FdA Business & HRM
Operations Management
Tesco – Operations Management
Contents Page
| Executive Summary | 4 – 5 |
| Introduction | 6 – 8 |
| Operational Strategy | 9 – 12 |
| Process Design | 13 – 14 |
| Supply Chain Strategy | 15 – 17 |
| Inventory Management & Control | 18 – 20 |
| Outsourcing | 21 – 22 |
| Lean | 23 – 24 |
| Quality Management | 25 – 27 |
| Ethical Considerations | 28 – 30 |
| Conclusion & Recommendations | 31 – 32 |
| References | 33 – 36 |
Executive Summary
This report aims at examining the current state of Tesco’s operations management. The report discusses various issues in detail based on operations strategy, operations design, and operations management. The company’s strengths and weaknesses are revealed by keenly investigating the operations strategies used by the company. General approaches of making improvements to the management of the company have also been discussed. This report first looks at the operations strategies used by the company. The company enjoys economies of scale because it serves a wide market. Tesco also sells its products at a relatively low price as compared to its competitors. This strategy enables the company to attract many customers and to maintain their loyalty. The company does not also compromise on the quality of their products as far as good customer relations are concerned. Other performance objectives of the company include; flexibility, speed of operations, and dependability.
Different types of supply have also been discussed in relation to Tesco Company. Some of the applicable supply methods include agile, lean, reverse, and hybrid. Both their advantages and disadvantages have been discussed thus showing the most effective one. Evolution of e-supply has also been discussed in relation to Tesco among other successful businesses. Moreover, inventory control and planning has been discussed by referring to associated costs such as storage, capital, and obsolescence. Additionally, outsourcing of various operations in Tesco has been discussed. Some of the benefits and disadvantages of carrying out outsourcing have been discussed.
The types of quality management systems applicable in Tesco have also been discussed about RATER and SERVQUAL. Ethical considerations in Tesco regarding management, suppliers, and customers have been discussed in details.
Operations management is administration of various business activities which is aimed at creating efficiency of operations within a given business. This activity entails converting labor and materials into services and goods to maximize profits earned. Supply chain management on the other hand refers to managing the flow of services and goods. It entails managing the storage and movement of raw materials and finished products. After examining the operations management of Tesco some of the recommendations arrived at include investing in research, carrying out intensive advertisement, focusing on provision of high quality products, and investing on staff development.
Introduction
Jack Cohen established Tesco in 1919 in London. Since then, the company has been growing bigger each year (Tesco PLC, 2017). Tesco is now the third biggest retailer in the world measured by profits and the fifth biggest retailer in the world measured by revenues located in the United Kingdom but operates in eleven other countries across Asia and Europe (Tesco PLC, 2017). The company has branches in fourteen different countries across the world. Due to its wide variety of products, it serves tens of thousands of consumers daily. The company operates different types of formats such as Superstores, Metros, Extras, and Express’s. In the recent past, it has been expanding its mode of operation by introducing online shopping. Tesco aims at giving consumers value for their money (Tesco PLC, 2017). The company also aims at growing steadily.
In addition to Tesco’s large scale of operation and its long history, the company’s success is also as a result of effective operations management, innovative operations strategy, and distinctive operations design. The company’s international expansion to other countries is due to its excellent corporate strategies (Tesco, 2010). Tesco’s significant growth and success in other countries is outstanding. One of its most helpful strategies is that it localises and applies a store format based on the behavioural habits of local consumers in the host country (Tesco PLC, 2017). This strategy not only allows the company to attract new customers but also increases the sales made.
Tesco always has a competitive advantage over the rest because it uses a consumer-centric concept (Wood, 2007). This company was chosen because of its familiarity with the researcher and its operations strategies are applied to ensure that their customers benefit. Due to its consumer-focused concept, Tesco adopts a low-price policy to attract customers and to enhance their loyalty. Since the company was started, it has used competitive pricing as one of its strongest marketing strategies. The company aims at selling more commodities at a low price. Low pricing is applied by using cost cutting approaches (Wood, 2007). Some of the cost cutting strategies used include minimising wastage and buying materials in bulk.
