The European Supply Chain Excellence Awards 2007, Retail & Distribution Winner: Tesco direct

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The Retail & Distribution category is always hard-fought in the ESCE Awards, and this year was no exception. Retailers live and die by supply chain effectiveness – a product out of stock, whether at the shelves of a conventional store or in the warehouses of an internet or catalogue operation, is in all probability a sale not made, and unsurprisingly many retailers and their partners believe they show excellence in this area.

We found three of this year’s entries to be significantly more advanced than the rest of the field, and so our apologies to the other five which we did not follow through to the final stages of judging. But to be shortlisted at all in these Awards is no mean accolade, so mention must be made of Arco, who have consolidated distributed branch stockholdings onto a single national distribution centre in short time without losing a day’s trading; Booker Group, the food distributor, responding to customer demands on choice, price and service; Dairy Crest with a considered range of technical improvements to fleet and warehouse operations; Co-operative Retail Logistics, with a major rebuild of their logistics infrastructure; and Premier Farnell, the electronics component distributor, for a range of initiatives ranging from Internet development to trade expansion into China. All these entries were worthy of their place in the finals.

Of the three entries considered in greater detail, Brammer UK, a UK distributor of industrial engineering products, impressed the assessors with its business model involving a strategic shift from being merely a spares supplier to a provider of ‘Maintenance, Repairs, Operations solutions’ helping organisations reduce their MRO costs. But the transformation is still in its early days, and so far the new strategy is not optimised across Europe.

Homebase’s entry illustrated perfectly the contribution a supply chain can make to an organisation when things aren’t going too well. Faced over three years with steady revenues but a 50 per cent drop in profits, it was incumbent on the supply chain to do something, without spending any significant capital. Homebase took up this challenge at every point from the working practices of Chinese suppliers onwards. The judges couldn”t give this entry the top Award, but it won the ‘Innovation’ category.

The winning Retail entry this year was therefore that from Tesco Direct, which the judges described as ”way out in front”. This non-food, multi-channel (order by website, instore or phone, and either delivery to home or workplace, or collection from store) is a new operation, only trading since September 2006 and in such circumstances the judges would often feel cautious about making an Award to an organisation in its formative stages. But with revenues already around €290 million, there is really nothing tentative about this entry. The judges were particularly impressed by the way Tesco have ”used and leveraged everything they can from existing supply chains and the people they’ve grabbed, and motivated them to ask how they can really make this operation perform to world class status”.

For Tesco Direct, operations development manager, Stephen Powell comments ”From a truly standing start wherein even the development team wasn’t in place at launch, a completely new supply chain, providing a true multi-channel capability, has been created. Many elements have been implemented elsewhere in this sector but what makes this achievement unique is the scale, degree of business integration and complexity of the supply chain challenges – notably, the integration of three warehouse management solutions along with payment processing, order management, publishing, asset management and rich data systems. This is testament to the hard work and dedication of the Tesco Direct team and its key partners, externally and internally”.

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