In the current challenging industry, any organization strives for supplying the finalized products and goods to the consumer prior to they tend towards the rivalry products. Retailing is an important segment of financial activities of both developing and developed national economies along with retailing and valued aided and wholesaling. Logistics is the significant function in any organization which plays responsible role in each and every aspect of movement as well as material storage over their journey from dealers to end customers.
Major operations include in logistics of an organization are inventory management, transportation policies and emerging of IT systems. In the light of above, the following report is intended to perform the critical evaluation of two companies in retailing industry and comparison between them. For this evaluation, Tesco and Sainsbury which are the two leading players across the UK retailing market are selected. As a part, various operations adopted by these two companies and its contribution towards the business productivity and sales are discussed.
Subsequently, replenishment policies and transportation mode strategies are also described in detailed. Finally, in these aspects comparative analysis is performed between Tesco and Sainsbury and based on identified challenges faced by them, proper recommendations are presented. Company profiles: Tesco Plc: TESCO PLC is one of the leading retailers across the globe. This company mainly deals with the retailing business and its related activities in UK, the Czech Republic, Malaysia, Poland, Slovakia, South Korea, United States, India, Hungary, China etc. t also offers various other services such as insurance services through its subsidiary, retail banking, and retaining services which offer in store that include phone shop or customer restaurant, optician, pharmacy etc. presently, it maintains over 180 opticians. This company stores and distribution networks provides the opportunities for customers to choose the products whenever it suits them from more than 770 stores, close to where they live. Currently, it maintains the 45 stores that provide the offer of grocery Click & Collect.
In the year 2011, this company acquired 77 stores of Mills Group in UK. In the year 2012, this company obtained Mobcast. Sainsbury: Sainsbury PLC is one of the major grocery and retailing related firms. This firm is administered three kinds of business segments such as financial services, retailing and property investments. From March 17, 2012, this firm operated over 10,000 stores including 440 convenience stores and 572 supermarkets. By this Company, some investment properties held which includes joint ventures with The British Land Company PLC and Land Securities Group PLC.
This firm includes click and collect services which enables the consumers to place common products orders via online through 2pm for compilation the next day from over 900 stores. The general merchandise website of this firm provides more than 6,000 own brands and branded products. In the year 2011, this firm obtained two companies such as Global Media Vault Limited and online entertainment company. Analysis of logistic operations of TESCO: Logistics in practice: This company is one among the prominent retailer across the globe with above 4000 stores and sales of nearly £50 billion per year.
They are implementing enduring strategy intended for increasing development on the basis of their desire to perform their best every day for the consumers. In regard to this, Tesco focus upon four distinct areas such as development within core business, UK, global business expansion, to play a leading role in non-foods in similar as food sector and to pursue the consumers to new services of retailing (Bearnon, 1998). To assists their logistic operations, it is being implemented a vast and effective logistics network that distance the world.
It constantly progresses meant for exceeding the ever-changing consumer demands. In context to retailing consumers, this company is constantly changing and responding through the provision of modern products and services since there is a constant change in the habits of consumers shopping that eventually has the impact upon their UK stores (Tesco, 2009). In 1970s, majority of this company sale were in quite undersized retailing shops across town centers. Later, during the period of next 20 years Tesco shutdown such undersized stores for concentrating upon large size retailing stores and out-of-town growth.
In recent days, the company aided smaller metro and express formats, thus by the year of 2008 they gained nearly 2. 5 million mt2 of sales area comprise four distinct major formats in order to exceeding differing requirements (Clarke, 2002). • 150 additional alongside greater than 6000mt2 and trading all types of domestic products • Nearly 450 supermarkets in addition 2000-5000mt2 and concentrating over food sector • 200 metro stores in addition to 700-1500mt2 trading less number of food varieties as well as ready meals 550 stores with till 300mt2 providing a regional service of about 7000 lines The varieties of food products are constantly extending by aiding to own brand like healthy living, organic, Free From, finest, organic and many more. In addition to food retailer, the firm currently trading the domestic products and persists its diversification into distinct fields such as insurance, finance, internet and telephone service, healthcare, petrol station, pharmacies and many more (King, 2000).