The company has an outstanding mode of operation because it also focuses on expanding its foreign market through introduction of branches in different countries. Despite its successful operations strategy, the company only operates in twelve countries (Sarac, Absi and Dauzère-Pérès, 2010). Other measures need to be taken to ensure that more branches are established. The company also manages about 476, 000 employees in various countries (Tesco PLC, 2017). Tesco values human resources and team work to ensure continued professional development. Additionally, the company ensures that it maintains healthy relationships with suppliers to attract favourable terms and consistent flow of commodities.
Operational Strategy
According to Baroto, Abdullah, and Wan (2012), operational strategies are the methods used by organisations to attain their set objectives. Through development of operational strategies, companies can implement or examine efficient and effective systems for using personnel, resources and work process. It is important to note that service-oriented organisations apply operational strategies so that they may link short-term and link long-term corporate decisions to create a management team that is effective.
Hill and Hill (2011) also note that a corporate strategy involves viewing a company as a unit of various interconnected parts. The different departments in an organisation depend on each other to achieve the set objectives and to stay healthy. If one of the departments is interrupted the entire organisation is negatively affected (Potter and Disney, 2010). Other core strategies that should be applied by a company must use cross-functional interactions and support its corporate strategy.
Small businesses in one industry should exploit and develop a competitive advantage to maximise profitability. A company gains a competitive advantage by outperforming competitors. This strategy is mainly attained by producing services and goods at low cost. Business owners can also show how their products are superior by using premium pricing. While applying a corporate strategy, business may opt for diversification if it proves more profitable. If there are other additional businesses, a small business may consider applying the corporate strategy (Slack, 2010). To ensure effectiveness of operations, the umbrella organisation should ensure that it contributes to the competitive advantage, profitability, and efficiency of all its business units.
Ramanathan, Bently and Pang (2014) assert that Tesco for a long time has managed to compete favourably under its ambitious and effective operational strategy. Tesco’s operational strategy can be looked at in three perspectives, which include; functional strategy, business unit strategy, and corporate strategy. From a corporate strategy aspect, the company closed its small-sized stores in 1985. It then opened several large supermarkets at that time. Through this strategy, the company defined its business format, focus, and direction. Now, the company operates store models such as; Tesco Superstore, Tesco Express, Tesco Metro, and Tesco Extra (Tesco, 2017). Such business formats increase the flow of customers, increase sales, and maximise profits through offering low-priced commodities. Despite the high competition and the demand for self-development, the company managed to expand to other countries using its store formats in countries such as Poland, china, and Turkey (Tesco, 2010).
Figure 2:(Adopted from 1000ventures n.d.)
The company success is mainly attributed by its application of corporate strategies.
Tesco grows fast because it is quite cautious with oversea market. Being cautious enable the company to remain proactive and to ensure that the challenges faced are solved within a short time. Tesco translates and localises its store formats according to the foreign market where it starts a new branch (Ramanathan, Bently and Pang, 2014). This strategy enables the company to adapt to the foreign markets and to satisfy their needs within a short time.
According to Tesco (2014), the company also uses functional and business unit strategies. The company ensures that it employs the consumers-centric concept throughout. Tesco also breaks numerous traditional rules that used to guide retailing practice. Tesco’s main aim of applying operational strategies is benefit their customers. Due to its strong focus on customers, the company has introduced the Tesco club card and the low-price policy so that it may maintain customers’ loyalty. Use of club cards and low pricing attracts thousands of customers thus increasing the sales made on daily basis.
The company also offers a wide range of products at a cheap price to attract as many customers as possible. The company can maintain the low prices of commodities by avoiding wastage, purchasing products in bulk, designing their delivery system and improving the efficiency of its employees among others (Slack, 2010). Tesco also gets its non-food products from different regions. By getting supplies from India and China, it expands its purchasing channel and cuts the cost of production. By providing commodities at low prices, it can stand out and remain the best option for consumers.
