Assignment Sample on MARK 1189 Procurement and Supply Management
Introduction:
The birth of industry 4.0 is generating a lot of dynamic change in the food retail sector. The world of the food retail industry today, is very competitive mainly because of the continuous change that is taking place with regard to the dynamic of the business environment within that industry. Formation of new formats for retail practices, emergence of globalization and vice versa are some of the practices that are taking place within the ever- changing environment of the food retail industry. In such ever-changing dynamic of the food retail sector, more pressure is levied upon the food manufacturers because they are compelled to be flexible with their approach so as to keep up with the shifts taking place within the industry. (Ogundijo, 2021) And so, the food manufacturers in order to keep up and stay intake with their competitive edge they come up with efficient and robust procurement strategies (Neumayr,2021). The competition within the food retail industry was already stiff because of which companies and organisations operating within that sector was undergoing through a lot of pressure however, the addition of the COVID- 19 lead pandemic added more fuel to the already existing challenges. Many unprecedented challenges and stresses were introduced to the companies and organisations operating within the food retail industry with regard to their procurement practices because of the outburst of the COVID- 19 lead pandemic. For this report writing we will be taking the case study of the TESCO Company. Some of the topics that we will be discussing under this report writing are as follows- first and foremost we will be analyzing the case study and identify the situation i.e., purchasing practices done by the TESCO Company before and during pandemic, how the Corona virus lead pandemic impacted the change in the demands and practice of procurements during the pandemic time, brief comparison will be done with regard to the purchasing practices before pandemic time and lastly we will be giving some form of recommendations on how the TESCO Company can make its procurement practices more robust (Omar,2021).
Analysis of the case study:
The Tesco Company is said to be a British multinational retail company. The Headquarter of the Tesco Company is said to be situated in Welwyn Garden City in England. The Tesco Company was founded in the year 1919. Kack Cohen is known as the founder of the Tesco Company. John Allan is the chairman and Ken Murphy is the CEO of the Tesco Company. As per the report that was published in the year 2020, the Tesco Company is known to have about 423,092 employees in all parts of the world. In accordance to the cross revenue, the Tesco Company is known to be the third largest retail company in the world. The Tesco Company is said to have about five different shops in five different parts of Europe and is said to be the market leader in the United Kingdom when it comes to the groceries (Agarwal,2021).
The corona virus lead pandemic has indeed brought in lots and lots of unprecedented issues and challenges when it comes to many sectors of the corporate world such as the supply chain, the logistic practices and vice versa. The COVID- 19 lead pandemic has seriously disrupted the flow of the supply chain globally (Boonteerarak,2021). The COVID- 19 lead pandemic has brought in a lot of shocking factors for the Tesco Company. Even giant food retailer company such as the Tesco had to go through a lot of challenging factors and issues in order to fight the unprecedented course of events put forward by the COVID- 19 lead pandemic. The business executives and the procurement leaders of the Tesco Company are trying their best to manage and maintain all of the operations of the business efficiently despite the challenges that lies ahead of them. The Tesco Company is trying its best to manage and fulfill the urgent demands of its customers and clients and is also trying to mitigate the varies challenges that lies ahead with regard to interacting with its suppliers so as to redeem the backdrop that took place with regard to its procurement practices. The Tesco Company is therefore, at the moment trying to put its initial focus on properly managing the upstream disruption that occurred with regard to its supply chain. In the mean time it is also trying to balance the decision-making factor with regard to its short- term sourcing having going through constraints with regard to its network of supply.
Tesco procurement practice pre- Covid time:
The procurement practice of the giant retailer company i.e., the Tesco Company was generally designed in such a way that it mostly focuses on containing the cost and at the same time it also focused on strategically put forward sourcing practices so as to manage the process of procurement efficiently. The Tesco Company is known to sell its products via the following form of stores mainly, the brick- and – mortar-oriented stores and the online form of stores. Tesco mostly purchase or procure the raw materials to manufacture its products through bulk buying and therefore, is associated with many multiple suppliers. The procurement practice or strategy of the Tesco Company is to mostly grip on the economies of scale and also to manage the supplies of the technology in the market under which it is operating effectively. The management process of the procurement practiced by the Tesco company mostly addresses and encompasses both the external forces as well as the internal forces existing within the market.
