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This essay will examine Tesco's supply chain and inventory management change procedures as related to digitization (AI). Additionally, it will examine the causes and effects of change that affect organizational strategy as well as how the changes work. It will examine how these changes impact team dynamics and leadership. By using the proper models, it will discover strategies to minimize modifications. Finally, it will discuss the recommendations and how they could affect Tesco in the long run.
The Tesco brand, owned by Tesco Plc, is a worldwide supermarket chain. The firm operates both an online presence and physical stores in a variety of configurations. Fresh food, drinks, bakery goods, groceries, home and entertainment, baby products, clothing, home appliances, frozen food, pets, health and beauty products, consumer electronics, and electrical goods are just a few of the many categories covered by Tesco (Sharmaa et al.). Consulting, retail banking, and insurance are some of the other services provided by Tesco Bank in the UK.
Tesco's new supply chain optimization software enabled the firm to analyze the success of special sales offers and better forecast consumer buying patterns, which allowed them to make yearly savings of up to £16 million (about $24.5 million). An analytics algorithm created by Tesco utilizes weather trends to determine how many shelves should be stocked in a given location. Organizations should have absolute command over materials at all places in the store network for supply chain analytics to be successful. Organizations ought to involve programming for robotized stock administration to do this. These frameworks can likewise assemble significant measures of information, which can consequently be proficiently inspected by instruments like those Tesco utilizes.
Two significant events—Brexit and the US-China trade war—that have seriously harmed global scenarios have a detrimental impact on the geopolitical environment worldwide. UK and US retailers view these nations as fantastic chances to grow their businesses and client bases. Additionally, British merchants' supply chain issues have gotten worse as a result of Brexit (Brock et al., 2022).
The global economic environment is still somewhat unstable, even though it is recovering from the effects of COVID-19. Unexpected increases in energy prices and worldwide interruptions to supply chain operations have caused the inflation rate to climb over expectations. Adverse consequences begin to show up once expansion development arrives at a specific point since request and purchasing power will fall. Furthermore, in the wake of plunging by 9.4 percent in 2020, the UK's economy showed an example of a development of 7.5 percent in 2021. ("United Kingdom GDP Growth Rate - 2021 Data - 2022 Forecast - 1955-2020 Historical", 2022).
Individuals are taking on contemporary lives and lean toward brands even in the retail area in countries like the UK, France, Canada, Australia, and the US. The fundamental supply chain includes commodities and food items, and customers regularly purchase goods. Speaking about consumerism, according to "UK Private Consumption: of GDP, 1955 - 2022 | CEIC Data," in 2022, private consumption in the UK is as high as 63 percent of the nominal GDP of the nation.
The retail area should likewise perceive that shoppers' inclinations for maintainability are developing, and firms should meet these inclinations to win and keep clients whose changing expenses for manageable endeavors will be exceptionally modest (Adamyk, 2019).
Currently, a wide range of innovative technologies is changing how to store and retail ventures work. These innovations incorporate large information, mechanized stock administration, web-based business channels, contactless conveyances, sans checkout shops, direct-to-boot conveyance, drone conveyance, face acknowledgment, and voice shopping. They likewise remember IoT sensors for the inventory network.
Change management is the practice of using a structured process and a toolkit to lead the people's side of a change and bring about the desired result. Change management's ultimate purpose is to facilitate employees' understanding, adoption, and use of change within the context of their day-to-day work.
Knowing the drivers can aid in determining the sort of change that the companies are facing. This is important because it can be challenging for everyone concerned to carry out the change if there is internal misalignment or confusion regarding its scope or need.
Seven main causes are causing the transformation, beginning with exterior factors and progressing inward.
External: When evaluating the root cause of the shift and the scope of its influence, executives will frequently start by considering the external drivers since they are better familiar with them (Hanelt et al., 2021).
A change may be necessary to respond to stakeholders' shifting wants and demands, or it may be necessary to align internal processes to cut costs and promote a stronger internal flow of information.
