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Introduction Of Managing Sustainable Global Value Chains At Tesco
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Supply chain management is the process of managing the flow of goods and services which are a very essential part of the whole process of transforming the raw materials into final products. Supply chain management is considered to be the most important part of an organization’s business as it helps them to streamline the supply of the goods and services and maximize the customer value which will help the organization to gain a competitive advantage in the market. This assessment will provide the idea about supply chain management in a global context and discuss the ways which can provide industry to have a sustainable market approach. The following assessment will analyze the contemporary and in future magnifying changes in context to an international supply chain industry and country which will help to understand the importance of sustainability.
Due to the Brexit, there has been a sudden reduction in the Sterling rates due to which the British retailers are very much concerned about their supply chains, and the UK leaving the EU is one of the main reasons the origin of the goods will change. This will impact the prices of the goods and services for the customers. UK leaving the EU creates both challenges and opportunities for the supply chains of the retail industry. This is the reason the sourcing strategy is very essential for the organizations which are operating in this sector of the country. This is the reason this challenge is considered to be a significant one for analyzing the sustainability aspects in the long term. For the demonstration of this supply chain management and sourcing strategy in context to an international context. The industry which is chosen for analyzing this aspect is the retail industry of UK and the assessment will revolve around Tesco Inc. as it is one of the biggest retail organization and has been impacted the most because of the Brexit and the UK leaving the EU as well as it will provide detail analysis of the impacts of this challenge on the industry and the organization. This is the reason the UK and Tesco have been chosen for demonstrating and discussing this aspect of the supply chain in detail.
Academic literature review
This section of the assessment will provide the idea about different pieces of literature and viewpoints of the authors and scholars regarding the supply chain management and sourcing strategies.
Sustainability integration in supply chain management
According to Mosteanu et al. (2020) sustainability in the supply chain and logistics has become one of the trendy features in recent times. It is observed that in recent times there are several drivers which are identified by the organizations for maintaining the sustainability of the supply chain effectively. The supply chain experts state that the operational decisions of an organization's supply chain are based on natural and social impacts. It is also observed that sustainability is the main aspect of corporate social responsibility (CSR) which is very helpful in embracing the natural and social perspectives of the management decisions made by the organization.
Impact of sustainability efforts on supply chain risk
As discussed by Gouda and Saranga (2018) despite various supply chain managing strategies and risk mitigation techniques the supply chain managers at a global stage are finding it very difficult to manage the supply chain which is getting complex day by day. It is observed that the risk mitigation strategies do not always reduce the supply chain risks for most of the organizations on the other hand it is also observed that the industries and the organizations which are trying to use the sustainability efforts are more able to reduce the impacts of the supply chain risks and develop a more sustainable market approach.
Fashion retail supply chain management
As stated by Wen et al. (2019) there has been a sudden increase in the business growth in the retail industry and especially for the fashion retail industry over the past decade. Most of the brands operating in fashion retail are highly driven by consumer demands and due to this are facing various challenges due to the increase in the demands. This is the reason the retail organization needs to keep its supply chain smooth and manage it effectively. This is the reason retail supply chain management is the most essential aspect for the organizations operating in this sector.
Impact of supply chain management on the firm’s performance
According to Gandhi et al. (2017), the adoption and implementation of the supply chain operation and management approaches in the organizational operations are some of the big reasons behind the change in the performance of the organization. customer relationship management and supplier relationship management are two of the most important supply chain management aspects which are very essential for the organization for enhancing the performance of the organization. The most impactful parameters like profit and sales growth are two of the most effective factors which justify the effectiveness of supply chain management.
Supply chain risk assessment in the retail industry
As stated by Martino et al. (2017) it is observed that in recent times there has been a sudden change in the demands of the customers as well as the increase in the technological advancements and the product lifecycle are getting shorter than expected which is affecting the maintenance of the supply chain for the organizations and this is the reason the effective supply chain management strategies are required for the retail industries for demand dynamism and volatility. Due to the traditional stock maintenance ways, organizations are facing over-stock issues in recent times due to the change in customer demands.
Retail supply chain management
According to Ge et al. (2019), the retail business is increasing in the past decades and the changes in the internet approaches are providing the customers with better approaches to reach their desired products and services. The supply chain management of the retail industries is going through several changes due to more advanced technologies and computation power. There are several core components of supply chain management like vendor management, demand forecasting, inventory management, and order fulfillment which are very essential for the retail organizations operating in this sector for enhancing their business performances.
