Question

Tesco is the UK’s largest food retailer, with a sales turnover of more than 67.5 billion. While it has some 638 stores in central Europe, and some 636 in the Far East, most are in the United Kingdom and Northern Ireland, where it has nearly 1,800. This number has increased rapidly as Tesco entered the convenience store market with deals such as the Tesco Express alliance with Esso to run grocery shops at petrol stations. The product range held by the stores has grown rapidly in recent years, and currently stands at 65,000 stock-keeping units (skus) depending on the size of the store as Tesco broadens its presence in the ‘non-food’ market for electrical goods, stationery, clothing and the like. This massive range is supported by 3,000 suppliers, who are expected to provide service levels (correct time and quantities) of at least 98.5 per cent by delivering to Tesco within half-hour time ‘windows’. Volumes are equally impressive. In a year, some 2.5 billion cases of product are shipped from suppliers to the stores.

Tesco states that its core purpose is ‘to create value for customers to earn their life- time loyalty’. Wide product range and high on-shelf availability across that range are key enablers of that core purpose. So how do you maintain high availability of so many skus in so many stores? This question goes to the heart of logistics management for such a vast organisation. Logistics is about material flow, and about information flow. Let us look at how Tesco deals with each of these in turn.

Tesco operates Composite distribution centres (called regional distribution centres, RDCs), which can handle many products at several temperature ranges. The opportunity is to provide a cost-effective daily delivery service to all stores. Typically, a composite distribution centre can handle over 60 million cases per year on a 15-acre site. The warehouse building comprises 25,000 square metres divided into three temperature zones. Each distribution centre (DC) serves a group of between 100 and 140 retail stores. Delivery vehicles for composite depots can use insulated trailers divided into chambers by means of movable bulkheads so they can operate at different temperatures. Deliveries are made at agreed, scheduled times. Ambient goods such as cans and clothing are delivered through a separate grocery distribution network which relies on a stocked environment where orders are picked by store. This operation is complemented by a strategically located trunking station which operates a pick to zero operation for fast-moving grocery on merchandise units that can be placed directly on the shop floor.

So much for the method of transporting goods from supplier through to the stores, but how much should be sent to each store? With such a huge product range today, it is impossible for the individual store to reorder across the whole range (store-based ordering).

Instead, sales of each product line are tracked continuously through the till by means of electronic point of sale (EPOS) systems. As a customer’s purchases are scanned through the bar code reader at the till, the sale is automatically recorded for each sku. Cumulative sales are updated every four hours on Tesco Information Exchange (TIE). This is a system based on Internet Protocol that allows Tesco and its suppliers to communicate trading information. The aim of improved communication is to reduce response times from manufacturer to stores and to ensure product availability on the shelf. Among other things, TIE aims to improve processes for introducing new products and promotions, and to monitor service levels.
Based on the cumulative sales, Tesco places orders with its suppliers by means of electronic data interchange (EDI). As volumes and product ranges increased during the 1990s, food retailers such as Tesco aimed to destock their distribution centres by ordering only what was needed to meet tomorrow’s forecast sales. For fast-moving products such as types of cheese and washing powders, the aim is day 1 for day 2: that is, to order today what is needed for tomorrow. For fast-moving products, the aim is to pick to zero in the distribution centre: no stock is left after store orders have been fulfilled and deliveries to stores are made as soon as the product is picked, which increases the stock availability for the customer. The flow of the product into the distribution centre is broken into four waves and specific products are delivered in different cycles through the day. This means that the same space in the distribution centre can be used several times over.
Source: Harrison,A & Van Hoek,R. (2014). Logistics Management & Strategy Competing through the Supply Chain. Fifth Edition. Prentice Hall International Edition

Question 1
Describe the key logistics processes and supply chain functions used to create value for Tesco’s global supply chain.

Question 2
Differentiate between Tesco’s logistics and marketing channels and the important role in managing their vast product range and customer base.

Answer 1

ANSWER :

QUESTION .1

Coming up next are the key supported endeavors strategies and stock structure limits used to make a glint for Tesco's general store structure:

1. Tesco has a technique of 3000 suppliers with association level of 98.5 percent who are required to offer things to Tesco inside 30 minutes.

2. Tesco has different standard dissipating trademark normal segments which can control different potential outcomes of confining temperature go

3. Checking things are gone on through discrete dissipating make which relies upon gave condition where game plans are picked by store.

4. Through the techniques for Electronic Point of Sales (EPOS) structure, plans of everything offering is followed consistently. This strategy is reestablished conventionally on Tesco Information Exchange (TIE).

5. Response time is diminished from producer to store and to ensure thing responsiveness on the rack by the usage of Internet Protocol.

6. Tesco places orders with its suppliers by structures for Electronic Data Interchange (EDI) what's more restocking is done by referencing absolutely what is required.

QUESTION .2

Clarification for Marketing channel is to discover new market and client base which itself is a gravely organized endeavor and matter of celebrate when you get new business.

Before long, constantly tremendous is designing advancement of a business and satisfying client need on schedule. In current business it is routinely it is poor upon different shipper, sub contracter, channel additional things, and so on. The layers from get-together thing to retail is unprecedented. In like way, these layers on time transport and quality is of psyche blowing worry in considering completed thing, shipment and stream, and retailing and keeping streamline stock.

Plainly unequivocal to Tesco where the thing base itself is goliath. Clear thing has undeniable thing life cycle. Strongly significant thing has grouped client zone and volume.

Right hand these Tesco had thousand of store, stockroom and standard vehicle make. It is difficult to control everything without progress support, similar to stock affiliation, and picked managment.

Other perspective is to suitably pass the change data as before timetable as conceivable to mammoth of the business chain. Without most recent improvement and access of data to all layers on the off chance that they are less contracted is critical to follow the progression and brief estimation concerning future.

Clear thing have undeniable selling cycle. So thing ought to be set up in stock when the interest begins. Over stock is other than not expected which gobbles up stockroom rental and may influence catastrophes pondering baffling moderate interest.