Internal: Although difficult to recognize and describe, these forces might contribute to a project's failure if ignored. The secret to success is paying attention to both internal and external factors. Putting too much emphasis on one thing might create problems.
Information is better when it is more apparent and straightforward. Along these lines, more noteworthy information ensures more viable and reliable preparation sets for machine learning systems and AI frameworks. Associations can more readily control the dangers related to mechanizing store network exercises in worldwide stockrooms and conveyance center points because of expanded visibility and transparency. Subsequently, advanced twins for supply chains are similarly pretty much as valuable and controllable as those for creation.
Most organizations require a rising number of multifaceted experts with the center information and capacities expected to oversee supply chains from beginning to finish. for the shift to carefully associated supply chains, where ability profiles are updated to put more accentuation on information and algorithmic education, exception-handling proficiency, and the capacity to make wise, integrated business choices.
Figure 2: Drivers influencing an organizational strategy
The coronavirus epidemic has accelerated the digitalization of the supply chain for many UK enterprises. Since 2020, a large number of manufacturers, suppliers, and distributors have been compelled to change the way they conduct business by shutting offices, lowering operating capacity, and adopting new working practices. Companies have also had to contend with unpredictable customer behavior and seriously disturbed supply networks.
Many organizations are adopting technology to make their operations more flexible and resilient since supply chain disruption is still a significant concern (Verhoef et al, 2021). This puts them in a better position to adapt to the economy's and society's constantly shifting conditions. A major force behind digitalization is the requirement to create robust supply networks.
Tesco intends to eliminate a stage of food packaging from its supply chain to attain this improved efficiency. Thanks to advancements in storage technology, Tesco can now have vegetables delivered straight from growers to its shops without the need for further packing.
Flexibility within the organization: With a digital operating model, management has more leeway to decide on the right level of centralization required to enable specialization or reduce process costs in light of regional variations in local labor prices and productivity levels. Higher value via improved quality and productivity is one of the main advantages an organization has when it centralizes certain specialized operations.
Better decision-making: After integrating digital technology into the supply chain, it will be easier to decide more quickly and accurately for each function. Additionally, by aggregating transactions and readily available information at the macro level, the performance may be analyzed precisely and effectively and the necessary adjustments be made to prevent distortions brought on by average costs.
Utilizing AI and machine learning-based technology has boosted insight into inventory levels, enabling smarter replenishment planning, more effective decision-making, and ultimately better customer service.
Boosts automation: By automating several labor-intensive operations and simplifying decision-making at various points throughout the lifecycle, an end-to-end digital platform produces efficiency, enhances data accuracy, and increases supply chain efficiency. Additionally, automation chooses the best shipment method, carrier, and timetable while taking time, speed, priority, and other factors into account.
Accelerates innovation: Innovation is the sole objective of all digital transformation activities. The company's business model will be strengthened as a result of this advancement over the traditional supply chain management method, and at the same time, connections with customers and suppliers will be strengthened.
Consumer engagement from beginning to end: The digital revolution of supply chain management will improve customer involvement in his journey (Paavola & Cuthbertson, 2022). For instance, using the supplier's automated tracking system, a client may keep track of his order information from placing one up until he receives it. Customers will benefit from having more control, feeling safer, and enjoying their purchasing experience thanks to this.
Leadership directs with hostility to accomplish the conversion. Leadership must encourage and boost involvement from staff who will be directly overburdened. Reluctance to accept can harm productivity and lead to other negative outcomes, such as staff quitting or requesting shifts. This phenomenon involves crucial variables such as attitudes about the change, the reasons for the changes, the reaction to the transformation, and the part played in the change (Mohapatra, 2021).
Leadership generates an equally divided creative power, lucidity, and calibration. Harmony can be analytic, so direction must be communicative regarding the meaning of the changes for the organization with aims and objectives. However, this can presuppose dismantling archives and advancing with multipurpose collaboration. Lucidity and calibration mean discussing the transformation regarding a plan of action, not only new technologies and processes. Leaders' responsibility and efficiency can handle any critical issue. Again, coping with the changes at all leadership levels can be a powerful advocate for transformational changes. Triumphant change management needs a compatible sense and measures from leadership at all levels of the company (Mohapatra, 2021).
