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Supply chain is a network of partners who collectively convert a basic commodity or upstream into
a finished product or downstream that is valued by end-customers and who manage returns at each
stage. However, supply chain management involves planning and controlling of all the processes
from raw material production to purchase by end-customers to recycling of the used cans. Besides,
supply chain management also know as a set of approaches that utilised to efficiently integrate
suppliers, manufacturers, warehouses, and stores, so that the products are produced and distributed
at the right quantities and qualities, to the right locations, and at the right time, in order to minimise
system-wide costs while satisfying service level requirements. Supply chain management is a big
challenge for all the big organisations because supply chain management is to coordinate planning
and control of each process, so that the needs of the end-customers are met, hence the organisation
can make more profit.

Supply chain management can be divided into 3 categories which are material flow or product flow,
information flow and finance flow. Material flow is the flow of the raw materials from the supplier
all the way down to the end-customer. Material flow is uni-direction which means that only flows
one direction from the supplier to the customers. For example, a physical products or raw materials
from suppliers to manufacturers t warehouse and then distribution to the final customers. Besides,
information flow is the bi-direction which means that the flow of the information from the supplier
to customer and from customer to supplier. Normally this type of flow include the quotations,
purchase orders, delivery status, invoice and customer complaints. Lastly, financial flow is the flow
or movement of the money from the customer to the supplier. When the customer receives the
product, the customers must pays and the money will be travel back to the supplier.

Moreover, supply performance measures can be separated into 4 part which are procurement,
transportation, warehouse and inventory. For procurement part, the performance can be measure
through supply quality and flexibility, pricing terms, inbound transportation cost, on-time
performance and information coordination capability. For transportation, time taken to deliver and
order, cost per kilometre of transportation and different modes of transport are used to measure the

performance of an organisation supply chain. Besides, for warehousing, supply chains performance
of an organisation can be measure through cases handled per labour-hour, percentage of late
deliveries, employees-hour worked versus employee-hours available and lines selected per
equipment-hour. Last but not least, for inventory, the inventory days and turns, inventory as a
percentage of total assets and on-shelf in-stock percentage can used to measure the performance.
The most important part is this report will more focus on the supply chain management measure
system of Tesco. Therefore, a Tesco manager is interviewed in order to conduct this report. Supply
chain management has been used by Tesco for many years and Tesco used supply chain
performance measure their warehouse and inventory.

2. Literature Review
In 1984, Dell was established. Then, in 1993 Dell experiences supply problems and hence Dell

completely redesigned their supply chain process along the lines of direct model which called by
the founder of Dell, Michael Dell. After redesigned the supply chain, between 1993 and 1998, Dell's
earnings subsequently grew at 65 percent per year. Dell's supply chain redesign was based on the
following 3 elements. The first element is Dell sells directly to customers and eliminates the
wholesaler and retailer. Secondly, Dell also takes advantage of new information technologies in
their communications with suppliers who can access Dell's component inventories, production
plans, and forecasts in real time and thus keep their production precisely matched to Dell's needs.
Lastly, Dell deliberately maintains absolute minimum inventory levels at every stage of production,
averaging 4 days overall. This shows that supply chain management is very important to a big
organisation to moving successful in their business and make more profit. Therefore, supply chain

can be a powerful source of competitive differentiation for todays companies. In order to stand a
chance to compete with others companies, a measurement and management system of supply chain
performance is paramount.

According to Zhang, Okoroafo (2015), supply chain performance is defined as the ability of the
supply chain to deliver the right product to the correct location at the appropriate time at the lowest
cost of logistics. This definition takes into account the time of delivery, cost, and value for the end
consumer. The authors believe that this definition includes the most important aspects of the supply
chain (Zhang, Okoroafo 2015). Supply chain performance is the ability of the supply chain to
provide products and services of appropriate quality in specific quantities and at the appointed time,
and minimise the total cost of products and services to the final customer in the supply chain
(Whitten et al. 2012). There are three basic criteria of performance evaluation which are efficacy,
efficiency and effectiveness (Estampe 2014). Efficacy is the relationship between the achieved
results and the pursued objectives; it is related to the level of customer satisfaction with respect to
the resources committed for this purpose. Efficiency is the relationship between efforts and
resources involved in the operation and the actual utility value as a result of the action; it is linked
to the achievement of objectives at a lower cost and the effectiveness is related to the satisfaction
with the results (Estampe 2014).