Evolution of supply chain management contribution

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The evolution of supply chain management can be measured at three different levels such as Information, Resources and Organization, emphasizing on how information integration could be achieved through Business to Business (B2B) e-hubs. Looking at the concept of supply chain management & integration with the evolution of e-hubs, we can further examine two more groups of e-hubs which is classified by supply chain processes, such as Procurement and Transportation, if an analysis is performed from the perspectives of facilitating supply chain activities and connecting chain partners, which reveals that limitations and gaps do exist in existing e-hubs, for example a framework for integrating existing e-hubs with other advanced information technologies, like Enterprise Resources Planning {ERP} and Customer Relationship Management {CRM} in order to bridge the gaps and expand their proper functionality for providing better solutions to supply chain integration

The most common accepted definition of Supply Chain Management is the systematic & strategic co-ordination of large business functions for example Tesco wherein it has got several stores throughout the U.K with the implementation of Supply Chain Management and across businesses thus improving the long term performance of individual company

Supply Chain Management encompasses the planning & management of many activities involved in Procurement, Sourcing, Logistics etc thus improving the long term performance of an individual company and the supply chain as a whole. Supply Chain Management is the key integration of adding value for the customers and stakeholders as a whole, the crucial components of co-ordinaton & collaboration with channel partners who can be suppliers/third party service providers or intermediaries

The main criteria of supply chain management is to improve collaboration, easy transportation and mostly "Trust" among supply chain partners, thus improving inventory movement with less control & more supply chain partners had led to the creation of supply chain management concepts.

Supply chain management activities can be classified into groups such as strategic, operational and tactical level such as Strategic network such as location, the size of warehousing / distribution centers, and facilities, and Strategic partnerships with suppliers, distributors, and customers

In the evolution of supply chain management: The term supply chain management was first introduced by a U.S. industry consultant in the early 1980s. However, the concept of a supply chain management was of great importance long before, in the early 20th century, the characteristics of this era of supply chain management include the need for large-scale changes, re-engineering, and downsizing driven by cost reduction programs, and widespread attention to the Japanese practice of management.

With the globalization, supply chain management helped organizations with the goal of increasing their competitive advantage, value-adding, and reducing costs through global sourcing.

In the 1990s major industries began to focus on core competencies and thus adopted a specialization mode such as sold off non-core operations, outsourcing to other companies. This system considerably changed management requirements by extending the supply chain well beyond the grey areas within the company walls and distributing management across specialized supply chain partnerships

In the eighties {1980's) supply chain began with the inception of warehouse management, transportation brokerages, non-asset-based carriers and beyond transportation and logistics into aspects of supply planning, execution and performance management

P1.2: One of the leading consumer products companies such as "Unilever" have begun to reinvent the supply chain's organizational alignment, breaking away from the constraints of the historical retailer-manufacturer relationship model. Customer business development has become the new order of the day, as the company looks to effectively collaborate with each key customer to increase sales. Where the old model was hampered by limited communication links and a myopic emphasis on transactions, the new customer business development model combines a range of elements from the consumer products company and the retailer to help increase sales-To help push its products to store shelves, Unilever's supply chain, sales, customer service, finance, and information technology groups are interfacing directly with retailers' buyers, information technology, distribution, and finance functions. The main objective is to identify cross-functional and cross-business opportunities.

Unilever's supply chain strategy prior to 2005 was very much focused on cost reduction and capital productivity. Its supply chain was largely reacting to supporting the overall business strategy. Supply chain management was aware of the industry trends for best-in-class performance and began the move to align the supply chain strategy with the business strategy.

The main aim of integrated supply chains is to remove barriers to ease the flow of materials and information. The removal of such shared resources is relatively related to the recently introduced concept of "Buyer Focus", meaning as the main and single resource in order to supply one buyer along the whole range of its products. On the other side suppliers with buyer-focused operations enable high levels of integration in order to cope in case of uncertainty in volume, mix and leadtime.

