Logistics Management In Tesco

Logistics management plays a significant role in the success of any company’s operations and has a direct impact on its bottom line. More importantly, logistics processes play a big part in customer satisfaction, which is more important than low product costs. Logistics professionals should think of themselves as a customer-facing portion of the company and strive every day to add value for their customers.

The current retail position of Tesco is far removed from the origins of the company. Tesco made its name by the operation of a ‘pile it high, sell it cheap’ approach to food retailing. Price competitiveness was critical to this and fitted well with the consumer requirements of the time. The company and its store managers were essentially

It became very difficult to analyze the distribution trends due to the decentralized model of management. For example, each product group had a different ordering system. Individual store volumes were so low that delivery frequency was less than desired and quality suffered. Delivery frequency was maintained, leading to high empty-running costs and increased store receipt costs. It was prohibitively expensive to have on-site Tesco quality control inspection at each location, which meant that the standards of quality desired could not be rigorously controlled at the point of distribution. It was also realized that this network would neither cope with the growth Tesco forecast in the 1990s nor, as importantly, be ready to meet expected high legal standards on temperature control in the chill

This increased frustration between the parties involved in the supply chain because communication was not centralized. However the company began to engage its suppliers in 1997 through a system which they called Tradanet. Improvements to scanning in stores and the introduction of sales-based ordering enabled Tesco better to understand and manage ordering and replenishment. Sales-based ordering automatically calculated store replenishment requirements based on item sales, and generated orders for delivery to stores within 24 to 48 hours. Suppliers could obtain information provided they dedicated resources to focus on Tesco customer wishes and provided appropriate product offerings. This commitment complemented the change in commercial structure to focus on category management and ECR principles. Tesco moved from the traditional single point of contact with suppliers (the buyer and the national account manager) to a more complex interaction in which functions