The Scottish Region of the Institute of Logistics and Transport visited Tesco's Dundee Distribution Centre on Tuesday 17 October 2006. The visit was hosted by Roger Shipton, the General Manager of the facility and began with a presentation giving the background details of Tesco and it's current position in the market.
Tesco is the largest supermarket group in the UK having a 30.4% share of the market, having grown from very small beginnings. The company was founded by the son of a Polish Jewish tailor, Jack Cohen, who began by selling groceries in London's East end in 1919 after serving with the RAF during the first world war. The Tesco brand first appeared in 1924 when Jack Cohen bought a consignment of tea from T.E. Stockwell and he created new labels by using the first three letters of the supplier's name and the first two letters of his surname to create the brand Tesco, with which we are familiar with today. The first Tesco store opened in 1929 in London and the company grew steadily. In 1948 Tesco opened it's first self-service store and it's first supermarket in 1956. Tesco's first superstore opened in 1968 and the first petrol station was opened in 1974. In Scotland, Tesco acquired the William Low supermarket chain in 1994 and converted 53 of the newly acquired stores to Tesco stores. Today it is expanding the number of its smaller Tesco Express and Tesco Metro convenience stores.
A view of the interior of the Distribution Centre.
© John G. Fender 2011
Tesco has a major overseas presence with stores in 12 countries, Czech Republic (35), Hungary (87), Poland (105), Irish Republic (91), Slovakia (37), Turkey (8), China (39), Japan (111), Malaysia (13), South Korea (62), Taiwan (6), Thailand (219). There are plans to open stores in the USA in 2007 and the company is planning further expansion in most of the countries it is active in.
In the UK, Tesco currently has 1,897 stores and these are served by a network of 27 distribution depots, of which two, Dundee and Livingston are in Scotland. There are some 17,000 people employed in the Distribution Depots, the largest having over 1,000 employees. Dundee has 432 employees and 91 drivers. It caters for around 4,000 grocery lines and has a weekly throughput in the region of 750,000 cases.
However, Tesco has announced plans to close both of the existing Scottish sites and replace them with a single new Distribution centre for Scotland in Livingston. This is due to the growth of the Scottish business and the location of the population served and the new site will be better located to serve the Scottish Market. This new Distribution Centre will cover 1 million square feet and when completed will be the biggest facility of its type in Europe.
The company has a fleet of 2,060 tractor units and 4,072 trailers and these vehicles cover some 7.7 million miles per week. Vehicles have a life in the region of 5 - 7 years before replacement. In Scotland the vehicle fleet is shared between Livingston and Dundee. Distribution work overseas is sub-contracted. A new venture is the use of rail for distribution work with a service being operated between Daventry and Grangemouth and containers then being taken by truck to either the Dundee or Livingston Distribution Centres. By using rail, Tesco is reducing the amount of CO2 emissions.
The first container that was transported by rail to Grangemouth, then by road to Dundee, being unloaded in the Distribution Centre.
© John G. Fender 2011
The party was given a guided tour of the warehouse and were able to see orders being made up for delivery to stores. A computerised system is used to produce the various orders for picking. Accuracy in picking the correct products and quantity is important and the use of barcode scanners simplifies the work. Thursdays and Fridays are the busiest days as stores stock up for people doing the weekend shopping. The visit was notable in that the first of the containers to have been transported from Daventry by rail was being unloaded. This new service is operated for Tesco by Stobart Rail and containers are taken by rail to W. H. Malcolm's Grangemouth terminal, then moved by lorry to Dundee or Livingston.
In the transport office detailed explanations of the scheduling and planning that goes into making sure that deliveries are made in the most efficient way. Planning is undertaken on a regional basis and aims at optimising trailer utilisation. The office also undertakes the sequencing of work. All vehicles are fitted with GPS systems and the use of "Isotrak" provides detailed operational control.
The Isotrack fleet management system is used to plan driver shifts and allocate work, monitor the daily plan and produce various management reports. Drivers have handheld terminals that are "docked" when in the vehicle and these are linked to an in-cab printer. These terminals are used to record the driver's activities and send messages to the drivers, for example changes to schedules or collections. Stores have "windows" for deliveries and depending on planning restrictions, deliveries can only be made between certain times at some locations, and at the time of the visit 91% of deliveries scheduled were on time. (The rest were still in course of being made). There is also a system to monitor driver's tachograph records and check for any infringements.
After the tour, members had the opportunity to ask questions on the operations whilst enjoying a buffet. Much of the discussion centred on the move to Livingston and the various challenges this has brought for management.
The Scottish Region would like to express its thanks to Roger Shipton, General Manager for permitting the visit and to Robert, the Duty Shift Manager and his colleagues, Paul, Izzy and Darren for the tour and detailed explanations. Thanks also go to Darren and Lawrence in the Transport office and to the various other members of staff who explained various aspects of the operation.
Report by John Fender.
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