The Tesco Company is known to rely a lot on its suppliers so as to refresh its stock of varied supplies of its products in the company’s stores. The Tesco Company since, it depends a lot on its suppliers, it even offers training programs for its suppliers so as to manufacture products that are quality oriented. The incorporation of such strategy enables the Tesco Company to leverage on the capabilities of the suppliers to grow. The Tesco Company is known to have a staff of about 200,000 who contributes in effectively handling all of the procurement related practices of the company effectively.
How impacted the demand changes led to changes in purchasing practices during the pandemic ?
Tesco Company in order to effectively manage its procurement practices made sure that its supply chains are effectively managed and look after. Before the outbreak of corona virus lead pandemic, the Tesco Company’s followed a supply chain practice that could be explained in the form of six sigma theory. The six-sigma model followed by the Tesco Company at the end of every process mostly gave importance to the quality. The main reason for using the six-sigma model was to control the costs at the same time maximizing the number of profits garnered by installing limits for control in every step of the process that was undertaken. For the Tesco Company, the inbound- oriented logistics was somewhat related to the activities that were upstream. All of the activities that took place while undergoing the procurement practices such as the process of ordering, the process of warehousing, shipping of the goods from the varied suppliers all of them were efficiently distributed. It is also stated that the Tesco company have a capacity to hold about 20,000 different items which consists of both food as well as non- food items (Atkinson,2021). The Tesco Company in order to offer good quality products to its consumers, obtained its goods from various suppliers. It was also stated that the Tesco Company followed the e-procurement practice as well. The payment mode of the Tesco Company for all of its suppliers consists of an interval of 14 days (meaning after every 14 days, the suppliers were paid the due amount for the items that were distributed to the company’s various chain). All in all, the procurement practice of the Tesco Company before the onset of the corona virus lead pandemic was very robustly and strategically put forward.
Tesco procurement practice during Covid time:
The corona virus lead pandemic has indeed brought in lots and lots of unprecedented issues and challenges when it comes to many sectors of the corporate world such as the supply chain, the logistic practices and vice versa. The COVID- 19 lead pandemic has seriously disrupted the flow of the supply chain globally. The COVID- 19 lead pandemic has brought in a lot of shocking factors for the Tesco Company. Even giant food retailer company such as the Tesco had to go through a lot of challenging factors and issues in order to fight the unprecedented course of events put forward by the COVID- 19 lead pandemic.
The business executives and the procurement leaders of the Tesco Company are trying their best to manage and maintain all of the operations of the business efficiently despite the challenges that lies ahead of them. The Tesco Company is trying its best to manage and fulfill the urgent demands of its customers and clients and is also trying to mitigate the varies challenges that lies ahead with regard to interacting with its suppliers so as to redeem the backdrop that took place with regard to its procurement practices. The Tesco Company is therefore, at the moment trying to put its initial focus on properly managing the upstream disruption that occurred with regard to its supply chain. In the meantime, it is also trying to balance the decision-making factor with regard to its short- term sourcing having going through constraints with regard to its network of supply.
Comparison between the purchasing practices before pandemic time and during pandemic time:
The Tesco company’s strategy with regard to its procurement practices and strategies were very well put before the onset of the pandemic lead by the infamous corona virus (Karim,2021). The procurement strategy followed by the company was very strategically put forward so as to ensure that its customers and clients received the best of the quality- oriented products. However, the company did have to make some changes and adjustments after the onset of the corona virus lead pandemic so as to keep up the unprecedented arousal of crisis (Andrikos,2021). And so, now we will be briefly discussing some points in the format of comparison with regard to the procurement practice undertaken by the Tesco Company before and after pandemic-
- Before the onset of the corona virus lead pandemic, the management process of the procurement practiced by the Tesco company mostly addresses and encompasses both the external forces as well as the internal forces existing within the market. However, after the onset of the corona virus lead pandemic, most of the procurement practice of the Tesco Company was mainly focused on the external forces who were the suppliers. The company wanted to make sure that it offered as much help to its suppliers from its end in order to support their business.
