Tesco PLC Analysis Paper Example

Winterman, (2013), Tesco PLC started in 1919 with Jack Cohen, who was twenty-one years old at that period, he had left the Royal Flying Corps at the end of world War I thus started buying surplus food from the army and selling it from a barrow in Hackney. Five years later he had begun selling his brand, tea. Thus he combines the first three letters of his supplier, TE Stockwell and the first two from his name, and created a brand name, Tesco. Tesco is the biggest retailer by sales in the UK market and also the largest national private employer, with approximately 476,000 in 6,553 stores as of 2017. It has an average of 50000 sales lines which ranges from food to CDs, clothes, books, garden furniture, toys and many others. Tesco has completely covered the British market, and it owns other stores in the U.S, Hungary, Thailand, Korea and others. It is believed to be second to Walmart in the world. It diversity ranges from selling to low-class clients, middle and upper class. The introduction of the Tesco Clubcard is the single most significant factor in the success of the company; the Clubcard was used to monitor customer behavior.

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The Transformation Model

Operation management involves a systematic process that transforms resources(inputs) into finished products or services for the consumers(outputs). This model deals with inputs, transformation processes, and outputs CITATION Uni11 \l 1033 (University, 2011). Ome of the inputs are used in the course of creating goods and services other are just utilized as a part of the process, the first example is the transformed resources, these are modified during operation, the second, transforming resources are resources that are used during the transforming process. The two types of processing resources are staff, people who are involved directly in transforming or supporting it and facilities, these are machines, land, building. The team used may be those who are employed or the supplies or raw materials. The output of a retail shop is the goods sold in the selves and the services offered to the clients. The transformation process adds value to raw materials, for instance, it changes ideas into tangible products, farm products to food. However, the transformation might sometimes lead to undesirable outputs such as waste.

Tesco Direct

Tesco accounts for 25% of all grocery sales offline and 43% online in the UK, with its assimilation of technology so huge, the firm has digitally transformed the customer experience CITATION Har16 \l 1033 (Harvard Business Scool, 2016). The brand has continually invested in technology so as to keep an edge in the competitive market, which in hugely digitized; so far there ar three significant technological advancements that have propelled the company forward but also presented some challenges. In 2000, they developed an online grocery store, Tesco Direct, however as the year went by there were massive investments to develop the online platform and often led to difficulties in the labor force in the delivery sector and supply chain due to underestimation of the online grocery orders given a lack of history data. The input was the introduction of the online grocery, and the transformation process is taking the clients order and preparing it for pick up or delivery, the output is the order itself.

Addressing this situation the management opened up a "dark store," these are large, purpose-built houses laid out like a supermarket but solely for online orders. These stores are closed but full of stuff with no clients, fulfilling online orders. The brand has since opened several other dark stores across the UK to cab the growing demand for online services CITATION Ret14 \l 1033 (Retail Gazette, 2014). The benefit of a dark store is that retailers can easily manage stock rotation and expedite the picking process, leading in an exceptionally high quality of fresh food. The move is also a benefit regarding space, however, with the dynamic technological world the brand needs to continually update its technology to be updated. Besides, there are a lot of security issues that comes along with online retail due to the protection of the client's personal details.

Operations Performance

Operation management plays a key role in achieving the central performance of any form of organization. Whether the operation is to improve customer performance or increase profitability, the way a firm utilizes it resources is very vital. Research showed that the UK retail market is very competitive, dynamic and innovative since the past few decades. Grocery stores such as Tesco, Sainsbury's, Asda are all competing to provide good prices, quality, range, and services to strive in the business. Customer loyalty is one of the frequently addressed matters in the marketing and service literature CITATION Kum11 \l 1033 (Kumar et al., 2011).This subject has been critical studies reveals that waiting time does not affect customer loyalty, but it influence customer satisfaction which may direct impact the commitment. Waiting time arises with an imbalance between demand and capacity. Operations performance of service delivery can positive affect customer satisfaction. Thus it is a direct determinant to loyalty; reduced operations performance of the provision of services negatively affects customer loyalty.