The role sourcing strategy in supply chain management
As stated by Jain et al. (2021) global supply chains are observing various supply chain interruptions and issues and this is the reason the sourcing strategy is needed to be used by organizations to enhance their supply chain management for better and profitable results. Supplier diversification and the use of long-term relationships with suppliers are two of the sourcing strategies which are used by organizations for reducing supply chain issues and interruptions. It is also observed that the most important aspect in recent times for organizations is to improve the supply chain recovery ability.
Supply chain resilience for single and multiple sourcing
As discussed by Namdar et al. (2018) The use of sourcing strategies is very essential for organizations to ensure supplier chain resilience and reduce disruptions. There are several types of sourcing strategies that are used by the organizations like single and multiple sourcing, collaboration and visibility, backup supplier contracts, spot purchasing. The collaboration and visibility are very essential for an organization as it impacts the supplier’s recovery capabilities the most. While managing the supply chain two types of risks can affect the organization the most like disruption and operational risks and this is the reason the supply chain management support disruption planning and mitigation.
Global sourcing strategy and structure
According to Jia et al. (2017), a synthesized structure of the global supply chain strategy is regulated with three dimensions the supply internationalization, internal and external integration. The global supply chain structure is then further broken down into structural design control and coordination which consists of three dimensions for each of them. This is the reason the theory of the structure-strategy is very essential for every organization to enhance their sourcing strategy for better supply chain results for the organization shortly.
Global sourcing: An evolution of global production
As discussed by Kotabe and Murray (2018) it is observed that there has been a significant increase in global sourcing in the manufacturing and services sectors. Global sourcing has been chosen as one of the key drivers for organizations and the use of superior corporate strategies is impacting directly the marketing performances of the organizations and the retail industries. It is also affecting the product quality, market share, customer satisfaction as well as brand loyalty which indicates the nature of the global sourcing strategy especially for the organizations operating in the retail industry.
Retailer’s sourcing strategy
According to Yoon et al. (2018) in the presence of supply disruption risks the presence of the optimal strategy is very essential for the organization and this is the reason the use of the multi-tier supply chain is very essential for organizations in recent times. It is observed that the behavior of the consumers impacts the supply chain behavior of the organization as it mitigates the negative impact of a supply shortage. This is the reason it is also observed that similar experiences of the consumers can increase the supply chain issues. The recent increase in consumer behavior imposes unpredictability which is the biggest reason behind the supply chain issues for the retail industry and this is the reason sourcing strategies are needed for the retailers.
Country case
The country chosen for this section of the assessment is the UK as it is the country that is most impacted by the Brexit and UK leaving the EU. The retailers in the UK are impacted the most because of the Brexit and they are highly concerned about their supply chain management as there has been a major shift in the ranges of the prices. It is observed that the UK is leaving the EU which is the biggest reason there will be a sudden change in the origin of the goods as most of the industries will prefer to purchase goods which are made in the UK as the import duties will be very high and the retailers will not be able to pay such high amount of money for purchasing the goods and sell them in the market (Bloom et al. 2019). The Brexit is another reason due to which the industries are preferring to provide the customers with the products which are generated in the UK as the consumers as imported products are much higher in prices due to which the organizations are losing their customers. The customers are not finding it appropriate to purchase the products which are so costly and this is the reason the supply chain, as well as the stock maintenance of the retail organizations, are getting hampered (Casadei and Iammarino, 2021).
The initial drop in the rates of the sterling is developing opportunities for the organizations as they are procuring the goods and services from the UK but in long term, this will negative impacts on the business of the organizations as it will limit their exposures on the future tariffs on the UK imports. The biggest impact has been on the organizations which are outside the UK as now they have to reassess their UK sourcing and need to make sure that the organizations which avoid attracting high tariffs are avoided. The country is going through a very delicate time in terms of its supply chain management opportunities and systems and this is the reason UK-based service centers and supply-chain hubs are getting unviable for the industries (Singh et al. 2018). The global organizations are facing major issues as they have to pay huge amounts of taxes due to the Brexit which is imposed on the country after UK leaving the EU and causing higher tax rates on the imported products. Most of the MNC's operating in the UK use foreign raw materials for the development of their final products and this is the reason the organizations are facing major issues as the imposed increase in the tariffs affects the supply chain management for the organizations. The only opportunity which is left for the organizations which are operating in the UK is to re-shift their supply chain systems in Ireland. This will be more feasible for the organizations and maintaining warehouses that are based in the UK. The increase in the taxes on imports and exports are the main reasons which are affecting the supply chain management and options for the organizations in the country (Turner et al. 2018). These are the reason behind choosing the UK for this assessment.