Also, business operations in UK stores have amended with the development of self service explores, 24/7 opening, shopping in online, shelf ready packaging and club card. Additionally, it has shifted into electronic commerce business which is the cause of transforming several logistic aspects indulging online based home delivery service with more than billion pounds of sales per year (Fernie and Sparks, 2004). Logistics replenishment policy: Tesco Company maintains nearly 13% of share across UK retail industry.
The concentration is been to enhance a share in food retailing during enlarging the scope contribution towards hypermarkets. At this moment, this company achieved the optimum efficiency of supply chain in addition logistics operations are currently targeted by rivalries. At present, the stock is verified regularly over real time basis and on the basis of inventory, order are progressed as core. Production schemes are generated and then shipped to local stores from deport following acceptance of depot in charge (Jones and Clarke, 2002)
Under the context of logistics operations, Tesco has introduced one policy that is continuous replenishment policy as a substitute to the batch data progression with constant system of flow then several order are transmitted to dealers in turn minimizing the stock rendering and acquirements of best inventory control. In the light of this the challenge of extreme inventory transmitted to the dealers. The traders got such orders in accordance with the needs one or more number of times per day by core batch processing segment.
Then the same were progressed with the help of dealers and placed in accordance with the batch orders and demands at depot of Tesco stores. Several dispatches are made to make sure effective fleet consumption and quick replenishment process (David, 2004). Transportation model for national and global operations: For the intension of product distribution in national wide, Tesco is been pursuing the intermodal transportation policy through various mediums of transportation such as road, canal and rail.
Also, it pursues a center and scope model at where the main storage houses are rendered and utilizing them the products are shipped to regional business stores. Inventory at regional business stores as well as storage places is traced through the central processing part (Mishra, 2004). Reports of inventory are created upon the basis of real time across the domestic stores at the instance when the inventory are diminishing below the safety margins, the product warehouses are informed as well as the stock is delivered.
The management like freight system is introduced which ensures the minimum price rendering for transportation is chosen. For global functions, Tesco must seek standardizing and maintaining their dealers over a global level. An analogous center as well as spoke model has been employed. The product storage place is been appropriately placed closer to sea shore like dock segment for making sure that the global deliveries been rendered over moderately inexpensive more of transportation through sea way.
The selection of dock segments is been made relying upon the labor and commercial laws for making sure the optimum profitability of total process of supply chain. Main warehouses are retained relying on the area of final domestic stores. A spoke model and an expanded center identified with the business products transported from dock segments to main storage places and finally towards end stores (Deborah, 2010). Analysis of logistics of operation of SAINSBURY: Logistics practices: Sainsbury being performed the logistics practices in terms of inventory in efficient and proper manner targeted to sales and business growth.
Under this scenario, approaches like maximizing the trailer space and recognizing unneeded journeys have been assisted in boosting up the company revenues to nearly £360million over first two quarters of the year. With effective logistics management, the company has gained in profit by around 8. 2% (Smith, 2000). Those while driving the work are signifying the way of structuring their daily activities in much efficient manner in order to make use most of time taken for driving. Also, the firm spending in innovative technology of supply chain is for enhancing their services of logistics.
This technology indulges a modern system which offers the instantaneous predicting and ordering for assisting the Sainsbury Company for enhancing the service effectiveness and minimizing the waste. Additionally, in the other fields at this company indulge the employment of self-scan check outs as per the share cast assisting the firm to equalize any sort of inflationary pressures over the period. For making the company’s logistics as much as effective, they make sure to associate the correct stores geographical to correct depots, minimizing of distance.
Also, they give training for their driver to regulate effectively in addition to the introduction to double-decker Lorries which is useful for shipping large amount of goods in single time (Jones, and Clarke, 2002). In perspective of both primary and secondary logistics operations, the firm attempted to reduce the release of CO2 gas. Regard to primary functions, they make use of empty trucks for collecting the products from store deliveries with the help of dealers and amount of gathering has presently exceeded of around 140,000 per annum.
Regard to secondary practices, a targeted venture upon automobile fill has resulted into the enhancement of above 1. 5% across total fleet of store delivery. Emission of CO2 gas for every 1000 cases shipment has reduced to nearly 120. 5kg of recent year. As a result, the decrease of 1% over the annum and nearly 17% on past five years implies that the firm has already exceeded the target in the year 2012. In addition, they have acquired the decrease of around 1,800,000Kms distance in this year by making use of own and dealer’s fleet in much effective manner (Amanda and Amelie, 2012).
