International Logistics and Supply Chain Management

International Logistics and Supply Chain Management
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Table of Contents TOC \o "1-3" \h \z \u 1.0 Introduction PAGEREF _Toc500381142 \h 32.0 Local Sourcing PAGEREF _Toc500381143 \h 32.1 Benefits of Local Sourcing PAGEREF _Toc500381144 \h 32.2. Limitation of local purchasing PAGEREF _Toc500381145 \h 63.0 Global Perspective PAGEREF _Toc500381146 \h 73.1 Benefits of Global Purchasing PAGEREF _Toc500381147 \h 73.2 Limitations of Global Purchasing PAGEREF _Toc500381148 \h 114.0 Conclusion PAGEREF _Toc500381149 \h 12Bibliography PAGEREF _Toc500381150 \h 13
International Logistics and Supply Chain Management
1.0 Introduction
The products that are bought in a supermarket arrive there as a result of a series of numerous trading relationships. Supermarkets in the United Kingdom, both local and international, compete in an environment of global trade, and this includes products that are sourced from the international market. For instance, the Pilau rice could have been sourced from India while the Chicken Tikka from Thailand, while other spices could have arrived from other Asian countries. While these products are not produced in the UK, studies have revealed that the sourcing strategies may lead to scandals, especially when products are sourced from the international market (Winterman, 2013). This paper seeks to analyze international logistics and supply chain management in relation to a British supermarket known as Tesco. Additional element to be analyzed is the domestic and international purchasing analysis and also to offer recommendations that can enable British supermarkets to be successful in both domestic and international markets.
2.0 Local Sourcing
2.1 Benefits of Local Sourcing
Tesco PLC is a British multinational supermarket and the largest retailer across the world in terms of profits, and the 9th biggest retailer in terms of revenues. Apart from being the biggest retail chain in the UK, Tesco has numerous stores that are distributed across Europe and Asia. Since the 1990s, Tesco has managed to diversify geographically into numerous segments like retailing of electronics, clothing, furniture, books, petrol, toys, financial services, internet services, and telecoms (Butler & Kollewe, 2016). Tesco is the largest supermarket chain in the UK, with more than 32% of market share. It is a comparable to the situation in the U.S. where the market is dominated by Wal-Mart. Tesco is currently the biggest private institution that employs people in the European Union. When it comes to local purchasing, there are numerous debates about whether Tesco is beneficial or harmful to the society and shoppers. Nevertheless, studies have revealed that there are numerous benefits for this British supermarket, particularly when it comes to local purchasing.
Local sourcing is considered as an increasing trend that has surpassed the global sourcing that has been favored by numerous retailers in the past. Currently, retailers try to balance global sourcing which offers the huge volume that is needed by the retailer, and domestic sourcing that meets the ethical and environmental demands of the customers or products that are sourced closer at home. Local sourcing for grocers is becoming a significant sales strategy since goods that are locally produced make up a huge balance of retailers’ businesses. For Tesco, the management team has put emphasis of local sourcing to ensure that it fulfills the demands of its customers (tescoplc.com, 2017). However, although retailers may decide to support their local suppliers, studies have revealed that there will be little difference especially when there is a huge price difference between the local and international products. This implies that the current business climate requires that domestic products remain cost effective through which a retail institution can operate.
To start with, Tesco enjoys economies of Scale. The expansive size of this retail chain institution implies that it can profit by economies of scale in regions, for example, mass purchasing, transportation, marketing, conveyance, distribution, and innovation. This implies that economies of scale enable the supermarket to earn higher yields and this results to lower cost of doing business as well as cost of operations. The second advantage of local purchasing is diversification, which has played an instrumental role in enhancing the rapid expansion of the retail chain (McCurry, 2014). The extensive size and budgetary assets of Tesco implies that it has possessed the capacity to diversify into different items, for example, bulk purchases of mobile phones, credit cards, insurance, petroleum, banking, and other retail products. In these local regions in the UK, Tesco has expanded the level of competition and this has enabled its customers to have access to cheaper products.
Another advantage of local purchasing is associated with the fact that Tesco is able to satisfy the minimal standards that meets the needs of the customers. Tesco has developed and has been so effective in light of the fact that apparently, they have been fruitful in addressing the necessities of shoppers. They offer great quality and affordable products that do not exceed the costs of operations. It is important to note that in the previous couple of years, Tesco has expanded its market base (Darby, 2011). This would not have been possible if it had not been able to meet the demands of its customers. Individuals recognize what is in store when they visit Tesco since there is a reliable supply of products and services in its network. It additionally spares time since individuals can do all their shopping at one place instead of having to visit all the other outlets to make separate purchases.
Domestic sourcing provides clear cost saving advantages. Studies have revealed that supply chains are by and large shorter when it comes to dealing with local producers, which prompts more predictability and certainty of communication and delivery times, especially for those who need immediate delivery. In that capacity, delivery costs are also ordinarily lower. Domestic providers can likewise be more receptive amid times of appeal when longer global lead times can make it harder to respond (Davey & Holton, 2017). For instance, Emma Brooks who is the director of the Chartered Institute of Purchasing and Supply (CIPS) said that domestic suppliers can act rapidly, expanding the marketing speed yet additionally take into account some agility. From the perspective of Tesco, the management ensures that domestic products and marketing enables the institution to gain a competitive advantage over its competitors. Amid the terrible climate in the course of the recent past, retailers have ensured that they promote local purchasing in order to overcome the global competition.
Tesco also benefits due to the fact that it is one of the largest employers in the UK. Since de-industrialization, there has been a deficiency of unskilled laborers. To some degree, Tesco has possessed the capacity to offer new sorts of occupations inside its market business (Wilson, 2012). In addition, Tesco offers flexible working hours as well as the possibility for individuals to work in an environment that enables them to bring their children to the workplace.
2.2. Limitation of local purchasing
Apart from the benefits which Tesco attains by dealing with the local products, evidence suggests that there are certain limitations of avoiding global products. To start, dealing with the local products usually limits the ability of Tesco to offer a wider choice of products to its customers. This implies that at the long run, Tesco may suffer a competitive disadvantage since consumers may decide to relocate to companies that have a diversified set of products (McCurry, 2014). The predominance of the company implies that a very few number of customers would be satisfied with the products sold by the...