Tesco Logistics for Offshore Management

Whether an organization is small, medium, or large, it should operate in an organizational structure that is well defined. A well-thought business environment focuses on reporting relationship and supports open communication that result in an efficient workflow process. There are various organizational structures found in companies, but only four are widely used. First, we have the functional structure, it is commonly used and it specifically divides the company into specialties; these specialty units can be logistics, sales department, and customer service. The divisional structure allocates their leadership to different types of products. The matrix organizational structure exposes their employees to multiple bosses. Tesco falls under the hierarchical structure. This structure divides positions and duties into several parts to ensure workflow is efficient and smooth. The senior authorities have maximum authority and responsibility. This report is going to dwell on the logistics of Tesco plc and the implications of offshoring it to a region that they have never operated before.

Introduction

Whether an organization is small, medium, or large, it should operate in an organizational structure that is well defined. A well-thought business environment focuses on reporting relationship and supports open communication that result in an efficient workflow process. There are various organizational structures found in companies, but only four are widely used. First, we have the functional structure, it is commonly used and it specifically divides the company into specialties; these specialty units can be logistics, sales department, and customer service. The divisional structure allocates their leadership to different types of products. The matrix organizational structure exposes their employees to multiple bosses. Tesco falls under the hierarchical structure. This structure divides positions and duties into several parts to ensure workflow is efficient and smooth. The senior authorities have maximum authority and responsibility. This report is going to dwell on the logistics of Tesco plc and the implications of offshoring it to a region that they have never operated before.

Scholars in Organization Culture

Andrew Pettigrew is widely attributed for having introduced the organizational culture concept to the field. He had offered a number of insights on processes that are linked to the organizational culture and he equated them to the birth of organizations. The culture was earlier described as a combination of belief, myth, ritual, and identity, this definition is still used to date. Hofstede studied cultural differences that influenced the organization performance. The culture was defined as the way things are done in an organization by Deal and Kennedy. They later offered models of cultures based on different organization prototype. Other scholars that dwelled on expounding organizational culture are Schein, Martin, and Smircich.

Performance management is an integrated approach aimed towards delivering success to the organization by improving other units performance. It majorly supports that not capital in an organization, but people to be the ones responsible for the competitive advantages. Performance management purposefully transforms the raw ability of the employees into achievements by removing obstacles as well as rejuvenating and motivating them. The competitive capacity in an organization can be elevated by managing and making the people achieve more.

The organization culture can create a negative impact on the logistic unit that has been offshored. To facilitate that, the performance management and the organization culture have to be linked. Kandula emphasizes on the good performance to that that emanates from a good strong culture. If differences are created in the organizations that do business together or the units within, then their strategies would not yield the same results. Despite Tesla being a good performer, having a negative culture will make their strategies in logistics get poor results in an environment which they are unfamiliar with. Weak cultures demotivate the best performing employees and the underperformance may lead to low achievements. The organizational culture plays a direct role in performance management.

Outsourcing and Offshoring

When an organization outsources, they hand over a section of their business to a specialist who is not within their business. The specialist will be responsible for the management of the section of the organization. Companies majorly outsource for the following reasons; to save on costs, for faster returns in a short time, business continuity, and for improvement in efficiency. Usually, the main objective underlies in the streamlining of the business processes. Outsourcing can either be across the street or the globe. On the other hand, offshoring requires that a business is moved to a different environment. The two processes are independent meaning a manager can outsource without offshoring.

Outsourcing

Advantages

Swiftness

In many cases, the tasks that are outsourced include those of the vendors who are specialists in their areas. Many times, the persons have certain equipment and technical expertise better than the ones of the organization that is outsourcing them. For instance, Tesco would consider outsourcing from an organization that has better tools. Owing to the expertise level that is associated with the organization providing the services, completion of tasks is much easier and faster, coupled with quality and better output.

Concentration and Focus

By an organization opting to outsource, they end up concentrating on their main processes and pay less attention to the supporting ones. Through outsourcing, firms such as Tesco are then in a position to have enough time to strengthen their main business and concentrate on delivering on their primary goals and objectives.

Sharing of Risks

By outsourcing certain components of the business, the firm gets a chance to shift liability and responsibility to the outsourced vendor. Given that the outsourced vendor is specialist, they are in a position to plan and have a better mechanism in place for risk mitigation.

Helps in reducing the Operational Costs

By outsourcing from a vendor, organizations often end up reducing their fixed and variable costs. When one outsources they are not obliged to hire a full house and in fact can only hire individuals who are particular to their needs. Through outsourcing, recruitment and operational costs can be reduced to a great extent.

