitive advantage. Every enterprise must consider several factors for formulating strategic plan in order to sustain in business environment. In addition to this, the company should also analyze macro environmental factors and make environmental audit for assessing its strategic position using different strategic tools. These tools aid the company to plan the strategy according to these factors. Not only this, the enterprise should also adopt quality management tools for developing its operations management system. However, adoption of effective strategy by Tesco helps them to attain success in competitive business environment.
References
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