The Lean Supply Chain – Fascinating Book on Tesco Goes Beyond Its Title

Sometimes you have to feel sorry for authors. Take Barry Evans and Robert Mason. They have both been supply chain professionals, Evans with Tesco and Mason with Marks & Spencer, and then academics and researchers at the Cardiff Business School Lean Enterprise Research Centre (LERC). At LERC, they worked with Tesco, the UK's largest supermarket group, for many years as that organisation implemented leading edge supply chain practices. They gained agreement from Tesco to write this book, “The Lean Supply Chain - Managing the challenge at Tesco”, which was published last week by Kogan Page.

We suspect it was intended to be a celebratory case study of supply chain excellence, based on the largest retailer in the UK, whose growth over the last twenty years had been one of the UK's greatest business success stories. However, in the last couple of years, the long successful rise of Tesco has gone into reverse. That caused, we suspect, some hasty re-writes and revisions to the original draft of this book.

Those issues included the horsemeat scandal of 2013, followed by revelations around how Tesco treated its suppliers, and accounting issues connected largely with rebates, discounts and other payments from suppliers which led to over-statement of profits. The Serious Fraud Office in the UK is still investigating those issues, and Philip Clarke resigned as CEO of Tesco in 2014 after a torrid three years. And the share price has reflected Tesco's troubles, losing half of its value over the last two years. That equates to "value destruction" of some £15 BILLION for shareholders. (Yes, regular readers might have guessed, that includes me!)

The irony of these developments is that it has led to a much more interesting book in all probability than the one that would have been written if all was still going well. Indeed, the title does not do justice to the content, which now goes well beyond lean and supply chain discussions. There is a considerable amount of material concerning Tesco's principles, and the approach that led to many years of success. There is also a quite thorough description of the recent issues, which means we consider this to be 50% a useful supply chain case study and 50% a much more general – and in many way, more fascinating - business book.

The need (we assume) to get Tesco's sign-off to the content does inevitably lead to a lack of questioning in some areas however. Even the highly regarded Terry Leahy, CEO before Clarke, must take some responsibility for the recent travails, but even various strategy initiatives which have perhaps proved less than effective are discussed in generally positive terms here – such as the overseas expansion, which is now being unwound. A more hard-hitting book about Tesco's decline is still to be written, and of course the firm is not out of the woods yet, even as it announces the sale of another non-UK business unit last week.

But The Lean Supply Chain is still fascinating. Leahy's principles were very much around the customer as the prime focus and key stakeholder. Whilst that sounds fine, it does raise the question of whether Tesco valued suppliers enough, which might have led to some of the poor treatment of those firms which emerged during the accounting scandal (demanding rebates and so on). My first employer, the Mars Group, has a principle of “mutuality”, which says that all stakeholders who interact with Mars should gain from that relationship, including suppliers and others as well as customers  – that sounds more holistic than the Tesco principle.

So the first and last sections of the book are of most interest to the general audience, covering the history of the firm, its core principles, how it expanded, and then later, a discussion of the challenges it now faces. The central part contains the more technical supply chain discussion. But all in all, this is a broader and more interesting book than I expected, and a surprisingly gripping "story" given what has happened recently. But what about the supply chain content, we hear you ask? That is also valuable, and we will come back to that tomorrow in part 2.

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