Additionally, Tesco introduced clubcards to maintain the loyalty of consumers. The loyalty cards are advantageous because they also enable them to track the buying behaviour of customers and to get data from them too (Xie and Allen, 2013). Tesco also provides targeted promotions and changes its layout as the customers prefer.
Tesco’s performance objectives include; cost, flexibility, quality, dependability, and speed (Slack, 2010).Tesco ensures that the products offered for sale are of high quality. The express store has fridges, shelves, and checkouts as well as cameras that monitor customers during shopping. In case a customer encounters any challenge, help is provided instantly. Tesco has several cash tills with each about four employees to serve more customers. Tesco express ensures that products are available for sale at all time by frequently checking on stock (Tesco, 2012). The company also offers discounts and competitive prices for their products.
A push operational strategy involves attracting customers through various interactions with middle people. The strategy relies on word of mouth, recommendations or personal selling. Social media is the major platform for push strategies used by businesses. Organisations that use a pull strategy ensure that customers are loyal to them by attracting them to what they offer (Hill & Hill, 2011). Tesco employees a pull strategy because most of the customers are attracted to what they offer and become loyal to them.
The four V’s of operation include visibility, variation, variety, and volume. Due to high demand of products and the large market served, Tesco ensures that large volumes of products are available for sale to meet consumer demands and to increase profits earned. The company also provides different varieties of products to serve the differing tastes and preferences of consumers (Tesco, 2016). There is little change in demand because the company does not face stiff competition in the United Kingdom. Visibility is high because the company is transparent with its consumers. Most of the operations are carried out openly.
The four V’s of operation include visibility, variation, variety, and volume. Due to high demand of products and the large market served, Tesco ensures that large volumes of products are available for sale to meet consumer demands and to increase profits earned. The company also provides different varieties of products to serve the differing tastes and preferences of consumers (Tesco, 2016). There is little change in demand because the company does not face stiff competition in the United Kingdom. Visibility is high because the company is transparent with its consumers. Most of the operations are carried out openly.
The club cards allow the company to have a good relationship with their customers by accumulating credit and sharing profits earned with customers. From the above discussion, it’s quite clear that Tesco links the operating function with its marketing strategy.
Table 3: Push vs Pull Model adapted from Ibrahim (2012).
Process Design
According to Talk (2016), process design refers to determining equipment needs, workflow, and the implementation requirements for different processes. A process design uses tools such as scale models, process simulation software, and flowcharts. An appropriate process design considers the efficiency of the process to the objectives of the business. A wide view of the entire organisation should be taken into consideration. The whole process should give customers value for their money by involving the management at different stages. An effective process strategy should be developed to achieve an appropriate process design. A suitable process strategy should involve technology investment, customer participation, and raw material procurement. Process design has been changing recently leading to introduction new concepts such as flexible manufacturing systems (Becker, Kugeler and Rosemann, 2013). Flexible manufacturing systems help to deliver effective and efficient production analysis and design. Tesco has been able to stand out in the market hence being the most preferred grocery shop in the United Kingdom. The company is well known for its high quality products, low costs, and speed of transaction. The company also uses club cards to get information from consumers so that they may identify areas of improvement.
To save costs and to increase the speed of delivery, Tesco uses its own means of transport to supply goods. Doing so enables the company to increase the efficiency of delivery. However, it is worth noting that primary distribution still needs to be improved (Hammer, 2010). Sometimes the trucks are not enough to get goods from suppliers.
Tesco has also made significant improvements on its supply chain by employing new technology and introducing lean management. In the recent past, the company invested in technology while other retailers focused on improving their supply chain and reducing costs. Tesco was the leading company introducing Radio-Frequency Identification (RFID) technology back in 2003 (Tesco, 2014).
Introduction of new technology is important because it gives a company a competitive advantage over the rest. As a result of introducing new technology, Tesco has a highly reliable supply chain, provides improved customer service, and higher working efficiency.
