As a major retail giant, Tesco faces immense pressure to maintain cost efficiency, improve product availability, and stay competitive in a market that is becoming increasingly cost-sensitive and consumer-driven. To meet these challenges, Tesco sought to optimize its procurement processes through partnerships with experts in procurement and supply chain management. This led them to engage Tata Consultancy Services (TCS), a global leader in IT services, consulting, and business process outsourcing.
The Procurement Optimization Initiative with TCS:
Tesco, like other large retailers, faced substantial procurement costs due to its global sourcing network and
the complexities of dealing with thousands of suppliers.
The need for cost containment while maintaining product availability and quality was critical.
Tesco managed relationships with a large and diverse pool of suppliers, many of which were geographically dispersed. Managing and optimizing these relationships efficiently was a key challenge. Inconsistent supplier performance across regions led to delays, inventory management issues, and quality inconsistencies.
Procurement processes were somewhat fragmented across different regions and product categories. There was a need for standardization to streamline operations, reduce duplication, and optimize procurement costs.
As the UK’s largest supermarket chain, Tesco faced intense competition from both traditional rivals (like Sainsbury’s and Asda) and newer entrants like Aldi and Lidl, which often operated with lower overhead costs and highly efficient supply chains.
Procurement Optimization with TCS
TCS brought its deep global sourcing experience to Tesco’s procurement operations. By leveraging its supply chain network and global supplier base, TCS helped Tesco negotiate better pricing and secure favorable contract terms with suppliers around the world. TCS also assisted Tesco in sourcing products from low-cost regions, such as Southeast Asia, Eastern Europe, and India, which allowed Tesco to reduce procurement costs significantly. Economies of Scale: Through its large network of suppliers, TCS helped Tesco consolidate orders and increase bulk purchasing, reducing per-unit costs and enhancing Tesco’s competitive position.
TCS helped Tesco implement Supplier Relationship Management strategies, which improved communication and collaboration with suppliers. This technology-enabled approach led to faster decision-making, reduced lead times, and more reliable deliveries.