The most important concept in supply chain management is its integration along the supply chain in order to improve performance which the shared resources limit the possibility at different levels of supplier-buyer relations depending on the amount and type of uncertainty

Task 2. Explore strategies used by organizations to develop and maintain effective supplier relationships


The strategies used by TESCO in regards to the development of relationships with its suppliers using appropriate web based technology which TESCO utilizes throughout its stores in the U.K and as well as overseas with the following web based technology

Tesco, like many other supermarket chains sources its goods from overseas manufacturers who are often competitive on price & volumes. Tesco has a policy of encouraging local branded suppliers to develop exclusive production facilities however in recent years Tesco has realized the need to look abroad for products which is no longer available in UK local market, Tesco as a major retailer of selling diversified product range, they work with many different suppliers worldwide, it is the company policy to have unique relationships with all its suppliers by applying all the available advanced technology in its communications and cooperation with its suppliers, the company aims to control the reliability of its suppliers and heavily relies on their efficiency. In some cases the direct suppliers often uses a number of sub-contracted suppliers, which is selected to be best in class & quality. Over the years Tesco has established close relationships with its suppliers/contractors and believe that regular and long term orders promote the relationship necessary to improve conditions in the supply chain. Tesco also develops various supplier management programs to survey key suppliers satisfaction

Technology is a major variable which has influenced the development of many of the Tesco products. Newer technologies benefit both customers and the company at large, in such a scenario customer satisfaction rises because goods are readily available to the customer needs, services can thus become more personalized and shopping more convenience. With the launch of (ECR) Efficient Consumer Response initiative which provided the shift that is now viable in the management of food supply chains

With the adoption of (EPoS) Electronic Point of Sale) and electronic scanners have greatly improved the efficiency of distribution and stocking activities, with needs being communicated directly almost instantaneously to the supplier , whereas before the introduction of web based technology it was very difficult and hectic for both the parties. The relationship with their suppliers in negotiating better promotional prices from suppliers that small individual chains are unable to match, the UK based suppliers are threatened by the growing ability of large retailers to source their products directly from abroad at cheaper deals, thus sellers can have similar effects in constraining the strategic freedom of the company and in influencing their margins. Such competitive rivalry have reduced the profit margins for supermarket chains and suppliers, other web based technology which TESCO also uses with its relationship with its suppliers are , Intelligent scale, Electronic shelf labeling, Self check-out machine for their customers etc

Task 2.2 Evaluate the effectiveness of strategies used by Tesco

The effective strategy which Tesco uses is primary dominated by few competitors, including four major brands with that of Tesco, Asda, Sainsbury's and Safeway that possess an estimated market share of 70% and small chains such as Waitrose, Somerfield, and Budgens within the last three decades the grocery market has been transformed into huge supermarket-dominated business. Extensive large chains have built their strategies such as one-stop shopping and major marketing expenditure. Such force had been seen a great impact on the small traditional corner shops, such as convenience stores, bakers etc

For example, its rather difficult for new entrants to raise sufficient capital because of large fixed costs and highly developed supply chains. This is a clear evidence of major investments done by large chains , for instance Tesco, wherein Tesco uses advanced technology for checkouts and stock control systems that impact new entrants and the existing ones. Other barriers such as the provision of products or services with a higher perceived value than the competition when achieved by Tesco and Asda seen in their aggressive operational tactics for their product development, promotional activity and better distribution

Tesco's introduce the famous loyalty clubcard which remains the most successful customer retention strategy which significantly increases the profitability of Tesco's business by meeting customer needs, such as to ensure low prices, better choices, and constant flow of in-store promotions which enables brands like Tesco to retain their customer base. It has been noted few years back that a crucial change in food retailing has occurred because of huge demand of consumers doing the majority of their shopping and prefers buying it all along in the supermarkets that shows a greater need for supermarkets to sell non-food items. I Consumers on the other hand have become more aware of the issues surrounding fair trade and with more expectations and aspirations

With a general threat of consumers switching to other alternatives major chains such as Tesco, and Sainsbury's are trying to acquire existing small-scale operations by opening Metro and Express stores in local towns and city centres

Big giants within the grocery industry has seen a significant growth in the size and market dominance of greater store size, increasing retailer concentration, consumers are increasingly demanding and sophisticated, large chains as Tesco are accruing large amounts of consumer information which can be used to communicate with the consumer with their shopping pattern with such innovation which can be targeted in the development of trading formats, in response to changes with consumer behaviorism

Today Tesco has become a brand name which has roots at the core strategic advantage which resulted in a strong brand image that is associated with better quality trustworthy goods which represent excellent value for money.