Improvement of Tesco’s Information Technology system helps the company to offer good customer service through reducing the waiting time and improving the check-out speed. The new technology also enables the company to concentrate on benefiting customers which is a concept of the company. Additionally, the RFID technology helps to improve the efficiency of employees by making the processing of goods easy and simple. Employees spend less time searching for products, thus they spend more time serving them. RFID technology also improves the accuracy of data through tracking products automatically (Tesco, 2017). The technology also makes it easy to control the entire supply chain.
Tesco has also uses Collaborative Plan Forecasting and Replenishment (CPFR) and cross docking operation to enhance inventory management. Cross docking makes it easy to load goods from the same store to one trailer. The approach also reduces inventory holding. The CPFR system enables the company to analyse the supply pattern and to also share the obtained data (Tesco, 2014). The company’s system helps to reduce the inventory cost and makes products readily available (Vom and Rosemann, 2010). The supply and operational design strategy of Tesco is highly effective due to its high dependability, cost efficiency, provision of high quality products, high flexibility, and increased speed of operation.
Supply Chain Strategy
Supply chain strategy is the process of evaluating the benefits earned from all operational components. According to Christopher (2016), supply chain management is like supply chain strategy but the latter is much broader. A business strategy involves making use of core competencies of a company to achieve the set goals and objectives. The strategy also involves analysing and making decisions about what services and products should be offered when they should be offered and where they should be offered. The strategy helps to identify markets, business cycles, and timing as a way of competing with others. The business strategy determines the direction a company wishes to go but a supply chain strategy consists of the actual activities of an organisation and how they can help to achieve the objectives of the supply chain.
Table 4: Supply Chain Management adapted from Pearson Education (2014).
Most organisations have a business strategy but few of them have a supply chain strategy. A supply chain strategy is important because it helps to support and to operationalise the business strategy. A supply chain strategy mainly aims at maximising efficiencies and cutting down operational costs. For instance, a firm may decide to apply a strategy that is targeted towards supply management so that it may remain competitive in the market. Once the purpose of the organisation is clearly defined, the company devises tactical steps aimed at achieving the set goals. A supply chain strategy also establishes ways of working with other supply chain partners such as customers, distributors, and suppliers. Once the market becomes highly competitive it becomes vital to make good relationships and to work as a team to gain a competitive advantage over the rest (Christopher, 2016). A supply chain that is well executed leads to value creation in a company.
Figure 6: Tesco Distribution Centre Locations (Adopted from IGD 2016)
Some of the common types of supply include reverse, hybrid, lean, and agile. Lean supply refers to lowering waste and reducing costs (Gil et al., 2010). This method is helpful to companies that deal with large volumes of orders because costs and wastes accumulate quickly. The concerned organisation avoids losses by maximising resources. Additionally, organisations with orders such as food among others that are of low variability benefit by using the lean supply chain. This method of supply is appropriate for Tesco since it offers groceries.
The agile Supply Chain is designed in such that it is highly flexible to adapt to changes either in the internal or external environment of the business. This supply chain is appropriate to companies that want to adapt to economic swings, customer demands, and technology among others (Qrunfleh and Tarafdar, 2013).
Tesco should also apply this supply method because changes occur to businesses. It will enable the company to remain stable during adverse periods.
A hybrid combines different elements of something to make an improved version. Hybrid supply combines the best aspects of technology, processes, and people to create an end-to-end and streamlined process. A hybrid supply chain combines elements of both agile and lean supply (Takahashi and Nakamura, 2004). Tesco should ensure that its supply chain is resource-efficient, adaptable, and flexible. A reverse supply chain on the other hand refers to activities applied to retrieve used goods from consumers and reusing them or disposing them (Domagala and Wolniak, 2013). This is also an important supply method that can be used to minimise wastes and production costs.
