Tesco’s still evolving analytics programme has saved £100 million in annual supply chain costs.
Using four years of sales data, the supply chain management team run simulations of the performance of Tesco’s distribution depots. The results allow them to optimise stock levels.
Reduced stock alone has saved the supermarket giant £50 million, and is just one of the projects carried out by an analytics which that has grown five to 50 in the last six years.
Other schemes include regression testing to understand correlations between the weather and sales, and the use of algorithms to determine when prices should be lowered for produce that is approaching sell-by date.
Instructions for the latter are transmitted directly to handheld devices in-store, eliminating the guesswork that was formerly the prerogative of store managers.
The success of Tesco’s supply chain analytics has repercussions for operations in a variety of industries, including IT, logistics & transport, retail & FMCG, and purchasing & supply.