Operation Management of Grocery Retailer in the UK: A Case of Tesco

Abstract

Tesco is the biggest grocery retailer in the UK focused on food products selling and some non-food services such as clothing, home appliances, financial, etc. Over the last five years, Tesco has had a healthy growth in revenues and net profits, which reflects the success of Tesco's operations management. The purpose of the study is to explore the successful operation management of Tesco company, which can bring some inspiration for other companies to grow. This paper mainly includes operation design (products, service, process, and layout design), resource planning and control, and capacity management. In terms of operation design, Tesco launched a new baby food range with absolutely no salt or sugar, no artificial colors or spices to protect children’s health; Clubcard, Scan as you go, staff visibility, and Online shopping & Delivery adopted for giving customers’ more benefits and convenience; Tesco belongs to mass service process, adopts tracking technology named thermal imaging cameras to monitor queue lengths, reduce customer waiting time, increasing service speed and flexibility. Tesco mainly uses a functional layout, keeps the layout of its stores the same to allow customers to quickly find the goods, saving shopping time, and designed the display locations of its products to increase its revenue. For Planning and control, Tesco belongs to ‘Produce to stock’, which shows the characteristics of a high volume of products, which can save customers’ time, because the products have been produced in advance for customers to buy. Regarding Capacity management, Tesco adopted a mixed strategy which is chase demand and demand management to manage mismatches. Effective operation management strategies have made outstanding contributions to the realization of Tesco's business objectives, profit increase, and long-term development.