An e-supply chain is also a recent technological advancement where supply is electronically managed with Web technologies among others (Mohapatra, 2013). The supply chain parts involved include downstream, internal and upstream supply chain. Managing a supply chain is quite challenging due to a large number of consumers, numerous business processes, and several business partners (Ross, 2016). An e-supply chain makes processes faster, more accurate, and faster thus improving operations and possible losses.
Vertical integration refers to the process where different steps in distribution and/or production of a service or product are either controlled by one organisation or entity (Christopher, 2016). The company involved does so to increase it entity’s power. Tesco obtains most of its products from farmers in different regions who can offer goods at a relatively low price. On the other hand, horizontal integration refers to the strategies aimed at increasing the market share by either merging, buying or taking over another similar business. Horizontal integration is meant to increase the market, expand management’s capabilities and knowledge, and take advantage of economies of scale and to reduce competition (Takahashi & Nakamura, 2004).
Figure 7: Vertical and Horizontal Integration adapted from Pixell.club. (2017).
Inventory Management & Control
Inventory Management is determining the timing and optimal quantity of inventory to align them with production capacity and sales. Inventory planning is helpful to organisations profit margins and cash flow especially for small scale businesses that mainly rely on a quick turnover of commodities. Inventory planning may be helpful to Tesco because it leads to better control of costs incurred, customer satisfaction, successful storage, and forecasting needs. With a good inventory planning strategy, a company will know its stock level; it can also reduce and optimise slow moving stock, and stock rotation (Heizer and Barry, 2013). Additionally, items that are not selling can be removed from the inventory to create space for fast moving products.
On the other hand, inventory control refers to process of checking the stock of a company. In logistics and operations management, inventory control requires the use of a programmed software and the technological system (Lacoviello, Schiantarelli and Schuh, 2011). In operations management and economics, inventory control aims at reducing costs without negatively affecting sales. In loss prevention, inventory control involves designing systems that create barriers to shoplifting. Stock control makes sure that all shelves are stocked appropriately. Raw materials are an important resource to any company because without them it may not conduct production effectively. Raw goods are commodities coming from suppliers. A company should develop a system that determines the status of raw materials to gauge what products will be produced in its next financial year.
Companies that do not manage their raw-material inventory are likely to go bankrupt (Heizer and Barry, 2013). If a certain raw material completely lacks, then the production process will come to a stop.
The other type of inventory comprises of goods produced by a different manufacturing company. This system has often been overlooked by companies leading to development of Enterprise Resource Planning systems to track the movement of goods. The system helps to avoid possible losses or theft. Profits can also be tracked easily making it easy to make future plans of the business.
Finished goods are mainly controlled by the warehouse or authorised distributors. Companies with several distributors need to know the quantity of their products available for sale in the market. This also helps them to estimate the total value of the products in the market (Tuyur, Ganeshan, and Magazine, 2012). With visibility of finished products, it is easy for Tesco to manufacture products for several distributors outside the United Kingdom thus increasing its market range and the profits earned (Tesco, 2014). Proper management is needed in service inventory. Global mandates of companies such as energy regulation and recycling of materials should be managed properly. This type of inventory is difficult to manage because it involves external parties as well as consequences if not done appropriately. Tesco gathers information about their products which have failed in the market. It is also able to identify the supply and production methods that did not work for them (Yun, Lee and Choi, 2011). The failure analysis enables the company to improve their services and to identify the most appropriate strategy for them.
Tesco has efficient and fast checkouts for stock control and customer service. Efficient stock control helps the company to provide outstanding services that are incomparable to its competitors. Tesco aims at delivering unbeatable services and prices and to ensure that the supply process is carried out appropriately to make goods easily available at their outlets (Tesco, 2017). Since Tesco is good at maintaining supplies, it offers free items to consumers in case they find that whatever item they wanted to purchase is not available in store. Tesco also has fifteen warehouses that are strategically located around the country. The strategic positioning of warehouses makes supplies more efficient and quicker (Heizer and Barry, 2013). The company also updates its stock using a computer program.