Tesco's has advantage of innovative ways of improving the customer shopping experience, thus Tesco is also very successful in terms of customer loyalty with due advantage with its loyalty cards system and its general approach to customizing services to the needs of every customer. With their effective strategy Tesco today had became the biggest online supermarket.

P2.3: Identify effective systems used by Tesco for proper relationship


Tesco today is everyone's household name and has more than 13% share of the UK retail market. Today Tesco operates more than six countries in Europe in addition to the UK such as the Republic of Ireland, Hungary, Slovakia, Turkey, Czech Republic and Poland. It also operates in the Asian subcontinent such as South Korea, Thailand, Malaysia, Japan and Taiwan. With its internationally growing market, Tesco had become vigorous about hypermarkets and this lead to a very positive implications for growth within the UK. Tesco has also formed a strategic relationship with giant U.S supermarket, Safeway Inc, to take the tesco.com home shopping model to the US. Telecoms in its strategy to develop popular retail services.

Today Tesco is in an enormously strong position in its domestic market with it generic strategies which are characterized with its ability to control their operating costs so well that they are able to price their products competitively and be able to generate high profit margins, thus having a significant competitive advantage over their competitors. Tesco mainly focuses on the creation of internal efficiencies that help them withstand from external pressures, therefore, it's reasonable to think that Tesco will have fewer or less interactions with the governmental/regulatory its suppliers and the environment at large. With the overall cost leadership & differentiation strategy adopted by Tesco are aimed at the broad market,

Tesco has a clear motto which has a clear business strategy with a purely defined market segment and strategic options with international alliances with the local retailers in Asian markets, by entering into joint ventures or partnerships, in order to gain a larger economy of scale and larger market presence

The success story of Tesco shows how far the branding and effective service delivery can come in concept like spreading out into the culture via a variety of channels such as cultural sponsorship, consumer experience, brand extensions etc

Marketing and sales strategy such as Tesco Clubcard gives further discounts and loyalty for the customers Tesco also attract more customers by advertising via local newspaper and national T.V. ad campaign for example the "lower prices" advertising campaign or more discounts offers etc, with a more customer awareness and the ethical business practices, in the long term it may give the company some constraints in terms of selling environmentally friendly products, in keeping the environment in mind Tesco has provided customers with recycling points and include information in their advertisements, thus adding value for its customers who believe that by choosing to shop at Tesco, they are helping the environment

Tesco constantly upgrades its anti-fraud software (technology/web camera etc), by installing new security systems which aim to reduce internal theft, another aspect is its HRM (Human resource management) which is regarded as an utmost activity, from recruitment to management development. Tesco also aims to increase the number of training schemes to further develop its recruitment programs Tesco continues to invest in customer service where training is linked so that the staff are motivated to learn, and are encouraged to improve their approach towards customers service quality

Task 3: Investigate how web-based applications contribute to the full

integration of the supply chain at Tesco.

Evaluate how web-based technologies assist integration of different parts of the supply chain/ network

In today's complex world of information technology and with the introduction of web based technology companies swiftly acts in an increasingly dynamic and complex environment, making forecasts and adapting to the challenges posed by such changes. In order to be cope up in such environment , it is necessary to innovate and take action at an extraordinary speed, thus improving the products, services and processes. Considering Tesco operations the web based applications have become necessities rather than luxuries. Systems which check stock control, keeping delivery records and analyze business transactions are the lifelines of such huge company tasks.

"Extranet system" meaning an Extranet is a private network that uses Internet protocols, network connectivity, & possibly the public telecommunication system to securely share part of an organization's information or operations with its suppliers or vendors or partners or customers or with other businesses. An extranet can also be viewed as part of a company's intranet which is extended to users outside the company, usually via the Internet. The Internet is perceived as a way to operate business with a selected set of other companies, B2B ((Business-to-Business), with precaution from other Internet users.

Such technology enables Tesco to use the Internet to create and customized information which floats between the company and its business partners. The system thus connects business partners online behind virtual firewalls, bringing more Flexibility, Extensibility & segregation across the distribution channels. In other words Extranet helps to extend key information on business partners throughout the supply chain and facilitate cordial relationships with its suppliers/partners.

