Understanding Inventory Management Strategies of Fresh Food Sector in the UK: The Cases of Tesco & ASDA

Understanding Inventory Management Strategies of Fresh Food Sector in the UK: The Cases of Tesco & ASDA

Inventory management is one of critical activities for successful business. In case of fresh food, shelf life is comparatively short and distribution processing is very complicated and particular. For proper health, it is very important to consume fresh food. Therefore, consumers always attempt to purchase the best items in grocery stores, and they tend to be quite sensitive and changeable in this regard. A number of retailers manage based on supply chain management to respond promptly to the circumstance change. The purpose of this research is to determine, from a supply chain perspective, why product shortages occur in the fresh sector. Furthermore, we investigate the inventory management strategies of two major retailers in the UK, which are Tesco and ASDA, via case studies. There are many possibilities about the cause of stock occurrence in respect of food supply chain, however major four factors are considered such as procurement, forecasting customer demand, information system, and logistics. Many retailers adopted the integrated systems for effective inventory management. In order to control efficiently the three critical elements(cost, customer service and efficiency), which are important factors when a company introduces a new system or a manager decides inventory level, Tesco settled down the Oracle Retail Warehouse Management System and ASDA adopted the CLASS tool from Cirrus Logistics. The manager should understand the concept of "switching cost" and the risk of "lock-in". When the costs of switching from one brand of technology to another are substantial, users face lock-in. The manager needs to take a long-term view towards the problem. It is one of appropriate ways for managers to use the Benefit-Cost analysis(BC analysis) or the Cost-Effectiveness analysis when the managers analyse the relationship between cost and efficiency(or customer satisfaction).

Inventory management is one of critical activities for successful business. In case of fresh food, shelf life is comparatively short and distribution processing is very complicated and particular. For proper health, it is very important to consume fresh food. Therefore, consumers always attempt to purchase the best items in grocery stores, and they tend to be quite sensitive and changeable in this regard. A number of retailers manage based on supply chain management to respond promptly to the circumstance change. The purpose of this research is to determine, from a supply chain perspective, why product shortages occur in the fresh sector. Furthermore, we investigate the inventory management strategies of two major retailers in the UK, which are Tesco and ASDA, via case studies. There are many possibilities about the cause of stock occurrence in respect of food supply chain, however major four factors are considered such as procurement, forecasting customer demand, information system, and logistics. Many retailers adopted the integrated systems for effective inventory management. In order to control efficiently the three critical elements(cost, customer service and efficiency), which are important factors when a company introduces a new system or a manager decides inventory level, Tesco settled down the Oracle Retail Warehouse Management System and ASDA adopted the CLASS tool from Cirrus Logistics. The manager should understand the concept of "switching cost" and the risk of "lock-in". When the costs of switching from one brand of technology to another are substantial, users face lock-in. The manager needs to take a long-term view towards the problem. It is one of appropriate ways for managers to use the Benefit-Cost analysis(BC analysis) or the Cost-Effectiveness analysis when the managers analyse the relationship between cost and efficiency(or customer satisfaction).