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Tesco: Inventory Operations

Tesco is one of the companies that is always increasing the supply chain efficiency through improved utilization of technology. Tesco is the number one supermarket chain in UK, as well as the largest online supermarkets (Tesco, 201). To maintain a competitive edge, the company continues to offer the customers high quality services and products. The inventory process used in Tesco is identified as RFID. It is an identification process for frequency used for counting, receiving and transporting the right quantity of each product through true to the right store. The RFID ensures inventory visibility in the business while reducing the traditional supply chain problems such as shrinkage, out-of-stock items and late deliveries among other negative impacts in customer services. Tesco will monitor the delivery goods in warehouses to ensure the outlets are well supplied to promote satisfaction in the customer base.

Tesco has a key advantage where through incorporating innovation in its supply chain (Smith & Sparks, 2006). Thus, it increases the sales of the company and the distribution efficiency leading to its competitive advantage (Regions and Groups, 2006). Tesco has other key systems of the supply chain mainly the Jidokha, Just-in-Time, Muda, Mura and Muri leading to improved waste elimination in the business. Just-in-Time ensures the company operates using the minimum resource to deliver consistently. Thus, it delivers just what is needed, when and where it is needed. The Jidokha process ensures that the products and delivery of products is confirmed one-by-one to eliminate abnormalities in the products. In regards to the Muda process, the inventory eliminates waste (OCS, 2011). After the lean solution was employed, the storage systems have been reduced, and the inventory reduced among other service levels.

The company operates stores such as Extra, Superstore, Metro, Online and Express. The retail industry is facing global competition to outperform the competitors. Tesco manages the competition effectively through functional, business, and corporate strategies. Tesco adheres to the consumers through been a step ahead of other competitors in the market, which benefits the customers. Thus, it gains customer loyalty, supported by the price competitiveness, by providing products at the most applicable lowest prices (Sahril & Awang, 2011).

Improved delivery system and usage of innovative technology in the business supply chain guarantees good customer service. The delivery process has been improved through advancing the home delivery services and other distribution process that affect the profitability of the business. For instance, the sales performance in the UK has continuously ben increasing where by the start of 2016, the ROI was highly positive (Tesco, 2016). The operating profit of the company has been growing steadily also. For instance, the operating profit in 2015 was £m153 while in 2016, the operating costs is at £m161. Tesco has increased its sales through the four stores it employs including the online store, which improves the company’s revenue. Tesco mainly delivers products after it has received orders from the nearest stores. More importantly, Tesco uses its transportation systems to deliver goods locally. Tesco strives on applying a cost leadership and differentiation strategy to its supply chain functions leading to the identifiable profits.


OCS. (2011). Stocktaking, Inventory and Audit Services. OutsourcedClientSolutions: Internaional Stocktaking Inventory and Audit Solutions, 1-27.

Regions and Groups. (2006). Visit to Tesco’s Dundee Distribution Centre. Focus, 58 — .

Sahril, N., & Awang, F. M. (2011). Strategic Management Industry: Retail. Synergy. Tesco: Every Little Helps, 1 -.

Smith, D., & Sparks, L. (2006). Tesco’s Supply Chain Management. chapter 7, 143 — 171.

Tesco. (201). Case Study: Tesco: Corporate Level and Business Level Strategies. Tesco, Bmt, 1-18.

Tesco. (2016). Annual Report and Financial Statements 2016. Tesco: Every Little Helps, 1-160.