Organization Name: Tesco
Industry: Retail, grocery
Name of Contact if Available: N/A
Web References: TESCO, The Guardian, The Telegraph, The Grocer, Talking Retail
Description of How Social Media is Used for Business Performance
Founded in 1919 by Jack Cohen, Tesco has grown to become the fifth largest retailer in the world based on revenue. The Britain-based multinational grocery and merchandise retailer now operates in 12 countries around the world, employs over 530,000 people, and serves millions of customers every day.
Tesco is in the midst of what British journalists have coined as the Tesco crisis. Like many other large retailers, Tesco has faced their share of allegations, negative publicity, and lawsuits associated with their business operations, ethics, supply chain, and treatment of employees. More often than not, these allegations have proven true. Tesco has lost a number of these cases and have been required to pay fines and damages including a £6.5M fine for participating in the recent dairy price fixing scandal. Additionally the company has been investigated for purchasing landbanks to prevent competition from developing, misleading customers through unethical pricing practices, selling products that contain horse meat, and linkages to suppliers that use slavery.
Unfortunately, these are not the worst allegations facing Tesco. In September 2014, new chief executive Dave Lewis stated that Tesco overestimated their earnings by £250M. The overstatement has been attributed to delays in payments to suppliers and requiring suppliers to pay for placement on shelves. This is one of the largest financial scandals in British retail history. Shares plummeted to an 11-year low and four of the companies senior executives were suspended.
Tesco Supplier Network
How does a company overcome a scandal involving their suppliers? By launching a social media supply chain network to improve communications and collaboration!
Launched in January 2015, the Tesco Supplier Network combined the preexisting Tesco Producer Network for fresh food producers and the Tesco Knowledge Hub for branded manufacturers and processing suppliers. After reaching out to the company, I was unable to get an original quote on how this new network would improve relationships.
“This new community of Tesco teams, suppliers and producers from around the world gives us the opportunity to improve communication, share ideas and continually improve the products that our customers enjoy. The network will play an integral part in our partnerships with suppliers to deliver for our customers.” – Jason Tarry, Head of Commercial at Tesco
The purpose of the network is to improve communication with suppliers, share ideas, address common challenges, and to drive sustainability and innovation throughout their supply chain. Suppliers will also be able to connect directly with Tesco and other suppliers to learn about sustainability challenges, harness shared buying power, and to discover innovation resources.
This is a step in the right direction for the embattled Tesco as they attempt to repair relationships with suppliers…but is it all a big PR stunt? Are they trying to divert some of the negative attention they are receiving?
As I’m not a member of their network, I wasn’t able to login to the actual portal. When viewing the main page you can see that their PR team has done an excellent job at promoting what Tesco is doing right – programs to protect children from exploitation, a youth academy program, the Eat Happy Project, and food collection programs at their retail locations. But how does this benefit the supplier? I don’t think any amount of social media is going to save Tesco at this point.
Lessons for Others
Integrating aspects of social media into your supply chain can have a number of benefits including:
Creating, Maintaining, and Restoring Trust
This is the biggest issue that Tesco is attempting to overcome with the Supplier Network. They have created the network to rebuild their relationships with suppliers. The network shows that they support their suppliers and want to provide them with the tools to be successful.
Through the Tesco Supplier Network, the company has the ability to provide suppliers with information first. They can post relevant articles, videos, and audio clips exclusively for suppliers. Additionally, they have opened up communication for suppliers by giving them a direct channel to communicate with Tesco staff.
Boosting Collaboration and Innovation
By providing a forum for suppliers to connect with the company and to other suppliers, Tesco is hoping to enhance collaboration and innovation. Feedback on programs, suggestions for improvement, and complaints can be shared and discussed. Ultimately, this will provide Tesco with research needed to enhance their operations and make positive changes.
However, I don’t think integrating social media into supply chain operations is an option for all companies. In order to be successful you need to evaluate the following:
Are Your Networks Strong Enough?
In order to successfully launch a network like the Tesco Supplier Network, you need to ensure that you have a strong community that is willing to participate. I would argue that Tesco’s current suppliers will not be supportive due to the impending legal actions and history of distrust.
Is the Timing Right?
Timing is everything! Is this the right time for your company to create these connections and enhance information sharing? As I mentioned above, the Tesco Supplier Network launch is a step in the right direction for them to improve relationships with suppliers but would they have done this is there weren’t allegations of unethical financial practices?
Is it Going to be Sustainable?
Launching a complete network to enhance collaboration requires a huge amount of capital – both human and financial. Companies need to ensure that they have planned their network, have a sustainability plan in place, and continue monitoring effectiveness. Many companies have attempted to integrate social media into their supply chain but abandon the project amidst lacklustre results.
Submitted By: Alicia Bedard, University of Waterloo
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