- Before the outbreak of corona virus lead pandemic, the Tesco Company’s followed a supply chain practice that could be explained in the form of six sigma theory (Golding,2021). The six-sigma model followed by the Tesco Company at the end of every process mostly gave importance to the quality (Beacom2021). However, after the outbreak of the corona virus lead pandemic, the Tesco company didn’t give much importance to the quality because it wanted to support its suppliers. Because of the onset of the pandemic, the varied suppliers with which the company was associated with struggled a lot because of the closing down of many of the restaurants and cafes with which it was associated with and hence, the company decided to help its suppliers (who were mostly farmers) by buying their crops as much as possible even if they (as in the crops) didn’t look the best. After the onset of the pandemic, the main focus of the company turned from providing quality products to its customers to supporting its suppliers and keeping the shelves of the company’s warehouse stocked and full. (Novikova,2021)
Before the outbreak of corona virus lead pandemic, it was stated that the payment mode of the Tesco Company for all of its suppliers consists of an interval of 14 days (meaning after every 14 days, the suppliers were paid the due amount for the items that were distributed to the company’s various chain). (Groot-Kormelinck, 2021) The Tesco Company was very much aware of the fact that all of the businesses of its suppliers were affected by the crisis that befall upon the world and so the company wanted to support all these businesses as much as possible. However, knowing and being aware of the crisis, that its smaller suppliers were going through, the company made changes with its invoice management. Tesco Company immediately paid off the due amount on receiving the product from its suppliers instead of waiting for the 14 days round to get over.
Recommendations:
The procurement practices of many varied industries be it the healthcare sector, the food retail sector or the automobile sector and vice versa all had to go through some rapid changes after the onset of the pandemic. The onset of the pandemic has compelled organisations such as Tesco, to be more connected with all of its suppliers and also with all of its external as well as internal partners. Here, are some of the recommendations that could possibly help the Tesco Company in order to robustly manage its procurement strategy during times as such as today.
- The Tesco company during pandemic time, mainly put all of its focused on its suppliers. Undeniably, the suppliers are very important for companies as such as Tesco but importance and attentions should be given to the internal customers as well as the external partners as well. The well- being of the people should be kept at utmost consideration. The company can check in occasionally to enquire about the well- being of the varied workforce associated with the company. In order to ensure resilience with its procurement practices during as such times as today, the company should maximize the investments in digital- oriented procurement process and tools such as the tools with regard to supplier collaboration and vice versa (Gaivoronskaia,2021). The company in order to help its varied stakeholders and shareholders can try to create a support system that is mobilize for all of its employees and at the same time providing full support to its suppliers (Narisetty,2021)
- The onset of the COVID- 19 lead pandemic has open eyes of many companies and organisations as such as Tesco with regard to their procurement practices and also with regard to the viability of the continuity strategies for their respective business. Many loopholes were identified by the Tesco Company that lie insidious with regard to the procurement procedures. And so, in order to avoid any such problems and issues in the future, the company should try to secure and strengthen its base of supply. The company should try to analyse and engage with all of the suppliers based in tier 1 as well as in tier 2 so as to have an in- depth understanding about the risks that lies ahead. Actions must be taken in order to overcomes the challenges with regard to liquidity and backlogs. Alternative source of supply for the procurement of the products should also be considered to be on the safer side. Consideration of shifts with regard to the procurement of supplies from varied local suppliers could be undertaken in order to ensure a balance form of supply of products (Mubarik,2021).
- Strategies with regard to risk management should be put forward robustly in order to ensure resilience and also to ensure the decisions taken with regard to procurement be lead with a purpose. Challenges and risk factors are bound to arise in the future as well and so, the company should try to embed management with regard to risk factors when decisions are being undertaken in aid of the procurement practice (Czeczotko,2021).
