Tesco Distribution Network Swot Analyses

tesco distribution network swot analyses

strengths

apart from entire tesco plc, tesco's distribution network was an integral part of its success story. tesco successfully apply lean distribution, just in time strategy on its distribution network.

1) data exchange programme ( tesco information exchange)

the deliveries occurred in waves depending on the nature of goods delivered. for example, fresh produce was delivered right before the stores opened while dry goods were delivered at less busy times during the course of the day. the distribution system was integrated with a supplier extranet that tesco had built in partnership with ge information services. called the tesco information exchange (tie). intended as a complement to the edi (electronic data interchange) system already in use, tie was linked to a number of tesco's key systems to give suppliers access to relevant and up-to-date information such as electronic point of sale (epos) data to track sales and inventory. tie promised numerous benefits for participating suppliers as well. it had the potential to generate significant savings in planning joint promotions, more efficient inventory planning, and more sophisticated analysis of inventory flow data. result greatly increased the number of deliveries: after a few years of experimentation, tesco trucks now leave regional dcs multiple times per day to replenish what was sold in the past few hours.

2) rfid (radio frequency identification):

tesco is one of the leading companies to use rfid.

- rfid help to achieve easier, faster and paperless picking process.

- key performance indicators can automatically be measured by rfid

- rfid allowed labour cost to be reduced

by this technology, tesco distribution network has got achievement in following areas:

a-delivered quantities versus what was ordered (availability or service)

b-delivery timeliness (measured against the booking-in time)

c-rejection of products (triggered by non-conformance to retailer procedures)

d-level of damages (to case or product item)

3) online grocery market

tesco using store based picking for online shopping and using its store for online customers demands through out the country. so there is no warehouse. tesco also had a strong brand already, and was associated with low-cost food items and well-managed stores. since tesco didn't have to pay off a massive infrastructure investment. tesco's existing distribution network, low costs. and strong, pre-existing brand. in that way tesco has the most preferable on-line shopping web site and is the biggest on-line grocery in the world. as a result, company got better than many on-line retail companies such as amazon.

weaknesses

1) factory gate prices:

tesco's failure rate at making factory gate collections from suppliers is unacceptable. that means the primary distribution network [between suppliers and distribution centres] isn't optimised yet. this is crucial and because suppliers operating on this basis with tesco would be selling their goods at factory gate prices, without distribution costs built in. if this is improved this will give tesco competitive advantage over its rivals.

2) online home delivery service:

as i mentioned earlier in the strengths, tesco is the biggest online grocery home delivery in the world. however in the long-run tesco needs to establish a distribution network and utilise its current dc's for online market in order to maintain this success.

this is particularly important as current applications has its disadvantages as online shoppers who are responsible for picking the order crate congestion on the shop floor.

the "personal shoppers" have to compete with in-store shoppers (customers) since the order is to be fulfilled within a store environment and not in a warehouse. this situation annoys many regular costumers and damages the lifetime customer loyalty.

3) international expansion

as mentioned in the strengths, international expansion is a key part of tesco's growth strategy. however a good research is crucial in terms of which countries to choose. in some countries suppliers and manufacturers may not yet have the technology for rfid, edi, tie technologies.

4) communication problems

there is a need for improved and stronger communication strategies within warehouses. as warehouses are vast areas, it is not always possible to use the usual communication channels and it requires implementation of innovative communication strategies. this is crucial as it directly affects accuracy and productivity.

5) goods in process (scanning)

goods in process applications are not efficient and not up to date. this creates high inaccuracy volume and increased inventory cost.

6) lost unit of delivery (uod labels)

lost unit of delivery rate is unacceptable. this also creates high inaccuracy volume and increased inventory cost.

opportunities

now, after summarising tesco's main weaknesses, i'd like to talk about the opportunities that tesco could take advantage of by converting its weaknesses into strengths.

1) combining