The Lean Supply Chain – Fascinating New Book on Tesco (part 2)

Labor Day

We started our review of the new book by Barry Evans and Robert Mason yesterday. “The Lean Supply Chain - Managing the challenge at Tesco” was published last week by Kogan Page and draws on the authors' experiences as supply chain practitioners and as researchers working with Tesco at the Cardiff Business School Lean Enterprise Research Centre.

Yesterday we largely covered the aspects of the book that relate to Tesco's broader business and the recent problems the firm has experienced. But the core of the book comes from many years work by the authors and others to turn Tesco into one of the most advanced supply chain management (SCM) practitioners in their sector and more widely.

The inspiration for the improvement programme came from Toyota and their work on SCM – with the aim of reducing stock holding, improving manufacturing efficiency, reducing response times and so on. The pioneers at Tesco and Cardiff University looked at what they could learn from the manufacturing experience and take into the retail world.

Much of the thinking came from linking the supply chain right through to the customer. So for instance, that meant being much slicker in terms of translating consumer demand in the shops to the supply situation. Suppliers were encouraged to produce shorter runs of product more often to build in more flexibility - and reduce costly stock holding too, of course. Another innovation that has become commonplace was packing product for transportation so that the units could be used directly in the stores - the large pre-packed pallets of soft drinks for instance that are now common in most big supermarkets.

The book scores highly in these sections, providing a lot of technical content for supply chain professionals to get stuck into, without becoming too dry and theoretical. However, procurement professionals should note that this is very much a supply chain book. A reader who only ever buys services and has no interest in the physical movement of goods will find less here of interest - although as we said yesterday, there are major elements of the book the cover Tesco’s rise and fall and are of a more general business interest.

But it would have been interesting to read something about the commercial negotiations that must have gone on as suppliers were encouraged to make radical changes to their own business models, for instance. Having said that, any reader with any interest in SCM will find good and interesting learning here, we suspect.

The importance of linking the supply chain activity to the wider business strategy comes though very clearly. Indeed, as the authors say, Tesco is as much a supply chain business as a retailer, and the theme of “customer value” and focusing on improvements that led to that were key to Tesco’s success. One major advance was the understanding of where the costs within the supply chain lay; so in Tesco’s case, a disproportionate amount were in the “last 50 metres” – getting the product actually onto the shelf. A “lean thinking” approach to that and other problems the led to solutions which took considerable cost, time and waste out of the process.

Even the more technical supply chain material is presented very clearly, and every chapter has a good introduction, a conclusions section and key chapter summary points. Along with a helpful use of charts, tables and pictures, it makes this a book that should straddle the academic world, practitioners, and, as we said yesterday, a more general business audience.

So whilst the authors may have cursed their bad luck with timing as Tesco hit its 2013/14 problems, the end result is one they should be very proud of; a book that deserves to be a real success, and one that every supply chain practitioner should read.

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