TESCO CASE STUDY IN LOGISTICS, Schemes and Mind Maps of Business Economics

Download TESCO CASE STUDY IN LOGISTICS and more Schemes and Mind Maps Business Economics in PDF only on Docsity! 4 Chapter 1 • Logistics and the supply chain ---- terns it will use; managerial, because it encompasses decisions about sou rcing, making and delivering products and services within an overall 'ga me plan'. This chapter addresses four key issues: 1 l ogist ics an d the supply chain: def initions, structure, tiering. 2 Material flow and info rm at ion flow: the supply chain a nd the demand chain. 3 Competing t hro ugh logistics: competitive criteria in the marketplace. 4 l ogistics strategies : a ligning capabilities across the supply chain. 1.1 Logistics and the supply chain Key issues: What is the supply chain, and how is it structured? What is the pur­ pose of a supply chain? Logist ics is a big word for a big challe nge. Let us beg in by giv ing an exam ple of that challenge in pract ice, because t ha t is where logistics sta rts and ends. Tesco Iesco is the UK's largest food retailer, with a sales turnover of more than € 67.5 bill ion. 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 rapidlyas rescc entered the convenience sto re market with deals such as the Tesco Express alliance with Esso to run grocery shops at petrol stations. The prod­ uct 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 resco 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 Tescowithin 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 t ime loyalty' . Wide prod uct range and high on-shelf availabil ity across that range are key ena blers 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 . An early reform for supermarket operation was to have supp liers deliver to a distri­ bution centre rathe r than to every store. During the 1980s, distribut ion to reta il stores was handled by 26 depots. These operated on a si ng le-temperature basis, and were small and relatively inefficient. Delivery volumes to each store were also relatively low, and it was not economic to deliver to all stores each day. Goods that required tern­ perewre-controned environments had to be carried on separate vehicles. Each product group had different ordering systems. The network of depots simply could not hand le \