Industry case
The industry which is chosen for this assessment is the retail industry of the UK as it is the industry which is highly impacted due to the Brexit and UK leaving the EU and the supply chain management is the heart of the retail business and the increase in the import and export taxes are making it very tough for the organization to survive in the market (Symes and Phillipson, 2019). For example, as observed in the case of Tesco, being one of the largest retailers it has an image of providing the best quality products to the customers at a cheap and feasible price but due to the Brexit, the organization is not able to provide their products to the customers at such low prices which are affecting the consumer behavior (SPARKS, 2018). The biggest impact is on the supply chain management as it is getting very difficult for the organization in the retail industry to manage their stocks due to which the supply chain is getting affected. In 2019, the retail industry was one of the most successful industries in the UK and has been able to generate more than £394billion worth of retail sales and profit for the industry which is considered to be higher than any other industry operating in the UK (www.tescoplc.com, 2011). Despite the Brexit issues the industry has been able to generate a good value but in recent times there has been a sudden decrease in the sales as the prices are increasing day by day and the consumers are avoiding purchasing products from the global organizations and choosing the local retailers and suppliers for purchasing the products (Feldmann and Morgan, 2021).
The increase in the supply chain issues are making the retail industry go through several problematic situations and this is the reason the organizations which are operating in this sector are needed to implement the best strategy which can help the organization to grow and reduce the impact supply chain management issues which are raised due to the Brexit and UK leaving the EU (www.tescoplc.com, 2011). The cost of business travel from the UK has increased and this is the reason the organizations operating in the retail sector are facing lots of financial issues. Therefore, the retail industry is trying to use sourcing strategies for reducing the impact on the supply chain. For example, Tesco has implemented group sourcing for reducing the impacts on the supply chain management especially on food products, clothes, and electrical products. The retail organization has been able to group their sources into two sections where they are dividing the products into food group sourcing and non-food group sourcing (Kim et al. 2019). This is the strategy that is providing the organization with the opportunity to make the global supply chain simpler and as well the prices are reduced which are considerably higher because of Brexit. This is the way through which the retailer industry in the UK is responding to the global market dynamics and trying to make supply chain management smooth and simple.
Conclusion and recommendations
This assessment concludes that the retail industries of the UK are needed to manage their supply chains as well as their stocks in an effective manner. for future trends as discussed above the organizations which are operating in the retail industries should make an effective purchase as well as purchase at a higher amount which means buying together. This will help the retail organizations to maintain a good stock and develop an effective supply chain for the organizations. An effective supply chain helps the organizations to fulfill the needs of the customers easily that too at a cheap price. The retail industry of the UK is needed to manage their supply chain operations from Ireland which will reduce the impact of the higher taxes due to Brexit in the future and the industry will be able to make the flow of the raw materials smooth and easy for the organizations. Managing the warehouses in the UK will help the retail industry to maintain a decent level of stock which will help them to provide the customers with the required product. It is also concluded that the organizations which are operating in the retail industries are needed to use their scale and expertise to purchase the products at less price so that they can provide the products to their customers at a cheap price and it can increase the sales and profit of the organization in the future.
The points mentioned below are some of the critical recommendations for the business managers to manage the supply chain effectively:
- It is recommended that the business managers can develop global sourcing teams who will be subjected to work with the local or national teams of the same organization. This will help the organization to outsource the raw materials at a low price and the organization will be able to purchase the products at a low price.
- It is recommended that the organizations are needed to deliver world-class processes to enable enhanced sourcing capabilities to make better purchases for the organization at a cheap price and improve the quality of the product. This will help the organization to sell more as the prices of the products will be less and consumers will be more comfortable purchasing the products which are low priced.
- The business managers are also recommended to prepare the supply chain cost modeling which will help them to develop an end-to-end cost matrix line, indirect duty matrix and the cost of the volume from the origin till the destination of the products this will reduce the cost of the products and the organization will be able to provide their customers with the products at a cheap price.
- It is also recommended that the business managers are needed to create space for their brands instead of going towards international brands as this will power the local brands and help the retail industry of the country develop and using the local brands will ensure that that the products are available at a cheap price for the customers as well as it will reduce the supply chain issues of the organization.
References
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