Leadership change can bind swaps to a particular target. Goals that are particular, assessable, feasible, pertinent, and time-based. Being particular about the transformation and articulation and analysis about the importance can be progressive along with being monitored and measured. Change management is difficult to achieve without the help of the leadership in any organization. Transformation efforts can be successful with the amalgamation of skills and attributes which together, make up the discipline of leadership change and furnish the supply chain management to guide the change management. Several companies are there lack this particular key factor or do not apply it sufficiently within the supply chain operation. An issue with the change in leadership can be recovered with the application of investment policy on key leaders with a development scheme by giving them access to practical education and training facilities for change leadership(Moise, 2022).
Figure 3 Tesco
Organizational changes seldom collide with resistance which makes the application of a changing atmosphere prospect quite an intimidating one. However, for a sustainable business adaptation and modifications are necessary. Studies have shown that globally more than 55% of companies fail to adapt to the changes and apply them in their firms. Utilizing a reliable change management strategy enables the organization to take into account all the elements required to win over workers and stakeholders. Additionally, it provides a quicker way than starting from scratch to establish a change management methodology that can be utilized for any new change to apply. Change projects are frequently large, complex, and expensive. Kurt Lewin, who created Lewin's change management paradigm in the 1950s, is its namesake (Moise, 2022).
The change process is broken down into these three steps:
This is the planning phase. Analyze the existing state of affairs to determine what has to be altered to obtain the desired results. Here is also when management makes its case to the staff and lays out the consequences everyone may anticipate.
During this phase of the change process, changes to the change are implemented while ongoing support for and communication with impacted employees is maintained.
This technique is used to map out a strategy for keeping tabs on the progress made toward the goal of ensuring the change persists. Evaluate how well the new processes are working, and how well management's objectives are being met.
Identification of the changes:
The first step in successful change management is to identify and articulate the reason for the change. Establish the specific nature of the transition to be made and the desired outcomes associated with it. Achieving the intended results from a change requires first establishing why it's necessary (Phuong, 2022).
Make a compelling business case to get support.
Whether Tesco management needs help funding the project, is searching for process champions, or is dealing directly with employees responsible for supporting change, getting executive buy-in is essential for implementing any change successfully. Tesco's change management must take the time to identify its stakeholders, develop its business case, and gain support for the strategy for what needs to change and how it will benefit Tesco before making any big changes.
Developing a road map.
Tesco must Include the project's goal and scope in its roadmap, as well as the proper employees and resources needed to carry out its strategy, and the financial requirements for a successful retailing business. Then, Tesco needs to describe a method that includes precise stages, quantifiable goals, well-defined rewards, and details on how the organization intends to track development and evaluate success.
Collect information for analysis
Tesco's change management should consider the advantages of collecting and analyzing data to gauge and evaluate progress as it starts putting the change management strategy into practice. Some adjustments will be simpler to quantify than others, but timely updates on development can help improve coordination, incentive distribution, and success indicators.
A proper training system may enhance employee work generation regarding the new changes introduced in the organization. Incorporation of a proper learning and training method can wipe out any phobias regarding the new adaption.
Lack of funding is a major issue for many transformation attempts. Stress, a decrease in the number of change components provided, and the project falling short of stakeholders' expectations can result from this. To avoid starting a business that is doomed to fail, it is crucial to have realistic goals and a sufficient budget from the get-go (Sultan, 2020).
Change calls for labor and effort. The most frequent complaint heard from executives about what prevents change initiatives from succeeding is that these activities frequently add to the workload that already exists for their workers in laboratories and team sessions. Lack of capacity and time to start yet another initiative to bring about the change is also noticed.
Sometimes even the most basic legacy systems fail to provide the most recent and accurate information and analysis needed for top-level management to make sound business decisions. In other circumstances, when companies have developed inorganically via acquisitions, important systems, and data sets may not be adequately coupled to give full real-time insights on critical business concerns. As a consequence, it is common practice for organizations to need to strengthen their essential data and IT infrastructure before they can adopt process and operational enhancements (Shayan, 2022).
