Tesco Supply Chain Management Practices Case Study Essay

Tesco Supply Chain Management Practices Case Study - Essay Example They were the authors of the book known as ‘The Machine that changed the world’ which was in charge of introducing the concepts of lean production for the Toyota Company (Indu & Gupta, 2004). The experts found out that the company indulged in many unnecessary handlings whereby there would be improvements along with reductions in the costs the company incurred. They additionally found out that there were longer lead times, poor availability of products along with locations of stores. The company in turn established a system for continuous replenishment, which enabled their products to have immediate replenishment (Womack & Jones, 2006). They have also been reducing their handling of goods while also streamlining their flows. They were able to accomplish this by using dollies on wheels, which replaced shelves. The dollies could be sent from the suppliers and into their delivery Lorries and taken back to the stores. They helped in reducing the companies need for handling th e products since their products were just being loaded at the end of the company’s production line and taken directly by wheels to their supermarkets (Ohno, 2005). This move helped the company in reducing their touch points for drinks by 150 locations along with the transit times. However, the multiple trips that were carried out resulted in higher costs for the company but these costs were covered by decreases in their inventory costs. The company also had agreements with other companies such as P&G, Unilever along with Coca Cola in order to alter their schedules for distribution (Womack & Jones, 2006). This in turn enabled them to reduce their lead times by fifteen days since the daily deliveries made through their wheeled pallets, which enabled the placement of their goods directly on the shelves of many of their outlets (Bicheno, 2008). The company’s holding of stock reduced greatly from over four to two weeks while their service levels also improved by over six pe rcent. The company’s use of lean production methods in the above aspects helped them see their profits jump from 16,452 million pounds in the year 1998 to 37,070 million pounds in the year 2005 making them the biggest grocery within the United Kingdom (Indu & Gupta, 2004). Due to the company’s use of lean production systems, they were able to reduce their storage locations from five to two, their order entry locations from six to just one and their service levels from 98.5% to 99.5%. They were additionally able to reduce their throughput times from twenty to just five days, which represented a 75% reduction in their total inventory (Womack & Jones, 2006). The Tesco Company initiated a ‘step change’ curriculum, which was used for identifying the processes in their supply chains that required transformations. This program helped the company in eliminating several of the unnecessary procedures that enabled them to save about two hundred and seventy million po unds in the years 2004 to 2005. The changes that were implemented under the program additionally helped in simplifying the operations in their stores while freeing up their employees so that they could more effectively attend to their customer’s needs (Ohno, 2005). The company introduced operations across docks that involved goods being loaded into one