- Application of innovation that ensures customer satisfaction and transparency should be embraced. However, while embracing innovations, the company should make sure that it is done with a purpose filled agenda so as to enhance the efficiency rate of the procurement process. People in charge for making decisions with regard to procurement strategies and procurement practices within the Tesco Company should consider using digital- oriented levers in order reshape and re- structure the efforts undertaken with regard to innovation for both the present scenario as well as for a world after the post- covid situation.( Ayagah, 2021)
Bullwhip Effect
The main priority of the Tesco Company after the onset of the corona virus has been its customers and its employee’s and suppliers and therefore, the company never fail to provide necessary updates with regard to ensuring safety to all of its colleagues and to all of its customers as well. The Tesco Company is also focusing on supporting the different communities existing in and around United Kingdom (Béné,2021). The main focus of the Tesco Company as stated by its chief product officer, Mr. Andrew Yaxley, is to focus on strengthening the partnership it shares with all of its varied suppliers so as to make sure that the company’s food shelves are not empty by any means so that the company can keep feeding the nations. In the United Kingdom alone, at present, the Tesco Company works with more than about 3,000 different suppliers. All of the businesses of its suppliers were affected by the crisis that befall upon the world. However, the company wanted to support all these businesses as much as possible (Arribas-Ibar,2021). The company is very much aware of the fact that the company’s suppliers were the one’s that were affected the most and therefore, the company before Covid time, they waited for all of the items to reach the company’s warehouse and at the end of every 14 days they paid the suppliers with the due amount. However, knowing and being aware of the crisis, that its smaller suppliers were going through, the company made changes with their invoice management. Tesco Company immediately paid off the due amount on receiving the product from its suppliers instead of waiting for the 14 days round to get over (Boons,2021).
Reduction of Bullwhip Effect
Before, the onset of the corona virus many of the suppliers of the Tesco Company would directly supply their products to the various restaurants and cafes. However, due to the temporary closures of all such restaurants and cafes, the supplies of the foods and vegetables had to be stopped. And so, the company in order to support those suppliers, started taking supplies of eggs, potatoes and chicken in order to support those suppliers (Bhatnagar,2021). The company also started promoting beef steaks at half discounted price so as to help the suppliers sell their products. The Tesco Company’s main agenda during Covid time with regard to its procurement strategy was mainly focused on helping all of its varied suppliers as much as possible to cope up with the ongoing prices and also at the same time make sure that all of its customers were getting the items needed by them at any given time by making sure that the shelves of the company’s warehouse were kept full (Pandey,2021).
Conclusion:
The report writing was based on the topic, “During pandemic, how demand changes led to purchasing practice change? And what is the strategy to manage such changes IN FOOD RETAIL SECTOR Taking example of case study of the TESCO Company”. The topic that were discussed under this report writing were- analysing the case study and identify the situation i.e., purchasing practices done by the TESCO Company before and during pandemic, how the Corona virus lead pandemic impacted the change in the demands and practice of procurements during the pandemic time, brief comparison will be done with regard to the purchasing practices before pandemic time and lastly we will be giving some form of recommendations on how the TESCO Company can make its procurement practices more robust. The COVID- 19 lead pandemic has brought in a lot of shocking factors for the Tesco Company. After the onset of the Corona virus lead pandemic, the Tesco Company focused on strengthening the partnership it shares with all of its varied suppliers so as to make sure that the company’s food shelves are not empty by any means so that the company can keep feeding the nations. The Tesco Company’s main agenda during Covid time with regard to its procurement strategy was mainly focused on helping all of its varied suppliers as much as possible to cope up with the ongoing prices and also at the same time make sure that all of its customers were getting the items needed by them at any given time by making sure that the shelves of the company’s warehouse were kept full. Many varied recommendations was stated in this report writing which the Tesco Company can follow in order to strengthen its strategies with regard to the procurement practices.
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