Tescos Clubcard

In the 1970s and 80s, Tesco was lagging behind with poor relation; it went under a dynamic change to becoming the biggest UK food retailer in the first decade of the 21st century. For 20 years, the brand underwent the largest and most comprehensive business transformation exercises in the UK. Competitors but its massive success typically changed the way stores, and businesses did business refuted the idea of Tesco Club card. The card was an instant success a year later it was on top of UK retail stores. The idea of loyalty scheme was not new but Cohen, the founder, is one of the early adopters of Green Shield Stamps in 1963 and succeeded to exploit it to his advantage. Using the card, Tesco collect raw data from consumers and turn it into valuable data. They use it to offer personalized discounts and rewards. They can learn consumer behaviors and optimize their products to consumers trends. The card increased the firms loyalty base. An owner of the club card receives vouchers and coupons. They also send emails to inform of new offers, which are personalized to clients needs. Nevertheless, the importance of new customers can end up being ignored, therefore; there is a need to strict balance between the two. The new customers also should be given a chance to enjoy the offers that loyalties afford CITATION Win13 \l 1033 (Winterman, 2013).

The improve customer satisfaction developed Tesco financially, and it again dominated in expanding massively which was Cohen idea, Tesco spotted potential spots ahead of it competitors, therefore, gaining an edge over its competitors. The huge customer base gave the firm a bargaining power to its suppliers thus made it quite hard for smaller operators to compete. It was very aggressive in getting the best deals in the market; it size allowed it to bargain even with the biggest manufacturers. The gained dominance made Tesco invest in training it employees to provide the best services to the clients and expanded its product and service base. The firm also offered favorable prices for all walks of lives depending on the consumer needs.

Process Design and Layout and Flow

An efficient layout scheme would contribute to the overall efficiency of operation. A misplaced facility layout of a production line can have a direct or indirect impact on small production. Facility lean design system is a production system that focuses on arranging the physical equipment within a workshop to help the service work in an active way CITATION Lij11 \l 1033 (Lijun et al., 2011). There are two approaches to this form of a layout; the first one takes a quantitative approach aiming at minimizing the total handling cost, the second is a qualitative approach that seeks maximize closeness-rating scores between departments based on a closeness function.

The primary objective of any organization is to provide service and product, which satisfies the client and creates value. This design is based on the customers feedback. Product has an attractive package to interest the customer in buying the product. The process of planning can be devised in the following categories; process requirement, gathering information to give a structure with the ended objective. Team building; for each target, a team of specialized personnel is created and equipped to partake the mandate. Planning and implementation; modules, policies and procedures required are developed which are after that approved. Audit; the process is evaluated if it is in line and will deliver. End of life; due to advancement, the process might become obsolete, and hence it is discontinued and a new one adopted.

Tesco's Technology and Lean Management

During Tesco major transformation in the 90s, it introduces lean thinking as a way of creating more value for clients with fewer resources. It had the basic understanding of consumers value and therefore focused on the way to continuously increase it. Therefore providing the user with absolute value and creating zero waste. It ultimately reviewed and decreased the supply chain using this model. Tesco has since developed a significant customer service since it moved to deliver customers orders online beside order retail shops still providing pick stations for their clients. By application of lean management and new technology to it, supply chain system it has reduced the cost and improved the supply of its products. The lean management process was and is successfully used by Toyota. This concept removes all the unnecessary parts in the operation process and prevents waste, Tesco restocks good several time in a data thus reduces inventory holding cut the cost and improves product availability and quality.

In 2003, like a trend, it took the lead by introducing RFID technology. This technology uses radio barcodes to scan and track products information throughout the supply chain. This advanced the brand regarding improved customer service, higher working efficiency and more reliable supply chain CITATION Zha14 \l 1033 (Zhao, 2014). The development of the IT (information Technology) system mainly progressed the company to a new level. First, I ensure that customers were cleared faster at the checkout, therefore reducing waiting time, which resulted in clients retention. The greatest advantage that Tesco had over it competitors is that it was quick to adapt new technology into its operations. The management took significant risks, which they rip fruits from until today. The RFID technology makes the employees work easier they can track the products easier for the customers hence spends more time serving the customers. Secondly, it improves tracking of the whole stock both inputs and outputs, and finally, it improved data accuracy.

Conclusion and Recommendations

Tesco's business transformation journey took them over two decades, but this was possible because it was driven by the passion, vision, and determination of the board, firstly by Lord Ian Maclaurin during the 80s and the Sir Terry Leahy from 1997. Tesco group has a remarkable strategic plan; most of its success is attributed to the good operational management, through efficiency and skills. Its strategies are based upon consumers satisfaction of need, reduced cost, improved delivery system, controlled inventory and innovative supply chain system. The principal of the company is to focus on the customers need, to keep the loyalty and increase retention. Tesco applies various technologies to keep up wit...