Organization Name : Tesco PLC
Industry : Retail
Web References : Tesco.com, uk.reuters.com, Tescoplc.com, theguardian.com, tescosuppliernetwork.com, supplychain247.com
About Tesco
Tesco is a British multinational grocery and general merchandise retailer based in Cheshunt UK. Founded in 1919 by Jack Cohen as simple grocery stalls, this retail powerhouse now operates over 7800 retail storefronts and dot come sites under various banners in 12 countries across Europe and Asia with 500,000 + employees. Tesco is 2nd largest retailer in the world with 2014 annual revenues of 62.3 billion pounds. Indicator of their dominance in UK market is an estimated 28% market share in grocery.
Tesco Challenges
The scale of Tesco business is staggering. Their brand plays in many different categories from banking and data management to mobile, home furnishings, restaurants and grocery across diverse markets. With size comes complexity and the risk of losing focus on the core fundamentals that created this hugely successful company. Tesco was not immune and after two decades of growth, the company dramatically lost its way. Distracted by expensive international expansion, it was slow in responding to the rise of discount grocers Aldi and Lidl in their critical UK home market. Tesco built their brand around consistently bringing the strongest value offer to consumers and this is good example of a core business strategy being neglected and the ensuing results were harsh.
It reported an annual loss of 6.4 billion pounds in April, one of the biggest in British corporate history, and is also accused of manipulating financial reporting last year, prompting investigation by Britain’s Serious Fraud Office. An embarrassing period for a landmark UK business called for immediate change.
“Every important part of Tesco has been, or is being, transformed — operationally, culturally or financially…and it is working,” said new CEO Dave Lewis, a former Unilever executive who joined Tesco in September last year to turn the business around.
A Social Solution to Improve Supply Chain
Tesco is the UK’s largest retailer and of course their recent results have been well chronicled. Immediate change was required to address far reaching issues at one of the UK’s largest publicly traded companies. One of the areas that new CEO Lewis has targeted is Tesco supply chain. Improving communications with suppliers is at core of supply chain initiative.
In January 2015, the Tesco Supplier Network launched. This on line interactive platform is designed to boost collaboration across its supplier network. Over 5000 suppliers have been invited to participate in this new thought share venture. Tesco has created a platform that promotes two way collaboration intended to find shared supply chain solutions for both parties – all aimed at improving the end consumer experience for Tesco shoppers. This is an interesting move by a company that has been criticized for playing extreme hard ball with their supplier group. While a great initiative to engage wider audience in search of shared efficiencies and to push innovative thinking, Tesco must be prepared to manage the harsh reality that will come with supplier feedback on how hard Tesco grinds supplier profit margin as well. This will be a true test of new CEO Lewis’s commitment to re-build supplier trust under his watch.
As of October 2015, 3300 suppliers have registered with the Tesco Supplier Network and over 800 suppliers have attended learning seminars hosted by Tesco. While too early to quantify overall results here, an encouraging start to a new more social approach to supply chain management.
Supply Chain & Social Media
Supply chain management (SCM ) can be very diverse and complicated. From sourcing and design to demand planning, procurement and manufacturing through transport logistics, there are many touch points along the supply chain trail. These touch points magnify as there are breakdowns in the chain. The chain itself is very social and requires constant human interaction. Logical extension to see Social Media tools as being useful in helping find efficiencies, lessen complexity and add speed to the supply chain.
So acknowledging that there is opportunity here, my research would say at this point it remains largely untapped. Many references of organizations selling their ability to help improve your supply chain through social applications but very few hard examples of actual successful case studies where social media made supply chains better. So we are in a ” show me ” state.
Tesco is at a critical juncture today. Brutal recent results have forced the company to re-look their entire business. One of the focus areas is supply chain and Tesco has taken fresh approach to building better relations with their suppliers. Drafting off other current network projects, Tesco Supplier Network can be great proof of concept for the intro of social media tools to supply chain. If successful at one of the world’s largest retailers with a very dynamic supply chain then we can expect a huge push here moving forward.
Survey results from Sept 2013 verify that supply chain process has seen minimal influence from social media to date. While 75% of companies polled believe that social media will have positive impact on supply chain in the next 5 years, currently less than 10% of companies have made investment here today.
Survey Data from : Adelante SCM, Adrian Gonzalez, Founder & President
I think we can confidently predict that as social media influence spreads across business in totality, we will see new ideas on how social tools can change current supply chain process. More business leaders are recognizing the importance of raising the people talent behind supply chain management. As SCM talent and leadership continues to develop, there will be receptive and inquisitive minds open to exploring social media tools. Where social media lives with marketing, sales and HR today, supply chain needs to be brought into more of these conversations. Best practices will eventually find application in the supply chain world.
From my experience, marketing and sales are rarely having these kind of conversations with supply chain today. To steal a line from Tesco marketing ” Every Little Helps “.
Submitted by : John Condon, University of Waterloo
To contact author of this entry: johncondon21@gmail.com
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