Figure 8: Inventory Accounting adapted from Accountingcorner.org. (2017)
Outsourcing
Outsourcing refers to subcontracting or contracting of noncore business activities to free up time, personnel, cash, and facilities for activities. In other words, outsourcing is the practice of allocating certain business processes to anexternal service provider. A business that does so holds a competitive advantage over its competitors. Organisations with strengths in various areas may contract out marketing, data processing, payroll accounting, legal, and manufacturing so that they may concentrate on their strengths and reduce production costs. Outsourcing is a vital part of reengineering ordownsizing (Lukić, 2012).
Outsourcing enhances expertise and swiftness of activities. Mostly activities are outsourced to highly skilled and specialised personnel. Such individuals have the technical expertise and specific equipment that is most likely better than the one available at the outsourcing company (Willcocks, 2012). Due to such factors, tasks are completed within a short time. Quality is not also compromised during the production process.
An outsourcing company is also able to concentrate on the most important processes which allow the organisation to strengthen its business processes. Outsourcing also makes risk-sharing possible between a company and external parties. If particular components of a company are outsourced, the business shifts specific responsibilities to the external party thus making production much more effective (Sharma, Sharma and Rajasekaran, 2011). The hired specialist plans risk-mitigating measures.
The other benefit of outsourcing is that it reduces recruitment and operational costs. Outsourcing eliminates the need to hire full time employees. Due to such a practice, operational and recruitment costs are greatly reduced.
The outsourcing company can use the accumulated profits to expand the business (Tesco, 2017). The profits earned are also significantly increased due to reduction of production costs.
Outsourcing could also bring negative consequences to a business. When a company outsources recruitment services, human resources, and payroll services among others, there are high risks of exposing private information to an external party. In the information reaches other organisations, it could be used against them (Lukić, 2012). Competitors may also learn about a business’ secrets.
In case a right external third party is not chosen appropriately, some of the challenges that could be faced include; production of substandard products, increased delivery time, and inappropriate allocation of responsibilities. At times, it may be much easier to regulate activities inside the organisation than hiring external specialists (Willcocks, 2012). The outsourcing company may lose customer focus and incur hidden costs.
According to Lukić (2012), Tesco outsources ICT services from external vendors to gain a competitive advantage over other retailers. The company thus has the flexibility to get experienced teams, skilled services, and experts. Tesco, therefore, benefits from provision of fast services and reduction of risks. The company is also able to offer outstanding services to its customers (Tesco, 2014). Operating costs are also significantly reduced thereby improving speed, quality, and cost of products.
Table 5: Outsourcing vs. Insourcing adapted from Kelvin (2015)
For example, Apple Inc. outsourced the production of the processors used in iPhone 4S to Samsung (Phelps, 2014). However, Apple is one of the main rivals of Samsung Company. Samsung gets a lot of income by producing most of its components by itself. Outsourcing may at times be dangerous due to arising conflicts between the transacting companies (Vitasek, 2016). For instance, Apple sued Samsung for copyright infringement where it paid for damages hence going losses.
Lean
The main aim of businesses is to minimise waste while at the same time maximising customer value. Lean in this case refers to the creation of value to consumers while at the same time reducing resources used (Liker and Convis, 2011). A lean company understands the value of its customers and finds measure of increasing it. The main goal of such an organisation is to provide quality products to customers by reducing waste (Chiarini, 2012). According to Stone (2012), lean thinking leads to a change in the management’s focus leading to optimisation of assets, technologies, and vertical departments to optimise the flow of services and products across assets, departments, and technologies to customers.
Lean manufacturing concept originated in the industrial revolution period (19th century). The concept became prominent due to the techniques that Toyota manufacturing Company used in 1970s. The Toyota Production System (TPS) enables employees to offer quality services. MUDA concept is vital to Toyota Production System. Kaizen is a term used to refer to activities conducted to ensure that a company improves all its functions through involvement of staff. The concept helps the company to maximise profits and to minimise costs. Most businesses saw the benefits of applying the concept in their operation (Pepper and Spedding, 2010). The principle is now used by modern companies such as Amazon, Apple and Tesco. Lean is pull focused and closely related to just-in-time (JIT). JIT principle means that commodities are sold or produced when a customer demands them (Monden, 2011).
