Case Study 6.2 - Tesco

1-      What benefits does Tesco’s information exchange offer to the retailer and its suppliers?

Tesco information exchange (Tie) allows combining retailer’s knowledge with product knowledge of suppliers and shift the responsibility for managing products to the relevant suppliers. Tie allows suppliers to have better understanding of their specific product lines, as for once suppliers join Tie, they will get access to the Tie web site and view daily electronic point-of-sale from Tesco stores. As Tie allows suppliers monitor changes almost in real time and thus having more time to react, the retailer will get much better product availability and reduction in inventory.   

2-      What differences have the use of Tie added over the original EDI system?

There are two differences between EDI and Tie. First difference is that EDI is a one way data exchange while Tie is two way. This two way exchange data resulted in the supplier being more involved in the supply chain. In addition, data could be processed and analysed to provide information regarding the sales performance from different aspects such as TV region, distribution centre or individual store which effect promotions.

Second differences, Tie has a promotion management module which allows retailers and suppliers to collaborate in all stages of the promotion (initial commercial planning, supply chain planning, execution and final evaluation).

3-      Discuss reasons why only two of Tesco’s suppliers have fundamentally altered the way they work as a result of Tie?

There are several possible reasons why most suppliers did not fundamentally change their way of work.

A-     Suppliers may be providing products to other retailers who may not be using a dual way exchange system as Tesco does. So, suppliers have to keep using the same work line to satisfy all their retailers.

B-      Retailing is a traditional industry; therefore suppliers have to have their own work line that matches the needs for the majority of the retailers.

C-      Processing and analysing the Tie exchange data does not necessarily require a fundamental change in the way work is done. It may require a small change or a better understanding for the market demand only.