Operations Management And Performance Objectives Of Tesco

Background of Tesco

Jack Cohen founded Tesco in 1919 and opened up its first store at Burnt Oak, Edgware North London. In 1932 Tesco store had expanded itself to a private limited company and entered stock market having a share price of 25 pence. Tesco stores have then largely been expanded across the world.

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Operation Management is regarding the process in which organization produce goods and services. An organization’s operation function is overall an arrangement of resources that are dedicated towards the production and delivery of services. The transformation process model is employed to elucidate the nature of operations (Ivanov, Tsipoulanidis and Schönberger, 2016). The production process always involves inputs and outputs. Inputs are customarily the raw material, while the outputs are products that are so desired to be sold in the markets. Resources being a critical part of any of the production processes, it is practical to follow the contrast of transformed and transforming resources. Transforming resources relate to elements that are required to convert the raw materials into finished products, which are desired by end users. Machinery, building, software, hardware and other components that are used for such purposes belong to transforming resources category. Correspondingly, transformed resources are the raw materials, which undergo a substantial transformation, which can be converted into desired shapes by the market. Therefore, whether it is the raw materials or finished products. They both classify as the transformed products (Hopkin, 2017).

While most of the company employs transformation process, it is natural to observe that it uses different elements for satisfying the customer needs. Transformation model in context to Tesco,

The transformed resources are the customers and goods to be sold.

The Transforming Resources are the staff and different facilities like billing machines, computers etc.

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Transformation process involves:

  • Selling of goods
  • Capacity
  • Inventory control
  • Giving customer advice

Output includes:

  • Goods sold
  • Profits made
  • Customer satisfaction

Tesco is concerned regarding the satisfaction of customers and meeting its requirements. The company has keen eyes on its price factor and makes a dire initiative in assisting its suppliers to enhance the services its offering to their company. In context to Tesco, following are the basic five performance objectives of Tesco, which comprises of Speed, Quality, Dependability, Cost and Flexibility.

The performance objective in context to the company Tesco are:

  1. Quality: Tesco established Quality as one of the key components of performance objectives which guarantees great particularly food items of high calibre and deliver in top-notch condition. Viable choice of supplies assumes an essential part of enhancing the nature of the item. What’s more, Tesco guarantee that the items (foodstuff or goods) are not in the distribution centres or retires for long (Slack, Chambers and Johnston, 2010.). Tesco keeps a check on expiring dates of its items as often as possible to keep the offering of substandard items. Likewise, Tesco performs an infrequent audit on its suppliers with a specific end goal to discover the quality of products. Hence, it is inferred that Tesco picks on the best quality items.
  2. Speed: Tesco presented the arrangement of online shopping for food to encourage its customers with the quickest shopping ever. What’s more, the alternative for home delivery is an additional favourable position to guarantee superfast delivery. Speed as a main performance objective is joined inside the operation processes, which has a direct impact on other departments (Zhao, 2014). Tesco knows about the way that the speed at which the operation is performed will specifically influence alternate departments. Consequently, Tesco has consolidated the components of speed while communicating data over the different departments.
  3. Dependability: Dependability alludes to the act of undertaking adequate actions in reasonable time for the comfort of customers, so they get the required goods as well as services precisely when they are required. Customers judges over the dependability of Tesco’s operation after the on time and satisfactory delivery of the items or services so demanded. Tesco guarantees unequalled accessibility of stock, with the goal that none of the customers is left unanswered (Ivanov, 2018).
  4. Flexibility: Tesco has effectively adapted to flexibility as one of the essential goals by the nonstop presentation of more up to date products and services in accordance with the changing taste of customers. Irish yoghurt is one such case of the item sold by Tesco. The organization presented this item in the store in the wake of understanding the current pattern of natural products in demand and expansion to this; Tesco presented its own particular product offerings under the brand name of Tesco (Christopher, 2016). Items that bear Tesco as brand name incorporate rolls, Pizzas, jams, bread, drain and so forth. Another approach of flexibility incorporates, changing the accessibility of specific products in a sum at noteworthy circumstances of the year (Dekker et al.2012). Dessert is one such case, which is accessible at least sum amid winter seasons, though a similar item in accessible in extensive sum amid the mid-year season
  5. Cost: Cost alludes to the execution of business operations monetarily. ” As the cost of producing goods and services lowers, the price to customers shall also be lowered”. Tesco actualizes higher cost to items in contrast with its aggressive supermarkets. Nonetheless, Tesco dependably has some particular items that offer decreased cost and uncommon rebates (i.e. get one, get one free), devotion (rebates to steadfast clients), and so forth.

