Competing Supply Chain: Tesco, Aldi, Lidl
Competing Supply Chain: Tesco, Aldi, Lidl
Competing Supply Chain: Tesco, Aldi, Lidl
Student’s Name
Institutional Affiliation
Professor’s Name
Course
Date
2
Tesco
An in-depth analysis of Tesco’s sourcing strategy depicts the adoption of a lean supply
chain in the company. The lean supply chain emphasizes the use of continuous improvement
activities that are directed at reducing waste and increasing the customers’ value (Koneckam
2016; Ferreira et al., 2017; Murray, 2019). These objectives are effectively outlined in Tesco’s
sourcing strategy. According to Tsinopoulos & Mena (2010), Tesco’s supply chain is based on
an overall objective to create value for its customers in exchange for their long-term loyalty. In
essence, this objective conforms with the main characteristics of a lean supply chain. The
characteristics of a lean supply chain as mentioned by Huxel and Gelashvili (2017), including
continuous improvement, waste reduction, and value creation. This is possible in Tesco through
Tesco also exhibits lean supply chain aspects in its sourcing strategy through its
established sourcing priorities. According to Tsinopoulos & Mena (2010), Tesco’s sourcing
priorities mainly focus on the company’s delivery cost, reliability of suppliers, and the quality of
goods supplied. These priorities evidence the concept of a lean supply chain in the company in
many dimensions. Leanness in this context seeks to optimize the performance of the company
through the utilization of available resources and a constant improvement of operations through
quality and waste reduction (Zahedi et al., 2020). Consequently, Tesco exhibits leanness in its
sourcing strategy via the establishment of a good working relationship with its suppliers
(Tsinopoulos & Mena, 2010). As suggested by Zhoe (2016), the value of a supply chain in
Aldi
Aldi’s sourcing strategy largely portrays lean supply chain management practices. To
begin with, the company has developed a long-lasting relationship with its suppliers to obtain
quality goods and services at affordable rates (Tsinopoulos & Mena, 2010). Additionally, the
company’s sourcing strategy is anchored on a business model which enables it to take advantage
of payment discounts and allowances. These advantages are transferred to the practical
realization of customers' value and elimination of waste as the main characteristics of the lean
supply chain ( Koneckam 2016; Murray, 2019). To some extent, however, Aldi's sourcing
strategy portrays agility. The concept of agility here involves focusing on flexibility and
(Çelikkol et al., 2021; Wehrle et al., 2021). In Aldi’s sourcing strategy, the agile practice is
evidenced by its decision to source 40% of its goods locally despite being able to source cheaply
internationally.
Lidl
The sourcing strategy in Lidl is structured on three concepts; simplicity and maximum
efficiency of the process, sourcing of high-quality products at the lowest possible prices, and
Pan-European bulk purchasing (Tsinopoulos & Mena, 2010). The company achieves these
concepts via buying or sourcing its supplies independently from local suppliers or buying on a
large scale internationally. All these aspects exhibit lean thinking supply chain management in
the company. For instance, sourcing high-quality goods and services are directly aligned with the
main characteristics of lean supply chain practices, which are to increase the value created for
customers in terms of price, quality, and supply timing (Nutburn, 2019). Consequently, the
4
company’s strategy to source its goods from local suppliers and internationally is directed at
Tesco, Aldi, and Lidl's lean thinking supply chain management approaches can be
evidenced by many factors in the companies' sourcing strategies. However, the primary factors
attached to their leanness in sourcing include the desire for the companies to cut their sourcing
costs, delivering costs, and sourcing quality services. Partial agility in Aldi's sourcing operations
can as well be linked to the company's flexibility and responsiveness to demand goods and
services and market sensitivity in terms of the company’s concern to work collaboratively with
its suppliers.
Tesco
Tesco's distribution strategy combines lean and agile supply chain management concepts
to achieve its objectives. While the lean supply chain in the distribution strategy helps the
company to add customers’ value and to reduce waste, the agile supply chain helps it to provide
timely access to market situations, consumer expectations, and competition (Awasthi & Omrani,
2019; Ariadi et al., 2021). Tesco utilizes innovations such as factory gate pricing to achieve
cheaper transport costs and efficiency in the distribution channel (Tsinopoulos & Mena, 2010).
Additionally, the company uses point-of-sale and retail-ready packaging systems to simplify and
speed up the distribution channel. These initiatives point out the company's desire to increase
operational efficiency and reduce the lead time with which its stores and customers receive
expected goods and services (Akdeniz, 2019). They also indicate the company’s leanness in the
distribution channel in terms of cost reduction, waste reduction, and emphasis on quality.
5
separation of its sore formats. Ideally, Tesco operates four store formats, including extra
superstore metro and express, each targeting a different group of customers with different desires
(Tsinopoulos & Mena, 2010). The separation of these stores in terms of customer groups and
desires enables the company to adapt to the distribution needs of each store correctly and to
eliminate management challenges in the distribution channel (Surahman & Gunadi, 2018). The
agile supply chain management concept also manifests in Tesco's distribution strategy through
its use of technology to manage logistics. For instance, Tsinopoulos and Mena (2010) intimate
that Tesco uses an advanced shipment notification to inform sites about an upcoming shipment
between stores and other distribution channels. This exhibits responsiveness and market
Aldi and Lidl’s store formats exemplify lean supply chain principles in the companies.