Disadvantages

Risk of Sharing Confidential Data

As much as outsourcing is an excellent idea, it poses some risks to an organization especially when the organization outsources HR, payroll and recruitment services. During these processes, confidential information is often given and may be at risk to the third parties.

Having the Deliverables in Synch

While outsourcing, one of the biggest challenges that organizations face is getting the appropriate partner (Rochester and Rochester, 1995, p.81). Getting the appropriate outsourcing vendor will ensure that problems such as stretched delivery time frames, low-quality output and wrong categorization of responsibilities are taken care of. When working alone as an organization, regulation of the factors may be much easier as opposed to instances where one is working with an outsourced vendor.

The problem of Hidden Costs

Even though most organizations find outsourcing to be cost-effective, there are always hidden costs that are involved. Most of the hidden costs emerge when signing a contract across international borders.

Lack of Customer Focus

When outsourcing for certain elements of the organization, it is advisable not to think that it is your organization alone that is using the services of the vendor. An outsourced vendor may be providing services to many other organizations. In such instances, the vendor may end up not completely focusing on the needs of the company and the task at hand as may be required.

Offshoring

Advantages

Economies of Scale

By offshoring, a company ends up setting some of its operations abroad and this helps in capitalizing on the comparative costs advantages on labor and the economies of scale as well. In most cases, companies outsource from countries that have a low cost of doing business. Therefore, the variable costs are often low making most companies seeking offshore services to realize a cost savings of up to 70% in some instances (Roza Van den Bosch and Volberda, 2011, p.319). The cost advantages that offshoring presents make companies take to enter into negotiations for volume discounts and diversification of positions.

Close Collaboration

Through offshoring, a company such as the Tesco will have greater control due to closer physical collaboration. In fact, in instances where there are shared space collaboration, there is a lot of work that can be delivered without having filters or delays that are linked to technology (Ellram, Tate, and Petersen, 2013, p.16). Even though there is software that allows the clients to see the work of outsourcing partner, issues of latency may end up compromising the benefits of real-time analytics.

Better Working Governance Policies

Offshoring can be beneficial to firms especially those that invest in economies that grant certain special exemptions and incentives to the companies that invest in their economy. Some of the benefits that the firms offshoring may enjoy include tax exemptions and easy access to affordable credit hence boosting their business.

Disadvantages

While offshoring, there are challenges that are presented and mostly include unemployment, the cultural and social differences and security issues

Cultural and Social Differences

Even though offshoring may be preferred due to its immense benefits, it is worth noting that the client has to be immersed in the culture and social practices of the host country. The impact may be negative as communication barrier may arise hence impeding productivity. Different from outsourcing, time zone differences are likely to work against the offshoring company as in some instances delays will arise due to unavailability of manpower.

Security Concerns

At any time that one is sharing, transmitting data to another party, there is always a chance that security breach and data integrity issues will arise. In cases where data is shared in collaboration, issues of data transfers will emerge.

Type of Information that Tesco Need to Adapt to Manage Offshoring

Information on the Likely Impact on Organization

For Tesco to succeed in offshoring plans, the firm will have to create a high level of clarity and communication from the leadership concerning the effect that the plan will have on the employees at all levels. There is need to have diverse representations and communicate the importance of such cases. It is never advisable to have leaders from the offshore location being the sole executives or managers. When the information is communicated, the impacts of friction and rivalry, as well as negative competition from staff members, are reduced.

Information on the Working Technologies

Tesco needs to get the information about the best multiple technologies that work for the organizations as a way of managing any form of virtual communication. It is necessary to be clear on the appropriate technologies in place and the situational limitations on the use of technology and accompanying infrastructure. For instance, whether it is advisable for employees to stay long enough to keep tabs on the other people from the other locations, maybe fellow employees or even relatives.

Reference List

Ellram, L.M., Tate, W.L. and Petersen, K.J., 2013. Offshoring and reshoring: an update on the manufacturing location decision. Journal of Supply Chain Management, 49(2), pp.14-22.

Rochester, J.H. and Rochester, H., 1995, September. Advantages and disadvantages of outsourcing. In Professional Communication Conference, 1995. IPCC’95 Proceedings. Smooth sailing to the Future., IEEE International (pp. 77-82). IEEE.

Roza, M., Van den Bosch, F.A. and Volberda, H.W., 2011. Offshoring strategy: Motives, functions, locations, and governance modes of small, medium-sized and large firms. International Business Review, 20(3), pp.314-323.