Product process matrix tool is used for examining the relationship between technology life cycle and product lifecycle. Robert H. Hayes and Steven C. Wheelwright introduced this tool to examine all the market-manufacturing congruence issues and understanding of the strategic options available to a company (Palmer, 2005). It has two dimension Process lifecycle/ process structure and Product lifecycle/ product structure.

Transformation Process Model


The process structure and product structure both indicate towards continuous flow as it deals with high volume commodity products (Varley, 2014). Since, the product demand is high; the adequate process is continuous flow to meet the demands. Tesco, in the UK operates from six different store formats each different in size and range of products sold. The main stores are Tesco Superstores, Tesco Metro, Tesco Extra, Tesco Express, One Stop and Tesco Home plus. The Volume dimension of an operation relies on a number of products as well as services built by operations (Mahadevan, 2015). In the current study, customers of Tesco are definitely more than any smaller retail shops as prices offered by Tesco are cheap in comparison to them. According to 2014 statics, Tesco had about 9.5 million club card members and each day a variety of customers purchased Tesco Extra, it deals with high-level volumes of customers. Customers are always keen on selecting the products by its own and making limited communication with their staffs. Tesco deals with such volume by purchasing products in bulk as this considerably reduces the changeover cost to the suppliers, and also it helps in getting pricing discounts when buying in bulk, which considerably reduces the overall unit cost.

In order to design a layout, it is important to select the process type as well as the layout, process types (Ivanov, Tsipoulanidis and Schönberger, 2017). The layout of Tesco is a mixed layout, which encompasses both process layout as well as Product Layout, i.e., Line Layout. The below figure showcases a typical layout of Tesco:


The Product layout incorporates location of transforming resources solely for the convenience of transformed resources (Peppard and Ward, 2016). In Tesco, all customers follow the same route while making up for a bill. Customers are required to queue in for making payment of bills. So Tesco encompasses of both Process and Product Layout.

An ideal approach to oversee quality isn’t to occur defects in any case, and this starts with operational management. Quality is the thing that the customer identifies it is. More regrettable yet, customer’s desires are continually evolving. So to characterize quality, you should recognize what’s vital for your customers and continually refresh that information after some time. Cooperation by everybody over the association is basic to the accomplishment of any quality change venture (Sparks, 2014). Line specialists are regularly the first to perceive process issues that add to the low quality. They work out the operations every day and are in the best-suited position for distinguishing and actualizing changes. Augmenting the capability of line specialists requires that they’re all around prepared and taught on the whole procedure, not only their individual occupations.

Performance Objectives of Tesco

Customers overarching expectations tend to rise after some time, so quality needs to be enhanced to keep up.

Yet in order to fulfil the real changes in operation management, one should craft a planning cycle.

Plan-Do-Study-Act Cycle.


It speaks to the roundabout idea of ceaseless change. As you take care of one issue, you proceed to the following issue. The procedure has four stages:

Plan: You should get ready for development, and the initial step is to distinguish the issue that you have to illuminate or the procedure that you have to move forward (Bateman, 2017).

After you recognize the issue/process, you have to report it, gather information, and build up an arrangement for development.

Do: You at that point execute and watch the arrangement.

Study: You have to assess the information you gather amid Step 2 (the do stage) against the first information you gathered from the procedure to evaluate how well the arrangement enhanced the issue/process (Zou, Isa and Rahman, 2017).

Act: If the assessment demonstrates enhanced outcomes, at that point you should keep the arrangement set up (and actualize it all the more generally, if fitting).


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Zhao, S., 2014. Analyzing and evaluating critically Tesco’s current operations management. Journal of Management and Sustainability, 4(4), p.184.

Zou, X., Isa, C.R. and Rahman, M., 2017. Valuation of enterprise risk management in the manufacturing industry. Total Quality Management & Business Excellence, pp.1-22.