According to Tsinopoulos & Mena (2010), Aldi’s stores are designed to cut unnecessary costs
that are accustomed to supermarkets. The company has eliminated many services that do not add
value to the customers such as banking, pharmacies, bagging clerks, and check cashiers. Lidl on
the other hand has opted to reduce its distribution cost by preferring out-of-town locations for its
via a company’s focus on the reduction of distribution costs and achieving values for the
customers.
The product portfolio in Aldi and Lidl portrays agile supply chain management concepts.
Dubeauclard et al. (2015) describe agility as a concept of the supply chain that is concerned with
with minimum and well-known products, the companies are exhibiting flexibility to change from
one product to another. Tsinopoulos & Mena (2010) also mentioned that products in the Aldi and
Lidl are sold in the shortest lead-time possible to maintain their quality. This decision also
exhibits agility in the distribution of the products because the companies are concerned with the
Aldi and Lidl’s distribution strategies largely portray agile supply chain management
concepts. According to Chan et al., (2017), agile supply chain management concepts emphasize
a dynamic supply chain that can respond quickly to changes in the business environment. In
conformity with this determination, Aldo and Lidl’s distribution strategies are structured in a
way that the companies can recognize small-scale operations and can directly deal with
customers to know exactly when to change their operations. Watt (2019) on the other hand,
mentioned that agility in the supply chain is market-sensitive whereby companies focus on
manifested in Aldi and Lidl’s distribution strategy because the companies have eliminated many
The agile supply chain management practice is widely used in companies' distribution
strategies. For instance, in Tesco, agility was experienced when the company separated its
operating stores to adapt to the prevailing environment and to eliminate unnecessary distribution
costs. In Aldi and Lidl, agility in the supply in the distribution strategy is manifested by market
sensitivity. The companies' objectives are to maintain manageable distribution networks relative
to their sizes and operations in the market. However, Tesco combined its agile practice with lean
Thinking to effectively reduce distribution costs across its distribution network, which is spread
References
Akdeniz, S. (2019). Is effective supply chain management the key to customer value? -Tesco F
https://www.researchgate.net/publication/335040157.
Ariadi, G., Surachman, Sumiati, Rohman, F., Surachman, S., & Sumiati, S. (2020). The effect of
https://doi.org/10.5267/j.msl.2020.6.045
Awasthi, A., & Omrani, H. (2019). A goal-oriented approach based on a fuzzy axiomatic design
Çelikkol, S., Yikilmaz, I., Başaran, R., & Sağbaş, M. (2021). Agile Supply Chain Management.
https://www.researchgate.net/publication/351416661_Agile_Supply_Chain_Management
Chan, A. T. L., Ngai, E. W. T., & Moon, K. K. L. (2017). The effects of strategic and
manufacturing flexibilities and supply chain agility on firm performance in the fashion
https://doi.org/10.1016/j.ejor.2016.11.006
Dubeauclard, R. Kubik, K., & Nagali, V. (2015). How agile is your supply chain? McKinsey &
Company. https://www.mckinsey.com/capabilities/operations/our-insights/how-agile-is-
your-supply-chain
8
Ferreira, P. O., Francescki, A. S. N., Melo, D. M., Silva, J. R., & Reichert, L. R. (2017). Lean
Thinking as support to the integration of Service areas. Journal of Lean Systems, 2(4): 2-
12. https://redib.org/Record/oai_articulo1394842-lean-thinking-support-integration-
service-areas.
Graham, D, (2019). Lean Warehousing and Distribution Benefits Your Company, Customers,
https://www.lean.org/the-lean-post/articles/lean-warehousing-and-distribution-benefits-
your-company-customers-and-supply-chain/
Huxel, P., & Gelashvili, E. (2017). Use of Lean and Agile Commercial Supply Chain Practices
http://www.diva-portal.org/smash/get/diva2:781731/FULLTEXT01.pdf.
Konecka, S. (2016). Lean and Agile Supply Chain Management Concepts in the Aspect of Risk
https://www.logforum.net/pdf/6_4_3_10.pdf
https://www.liveabout.com/lean-supply-chain-management-2221274.
Nutburn, M. (2019). The benefits of a lean supply chain. The British Assessment Bureau.
https://www.british-assessment.co.uk/insights/benefits-lean-supply-chain/
Rashad, W. & Nedelko, Z. (2020). Global Sourcing Strategies: A Framework for Lean, Agile,
Surahman, S. & Gunadi, S. (2018). Managing The Agility of the Supermarket’s Supply Chain
https://www.ijstr.org/final-print/aug2018/Managing-The-Agility-Of-Supermarkets-
Supply-Chain-Using-Inventory-Management-And-Ict-Systems-Approach.pdf
Tsinopoulos, C. & Mena, C. (2010). Competing Supply Chain Strategies Tesco, Aldi, and Lidl:
Watt, N. (2019). Supply Chain Management – The Agile Supply Chain. Ivory Research.
https://www.ivoryresearch.com/samples/supply-chain-management-the-agile-supply-
chain/.
Wehrle, F., Remschel, S., Kaesser, D., & Oster, O. (2021). Mitigating Risks through Agile
https://www2.deloitte.com/content/dam/Deloitte/de/Documents/risk/Deloitte-Agile-
Supply-Chain-Management-ENG.pdf.