In organizations like Tesco, change management is challenging without the support of the leadership. Effective leadership at all levels is required for successful change management. Any serious problem may be handled by a leader's accountability and effectiveness. A strong advocate for transformative changes might be able to deal with the changes at all levels of leadership. Tesco must consider all the factors necessary to win over employees and stakeholders in its transformation strategy (Colley, 2022).
Teams in different organizations often struggle to choose which experiments to do since there are so many competing viewpoints to consider. When making decisions, teams may benefit from the framework provided by Force Field Analysis, which encourages them to think about the forces driving and resisting the change. The use of Force Field analysis allows Tesco to develop an effective decision-making process in the organization. The framework is beneficial during the change management process as it allows the organization to concentrate on the drivers and barriers of change along with the resisting factors of change. Leadership approaches are one of the essential areas that are focused on by Tesco while applying the change management process in the organization. Leadership approaches allow Tesco to manage and successfully implement the change management process in the organization. The democratic leadership approach is one of the approaches that has been demonstrated briefly in this assessment. Force field analysis and its applications and usage have also been discussed in the present assessment.
To meet the needs of today's retail customers, an investment in the supply chain is essential. The supply chain sector is one of TESCO's most pressing operational management problems since it is not integrated with the other management divisions. As a result, business processes have become more complicated since inventories are not being managed efficiently and rivals are taking advantage of the situation in the retail sector. Grocery shops have high demands, but the logistical infrastructure is unable to provide them. TESCO has to increase its profits, thus it need to make certain changes (Flanding, 2018). These days, groceries and perishables are sent according to their requirements. TESCO has a problem with its tiny sector that it has to control since orders are being canceled often and the stock level is going down.
Following the force field analysis supply chain change in the organization has resulted in opposition and support of different individuals during the change management process. Employees in the senior and lower levels are the ones who have supported the organization in the context of change management of the supply chain. However, the customers and the third-party vendors and suppliers are the individuals who have shown their disappointment towards the change management process in the organization (Sultan, 2020). The change management process requires a quantity of time which may impact the customers of the organization. Moreover, the change management process also involves third-party suppliers collaborating with several departments in the organization which is not acceptable to some of the 3P suppliers. This was created in opposition by the suppliers and customers.
The force field analysis has demonstrated several areas that need to be developed with proper recommendations. One of the areas is the opposition of the suppliers and then customers. Performing Omni channel marketing is one of the ways to convey knowledge about the change management process to the customers. This will allow Tesco to inform the customers about the change in the supply chain and its positive impact (SPARKS, 2018). The organization should implement strict policies for the 3P suppliers to connect and cooperate with different departments in the organization. This will allow the proper and smooth functioning of the supply chain. Moreover, a separate team of individuals needs to be enacted to monitor the actions and contributions of the vendors and suppliers toward the change management process.
Lack of accountability is one of the factors that resulted in barriers to the change management process at Tesco. It is important to have everyone on the team, from upper management to the front line, involved in the transition. This will instill in them a feeling of ownership over the result as well as the significance of their contribution. Senior leaders may organize regular information sessions, ask for recommendations and comments, run anonymous surveys, and host town halls and the organization must make sure its doors are always open to promote engagement. Due to the lack of accountability, it is a challenging task for the organization to involve employees and individuals in the decision-making process (Hashim et al., 2021). Weak accountability results in poor decision-making processes and leadership in the organization. Poor leadership often leads to conflicts and low productivity on the work floor of the organization.
Insufficient resources are another factor that resulted in barriers to the change management process. Due to the shortage of digital resources, it is difficult for individuals at the senior level to continue with the decision-making process and leadership in the organization. The change management process involved the implementation of AI into the supply chain department of Tesco. However, a lack of knowledge of AI and inappropriate training have resulted in incorrect results and outcomes thus creating a barrier for the organization.
