Case Study: Award-winning online strategy for Tesco

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The launch of Tesco Direct in the autumn of 2006 was a key event in the development of multichannel retailing – the UK’s largest supermarket chain moving decisively into the non-food sector with an online offering. The success of the operation won Tesco the 2007 European Supply Chain Excellence Award for Retail & Distribution.

Tesco brought in Neil Ashworth from Woolworths to mastermind the launch of the service as director of supply chain at Tesco Direct.

Through Tesco Direct, customers have the choice of ordering online, by phone or in selected stores. Delivery options include two-hour slots for home delivery on a van, next day delivery by courier or the option to pick up from stores. Customers can schedule their Tesco Direct order with their grocery shop and have everything delivered at the same time.

The operation is based at a 202,000 sq ft warehouse at Daventry and uses Manhattan’sWMS and Supply Chain Intelligence systems. It operates as a fulfilment centre rather than a distribution centre as it fulfils customer orders directly, rather than shipping goods out to Tesco stores.

For Tesco Direct, operations development manager, Stephen Powell said: ‘’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.”

The European Supply Chain Excellence Award judges were particularly impressed by the way Tesco had ‘’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’’.

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