This process reduces possible production losses thus leading to maximised profitability. The process also involves elimination of waste, use of less human effort, spending less time, capital, and space.
The company using the strategy is also able to respond to dynamic customer desires with fast throughput times, high quality services, and increased variety (Pepper and Spedding, 2010). Management of information becomes more accurate and simpler than before.
Quality Management
Tesco is committed to their customers which is part of the reason as to why it is the largest retailer in the world, successful and why customers are loyal to them (Tesco, 2017). Once a customer is served at Tesco for the first time, there are high chances that the customer will come back after some time. Tesco has several stores that are easily accessible to consumers. The stores also have a wide range of products to increase the choice or customers. Due to the vast range of products, all types of consumers’ needs are fulfilled. The company attracts customers from different parts of the world (Rezaei, Çelik and Baalousha, 2011).
The company offers club cards to customers thus encouraging them to buy from them quite often.Tesco has six major competitive priorities, which include: dependability, low cost, speed, delivery time, and flexibility (Goetsch and Davis, 2014). Through these components, the company can gain a competitive advantage over the rest. Tesco dominates the United Kingdom market due to its good reputation. The company has built its good image through one stop shopping and its operating efficiency. The company uses advanced technology such as stock control and check out system. The company handles customers in a good way, introduces new lines and ensures that products are always available for sale.
Most suppliers fear that they may lose their clients to Tesco. They, therefore, negotiate with the company for favourable promotional prices for their products. Thus, customers get high quality products at a low cost. Tesco also has a good brand name because it is known for high quality products (Tesco, 2014).
Tesco uses product differentiation and economies of scale for activities such as distribution, and promotion. Thus, customers become dependent on it. Most of their products are also different from those offered by their competitors. If products are undifferentiated, customers will feel free to switch to other companies. Outstanding services offered by Tesco such as refrigerated delivery, online food shopping, and club cards enables the company to meet the needs of their customers. Such services also enable the company to retain its customers. Tesco uses its club card to get information about consumers which makes management easy (Mollah, 2014). The information also enables managers to identify areas that need to be improved and to know what items they prefer buying.
According to Turner (2012), Tesco is also efficient in delivering products at a short time. Tesco has small branches at different parts of towns and cities either as Express or Metro. This makes it easily accessible to customers. Management of supplies becomes easy because of delegation of duties. Making purchases, getting to stores, and returning to respective locations takes a short time (Tesco, 2010).
It is quite clear that Tesco uses SERVQUAL to capture the perceptions and expectations of consumers along dimensions such as reliability, assurance, responsiveness, tangibles, and empathy to offer quality services. Through establishment of numerous branches in different towns, the company offers accurate and dependable services. Use of club cards builds confidence in buyers as well as trust. Additionally, products are physically present in its outlets thus leading to short delivery time. Customers are served as fast as possible and given individualised attention.
Other aspects of service delivery offered by Tesco include; improved communication, increased accessibility, credibility, and competence (Mollah, 2014).
Table 6: Quality Management adapted from qualitydigest.com (2000).
Ethical Considerations
Tesco strongly believes that it should conduct a sustainable supply chain to make the company sustainable. The company thereby ensures that employees are subjected to fair working conditions. Suppliers of their products are also expected a certain guideline. Suppliers are supposed to comply with ETI Base Code. Suppliers are expected to have good intentions as they conduct their practices (Albareda, 2013). Carrying out collaborative initiatives between Tesco and its suppliers, the businesses can improve the working conditions for their workers.
Tesco has an ethical trading program that forms its core element of carrying out responsible business activities regarding buying and selling products. The company also ensures that the commodities sold are produced under good conditions (Robinson and Dowson, 2012). It is also the duty of the management team to ensure that both consumers and employees are treated fairly to avoid tarnishing the company’s reputation.