Leadership is one of the elements that allowed the organization to accomplish the change management process in Tesco. With proper leadership and mentoring of the employees, Tesco was able to achieve the goals and objectives of the change management process. In the initial stages of the change management process, employees were given proper training sessions regarding the use of AI in supply chain and inventory departments. Furthermore, the vendors and the suppliers were included in a discussion event where the individuals were illustrated regarding the positive impacts of the change management process (Zhao, 2021). The vendors and suppliers are also provided with training sessions regarding AI tools and resources. Within the accomplishment of the change management process, the organization has been able to manage positive impacts in its organization. With the implementation of AI in the supply chain and inventory management in the organization, Tesco has been successful in accomplishing its change management goals. Calculations are made by computers and relayed into Tesco's real-time order management system to modify the daily delivery quotas placed on suppliers. The system, which is hosted on an IBM System Z mainframe, handles daily stock orders totaling roughly £100m from thousands of vendors.
Tesco's upper echelons adopted a form of leadership called "participant democracy," in which employees have a say in company decisions. Leadership at Tesco inspires the staff, which in turn ensures that consumers continue to get high-quality service. The management of Tesco places a premium on having delegated authority within each division. The advantage of the democratic leadership approach is it allows the organization to gather different ideas and techniques from the employees during the decision-making process (Moccia, 2018). With different ideas, the organization can develop a smooth and effective decision-making process.
A disadvantage of the approach is it results in communication gaps and conflicts among employees of different cultures where the opinions of employees are considered where others are not. For example, the duty managers of Tesco are specialists in duty management and they make sure that all team leaders are completely educated, validated, and participatory (Mansaray, 2019). They also lead the workers in making daily decisions that support the functioning of the stores of the organization.
Strong evidence of good democratic leadership may be seen in high levels of employee engagement. Using this kind of leadership calls for shared decision-making between members of the group in Tesco. In a democratic setting, effective leaders actively seek out and consider the input of their team members. Members of the team experience psychological safety when they feel comfortable enough to speak their minds and contribute to the group's decision-making process openly and honestly. An environment of psychological security promotes creative problem-solving, fosters more teamwork, and may even reduce employee turnover. In a democratic system of government, employees are supposed to be able to choose among a wide range of policies and leaders. Groups should routinely get together to suggest gatherings where everyone contributes their thoughts. Team members may pool their knowledge to solve problems, and managers can put that knowledge to good use (Bhattacharya, 2021).
On the other hand, democratic leadership styles also lead to losses for Tesco if appropriate ideas and opinions are not considered in the decision-making process. This also leads to losses for the change management process in the organization. Moreover, offering employees rights in the decision-making process beyond the limits may lead to negative results such as showcasing authority and inappropriate leadership approaches by the employees in different situations (Cilek, 2019). Tesco has employees from diverse cultures. The diversity of the employees results in different perspectives on the decision-making process. Several employees may tend to participate in the decision-making process while others may isolate themselves from the process (Caillier, 2020). On the other hand, the change management process also faces barriers due to the diversity of employees in the organization. In several cases, it is difficult for leaders to convince employees and other stakeholders to participate in the decision-making process and the change management process in the organization. The organization needs to focus on the diverse range of employees while implementing the change management process.
Lewin’s change management model is one of the frameworks that is used by Tesco in implementing the change effectively. During the unfreezing phase, the focus is on raising consciousness about how the status quo, or the existing level of suitability, is limiting the organization. On the other hand, leadership needs to be precise and clear while raising consciousness among employees. The second step is the changing stage. Employees in this transitional stage are learning new routines, procedures, and mindsets.
The more ready they are, the quicker and simpler this phase will be. However several employees lack basic knowledge and skills which leads to poor mindsets and procedures among the employees. While it is important to provide workers with enough training on AI and tools, information, encouragement, and time as they adjust to the new norm. Finally, the freezing stage is enacted in the organization. Organizational procedures, objectives, structure, offers, or people are adapted to the new normal, and then the status quo is refrozen.
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