Indian Institute of Management - Kozhikode

EPGP 08

SUPPLY CHAIN MANAGEMENT

Quarter III - Project

- An Overview of Supply Chain Management

Navaneeth Mukundan EPGP-08-061

Midhila K ​S​ EPGP-08-062
Sreekanth Menoth EPGP-08-109
Tiju Thomas EPGP-08-123
 - Introduction

TESCO is one of the worlds largest retailer with about 476000 employees
operating in 11 countries worldwide.

Headquartered in UK, TESCO has been in business for almost a century

Group Sales of £ 48.4 billion

Operating profit of £ 944 million

https://www.tescoplc.com/about-us/our-businesses/
https://www.tescoplc.com/investors/reports-results-and-presentations/results-and-presentations/
 - History

History of TESCO
• Found in 1919 by Jack Cohen
• Name TESCO from the initials of TE Stockwell, Jack’s Tea Supplier and
Jack’s surname
• Opened first Store in 1929 in Burnt Oak, Edgware, North London
• Tesco Stores was listed in Stock Exchange in 1947
• First Supermarket was opened in 1958
• Opened petrol station in 1973 in UK
• In 1982, computerized checkouts were introduced
• TESCO express stores opened in 1994
• Went international by acquiring Hungarian retailer S-Market in 1995
• Opened first Extra format store in 1997
• In 2000, Tesco.com was launched
• Entered India in 2008, with Tata Group as Star Bazaar hypermarkets

https://www.tescoplc.com/about-us/history/
 – Organization Structure

John Allan – Chairman

Dave Lewis - Group Chief Executive
Alan Stewart - Chief Financial Officer

Richard Cousins - Senior Independent Director

Mark Armour - Non-executive Director
Byron Grote -Non-executive Director
Mikael Olsson - Non-executive Director
Deanna Oppenheimer - Non-executive Director
Simon Patterson - Non-executive Director
Alison Platt - Non-executive Director
Lindsey Pownall - Non-executive Director
Paul Moore - Company Secretary

https://www.tescoplc.com/about-us/board-and-executive-committee/board/
– Areas of Operation / Offices
– Services / Products Offered
 – SCM Overview

Tesco's SCM relied heavily on the concept of 'Process Improvement' and was
guided by its core purpose of creating value for customers so as to earn their
lifetime loyalty. The key period for Tesco's supply chain initiatives was between
1983 and 1996; during this time, the company introduced several systems
including point of sale scanning, centralized ordering, centralized distribution,
automated warehouse control and electronic data interchange (EDI). Graham
Booth (Booth) was Director, Supply Chain, Tesco between 1985 and 2002. He
felt that it was necessary to have replenishment triggered by customers, for
which, using the same set of suppliers along with cross dock distribution
centers (DC) and vehicles supplying to all store formats would be ideal...
Since 2006, Tesco has used big data analytics to improve its supply chain,
primarily targeting its inventory management systems , able to predict
customer buying habits and track the effectiveness of special sales offers.
PHASE
Direct to retail store delivery (1970s)
Centralisation (1980s)
Composite (1980s and 1990s)
KEY ISSUES
Supplier organised and controlled; Tesco
not in control of range, price, or
availability; retail store variability.
New facilities and approaches;
manufacturers’ and suppliers’ products
are delivered to supply distribution
centres, not retail stores; outsourcing;
range, quality, and price control set by
Tesco head office; distribution centres
organised on product-line basis.
Multi-temperature regional centres and
vehicles; productivity benefits; sharing
of stock-holding; increased frequency of
delivery to retail stores; better space
usage; standardised retail stores make
supply easier; quality and productivity
increased and costs reduced; inventory
holding reduced significantly
PHASE KEY ISSUES
Vertical collaboration and lean supply Primary distribution focus; mapping the
chains (2000s) value stream; flow principles and lean
principles introduced (simplicity,
transparency, and efficiency); stockless
distribution centres; separation by
product demand; sales-based ordering
systems; supplier agreements and
compliance; customer-focused with
retail store-specific product ranges
based on ‘Clubcard’ data; technology
development and just-in-time
principles; continuous replenishment;
flow-through and network
management; emphasis on handling
and packaging logistics; shelf-ready
merchandising.
PHASE
Managing complexity (2000s)
KEY ISSUES
Internationalisation of supply and retail
store operations; multi-format retail
store development with new sizes,
approaches, and locational types;
extension into non-food; internet-based
retailing and home delivery utilising
store-based picking systems; catalogue
retailing and single-item picking and
delivery; 24/7 operations; in-house
operations extended; RFID experiments;
localisation of product sourcing for
some lines; green and sustainability
initiatives; intermodal and reverse
logistics; collaborative transport; vehicle
and driver performance.
SCM Structure
• Tesco has developed an analytics model that uses
weather patterns to properly stock store shelves.
By looking at historical buying data and expected
temperature trends, the business can accurately
predict what consumers in a specific area will want
to purchase and then supply locations accordingly.
For example, if warm weather is expected to come
to an area after a particularly brutal cold spell,
Information Age reported that Tesco will ensure
that surrounding stores are well stocked with more
barbecue meats and less cat litter.
• retailer uses big data analytics to track the
effectiveness of each sale or special offer at its
stores, the news source reported. That way, the
company is able to determine which sales should
be run again and how store shelves can be better
stocked to accommodate increasing or decreasing
demand of certain products.
 – Warehousing Strategy
 Distribution depots with huge warehouses -some run in-house by Tesco and
the remainder are contracted to third party agencies
 National Distribution Centres
 Regional Distribution Centres - ‘mega-sites’, fast-moving sites and medium-
moving sites
 Composite Distribution Centres
 Temperature Controlled Depots - fresh foods, fresh and frozen and frozen site
 consolidation centres run by a variety of operators which feed into this system.

‘Steering wheel’ approach widespread throughout Tesco. Any distribution centre

steering wheel focuses on Operations (safety and efficiency), People (appointment,
development, commitment and values), Finance (stock results, operating costs)
and the Customer (accuracy, delivery on time).
– Key benefits and Challenges (SWOT Analysis)
Bibliography

• http://www.rfgen.com/blog/bid/285148/Tesco-
Improves-Supply-Chain-with-Big-Data-Automated-
Data-Collection
• https://en.wikipedia.org/wiki/Tesco
THE END