Tesco’s operations are well integrated with ethical trade practices thereby forming its strategies for corporate responsibility. Tesco’s activities and objectives are thus delivered by highly qualified and well trained personnel. This enables the company to offer high quality products at a low price (Albareda, 2013). In case of problems, they are solved within a short time to reduce delivery time. Delays are also avoided as much as possible because they make a business to appear unreliable.
Tesco’s business approach is based on transparency, improvement, monitoring, and values. The company works with other suppliers that have the same values as it. This enables the company to relate well with suppliers so that they may offer high quality products. Working with likeminded suppliers means that quality is not compromised at any level of production (Robinson and Dowson, 2012). Since Tesco aims at providing goods at low prices, its suppliers will also sell raw materials at low prices to reduce the production cost.
The company also conducts vigorous monitoring so that it may understand the truth about the working conditions for its workers. In case there are complaints, the management finds ways of solving the problems faced to make production effective. Conflicts among workers that may result to poor performance are also solved to improve the relationship among themselves (Robinson and Dowson, 2012). Good communication skills among workers enable them to follow the right process when dealing with organisational challenges and complaints.
Additionally, Tesco works to improve its goods and services. This means that they ensure progress by using recent technology and other helpful means. Suppliers of goods to the company are also supported so that they may also offer high quality goods at good conditions (Drake and Schalachter, 2008). The company is also open to customers and suppliers so that they may understand the things that are expected of them. Being open enables the company to work effectively with both suppliers and customers.
Tesco is one of the founding members of Ethical Trading Initiative (ETI). The organisation expects all suppliers to apply the set standards to make sure that their services and goods are within the accepted code of practice and conduct. Tesco helps its suppliers to achieve high standards.
Suppliers are closely monitored to ensure that everything goes well according to the plan (Robinson, 2010). Tesco addresses the problems faced by suppliers thus ensuring that they operate in improved conditions.
Conclusions & Recommendations
Businesses in the modern world play a major role in determining structure of our society. Thus, businesses are quite active in developing new concepts and to advance their strategies. There is stiff competition in the current market meaning that businesses need to identify ways of gaining a competitive advantage over the rest. Companies are, therefore, actively involved in finding ways of attracting customers, improving sales, and the type of products they offer. For instance, companies look for ways of improving customer relations, providing quality products, selling their products at favourable prices, and increasing the efficiency of their services.
Good operations management should always be upheld as in the case of Tesco Company. The company operates different types of stores that are in various town so that it may reduce delivery time. This strategy makes the company’s products reliable and accessible to most consumers. Tesco also uses club cards so that it may get important information that may enable the management to understand its weaknesses, strengths and areas that need to be improved. Provision of a wide range of products also enables Tesco to remain the best option to its customers.
Tesco together with its suppliers also are keen in following the accepted code of conduct and provision of services. The company also offers high quality goods at a low price. This strategy also enables customers to remain loyal to it. Tesco also commits a lot of resources in its development and training programme to improve the skills and knowledge of its employees.
Tesco should invest more on carrying out research on consumer demands, products and customer preferences. This will enable the company to maximise on available business opportunities. The company will also be able to identify marketing strategies that will increase profitability and the number of customers. Tesco will also identify weaknesses in its management strategies and find other ways of improving the services they offer.
Tesco should continue focusing on provision of high quality products and services. To maintain market dominance in the United Kingdom, the company should invest more on what it offers. The lost market should also be recaptured by increasing the quality of goods. Once people learn that the company offers the highest quality products at a relatively low price, they will prefer being their customers.
Carrying out vigorous advertisement will enable the company to reach out to customers who are not yet aware of their products. The company should set aside a department that deals with public relations and explain their products to customers. This will enable consumers to understand why what added advantage comes from buying Tesco’s products. Advertising the company’s products either through social media or other electronic media will enable consumers from other regions outside United Kingdom to get attracted to their products and services.
References
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