Logistics replenishment policy: Sainsbury Plc Company employed the policies for replenishment that are SABRE as sales relied approach for generating and processing the orderings of the consumers, which generates the total list of desired products for the purpose of carrying out the operations. Additionally, in recent days the company is making use of Just- in Time model especially for effective replenishment when compared with the conventional sales based replenishment (Gustafsson, Jonson and Smith, 2006).
The intension behind the replenishment policies of this company is to provide the best chain management of dealer to store replenishment and also minimizing the time taken for such process along with stock rendering. This comprises series of significant systems that differs the base of ordering which is considered as crucial operation for the firm. In this company, the systems are scheduled to emerge the total pool of stock level across branches using the scanned data as well as the data related to receipts.
With the above models, several distributions are created for assuring the effective function of the fleet as well as faster replenishment at this company (Latika and Patthaveekarn, 2009). Transportation model for national and global operations: Sainsbury’s performed the business operations in a well-planned way in both national and global wide. The global strategy of the firm is considered as rapid follower though with ever-changing resultants. Over the period of past few years, this company entered into several new markets such as Scotland, Northern Ireland, Sprucefield and Lisbum.
The firm used the advantage of IT solutions within the aspect of transportation mode through the execution of advanced version of paragon software close to its national wide distribution. The intension behind the shipping operation is to join the paragon’s scheduling maximization along with telematics in order to drastically expand the exactness as well as employed of complex transport policies (Michael, 2006). In addition, Sainsbury implementing integrated transport management system for fulfillment of above intension.
Productivity of the firm is raised by nearly 8%, grown the implementation abilities around 12% and increased levels of on-time distribution is about 17%. The performance of daily activities has increased with the help of paragon software for nearly 19 centers of the company to 276 smaller stores and 527 super markets along with the assignment of trailers, drivers, rigids and tractors to routes for several years. Additionally, this firm guaranteed the multiple shifted transport plans are attainable and pragmatic (Liam, 2004). Comparative analysis of the two companies:
From the above evaluation and reviews about the logistic operations of both Tesco and Sainsbury retailing companies in UK, it is comprehended that across the retailing sector, Tesco is being acquired constant leading position over the Sainsbury as it dominated especially in food retailing. Currently, Tesco stood at top one while Sainsbury ranked as second position across the UK market. Though these are leading players across competitive environment of both national and internationally, it is required to still seek for the development of distinct format stores relying on the area and user characteristics.
For instance, Sainsbury and Tesco have created presence of high street and city hub as a part of logistics operations by means of developing the Metro and express of Tesco and Sainsbury local. Various policies of logistics replenishments are adopted by these two organizations as per their capabilities in effective way with an intension for quick replenishment that leads to attainment of success. However, it is clear that while Tesco has been sustaining its development rate by being a dominant retailer by purchasing retail outlets in dissimilar countries, Sainsbury’s has been improving its global presence by establishing its own outlets.
Also, the utilization of IT infrastructure seems to be lagging behind in case of Sainsbury’s when contrasted to Tesco. Overall, it can be understood that both of these companies should make changes in utilizing the Information technology (IT), should solve the legal and taxation issues in foreign countries ,should strive to decrease the cultural conflicts while seeking international expansions and implementing logistics operations. Recommendations to TESCO and SAINSBURY:
TECSO and Sainsbury have achieved much and proved stronger in the logistics operations: For the next 5 years, the following are the recommendations to the companies to grab and sustain the market place in logistics operations. Investment on the technology is a wise decision. The technology used in Logistics should be upgraded/ adopted as per the current industry standards. This will make the organization stand few years ahead of its competitors.
Transportation charges could be combated by increasing number of distribution centers. This will also enable the customer to keep close of the organization and the needs of the customer are met easily. Customization of the logistic operations is a much hyped solution for a better logistics today in any organization. . Irrespective of the customization, small or mushroom, there needs to have a greater visibility, operational efficiency and revenue enhancements should be the prime focus of the customization.
Route planning is said to be other better improvement strategy in logistics operations in which an organization starts to identify costly routes and try mitigating the route costs. Modern technologies make use of tracing and identifying the routes based on the risk, capacity and the cost. The choice should be based on the calculations of the elements. Intermodal transport is one of the next best things that companies could opt for in case of the long distance logistic operations. It not only reduced costs, risks and the effort but also prevents environment with low emissions of fuels.
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