To what extent can Tesco’s supply chain practices be said to follow lean (i.e. just in time) principles? (Consider JIT as a philosophy, a planning and control system, and an inventory system.)
JIT as a philosophy
In this case, JIT is seen in three main domains: the elimination of waste, the adoption of continuous improvement strategies, and the involvement of all personnel in the business operations of a company. In a move to adopt continuous improvement strategies, the company has continued to develop its ‘step change’ program. Some of the initiatives of the program include the use of replaceable shelves so as to reduce the time spent by staff in arranging shelves; self-service checkouts; the use of handheld scanners in all stores and the establishment of a dedicated clothing distribution center.
The company’s adoption of the RDIF technology also illustrates its initiative to factor in new improvements in its operations. The system proves to be much better than the traditional bar codes since the new technology enables the transmission of product codes to scanners without the need for human intervention and specific items can be tracked throughout the supply chain. Furthermore, the technology promotes efficient processing of goods, a relatively higher rate of employee efficiency through enhanced product availability, lower costs as well as reduced theft cases.
Waste elimination is achieved by the use of an e-procurement program. The Tesco Information Exchange program (TIE), which is the basis for its “full fresh” program, ensures that perishable goods such as foods are delivered twice a day to reduce wastage and to ensure that the products are fresh.
JIT as a planning and control system
Planning and control involve the reconciliation of supply and demand for goods by customers. In other words, it refers to the day-to-day activities that run the operations of a business.
An example of how Tesco uses the JIT as a planning and control tool is in its move to Collaborative Planning, Forecasting, and Replenishment (CPFR). This mainly involves an analysis of customer demand patterns whereby business partners share forecasts and trend changes in the market over the Internet. This is usually aimed at reducing inventory costs and improving the availability of products to customers.
Tesco obtains Point of Sale (POS) data from each of its individual stores. This data is used to study and analyze consumer behavior, manage the stocks at different stores, and for sales projection purposes. Moreover, its e-procurement program, TIE, links all stores to their suppliers hence facilitating faster transactions in the supply chain.
JIT as an inventory system
Tesco’s Continuous Replenishment (CR) system best illustrates its use of JIT as an inventory system. Orders are obtained from the sales counters at different stores and sent to the head office. They are then sent to suppliers for stock replenishment via an automated order process. The orders are placed several times a day, suppliers then make deliveries to the distribution centers, and the items are then dispatched to the stores upon arrival.
The cross-docking operations strategy is also another JIT inventory system. The company eliminates the need for storage by decreasing inventory holding. This is achieved by offloading goods from supplier trucks and loading them onto trucks that are heading to the same store.
The primary distribution process has enabled the firm to fully utilize its distribution fleet through backhauling. The process involves the collection of goods directly from domestic suppliers and delivering them into its distribution network.
What are the main differences between operating JIT in retailing and manufacturing operations?
JIT in manufacturing usually involves raw materials, work in progress, and finished products. On the other hand, JIT in retail mainly involves obtaining already finished goods from manufacturers.
JIT in retail, in most instances, deals directly with the final consumer. However, a manufacturer rarely has to deal directly with the consumer.