One of the most efficiently technological factors which advances that support daily business operations of Tesco are wireless devices, intelligent scale, electronic shelf labeling, customer's self check-out machines and RFID: radio frequency identification systems. With such advanced technology it helps in its efforts to maintain Tesco's ability to handle an increase in product/service volume while controlling costs; it also enables to be innovative and market oriented.

The cultural web theory application is an effective analysis for management in order to represent the assumptions which is linked to structural aspect of the company, this theory application is a useful tool in considering the cultural context for Tesco's business. Hence the concept of cultural web theory is the representation of such actions, this is to understand and characterize both the company's culture and the subcultures in adaptation of future strategies related to technology

Tesco has a very friendly and supporting approach in the routine ways which the staff at Tesco behave towards each other, and those towards outside the company which can make up the ways people do things. This control system is under constant management review which monitors the efficiency of the staff and the managers' decisions. Tesco emphasizes what is particularly important and reinforce the way things are done by arranging On-going meetings & communication at every level of hierarchy considering the special events, corporate gatherings, of the company's which represent a strong internal environment

Companies are attempting to find ways to improve their flexibility and responsiveness and in turn competitiveness by changing their operations strategy, methods and technologies that include the implementation of supply chain management{SCM} with a set of pattern and information technology (IT).

Task 3.1: Evaluate how web-based technologies assist integration of different parts of the supply chain/ network

Today companies act in an increasingly dynamic and complex environment, giving more difficulties making forecasts and adapting themselves to the continuous changes. In order to be able to compete in this kind of world, it is necessary to innovate at an extraordinary speed, continuously improving the products, services and processes. For Tesco operations have become necessities rather than luxuries. Systems that control stock, keep all the stock and deliveries records and analyse business transactions are the lifelines of the company. It can also be said that IT has risen beyond its traditional support role and taken up a central role in business strategy formulation.

Technology is a major macro-environmental variable which has influenced the development of many of the Tesco products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available, services can become more personalised and shopping more convenient.The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains (Datamonitor Report, 2003). Tesco stores utilise the following technologies:

Wireless devices

Intelligent scale

Electronic shelf labelling

Self check-out machine

Radio Frequency Identification (RFID).

As members of a company evaluate the objectives of their strategy, it is also important to understand that there are multiple levels of strategy in any organization. At the highest level is the business strategy. Business strategies help to shape what the company is and what it wants to become. With a business strategy defined, companies must then define, or their customer will define for them, the customer service strategies.

Supply chain strategies then represent the operating platform that must be put in place to achieve the customer service strategy, and ultimately the business strategy, at the lowest possible cost. The real estate strategy is then the platform upon which the supply chain strategy resides, acting as a key enabler of success - hence, the symbiotic relationship of supply chain and real estate.

Although the overall roadmap to supply chain planning is a long one, there are two critical touch points of supply chain and real estate planning: distribution network rationalization and site selection. Although different in their methodologies, network optimization and site selection work hand in glove relative to defining a company's optimal distribution infrastructure


The success of the Tesco shows how far the branding and effective service delivery can come in moving beyond splashing one's logo on a billboard. It had fostered powerful identities by making their retiling concept into a virus and spending it out into the culture via a variety of channels: cultural sponsorship, political controversy, consumer experience and brand extensions.

In a rapidly changing business environment with a high competitors' pressure Tesco have to adopt new expansion strategies or diversified the existing in order to sustain its leading market position in an already established retailing market. The company must constantly adapt to the fast changing circumstances. Strategy formulation should therefore be regarded as a process of continuous learning, which includes learning about the goals, the effect of possible actions towards these goals and how to implement and execute these actions. The quality of a formulated strategy and the speed of its implementation will therefore directly depend on the quality of Tesco's cognitive and behavioural learning processes.

In large organizations as Tesco strategy should be analysed and implemented at various levels within the hierarchy. These different levels of strategy should be related and mutually supporting. Tesco's strategy at a corporate level defines the businesses in which Tesco will compete, in a way that focuses resources to convert distinctive competence into competitive advantage