Initially under Cohen, TESCO sailed on the principle of "Pile it High, Sell it Cheap�[ Corina, M (1971)]. The idea was inspired from the USA retail format where bulk procurement was done resulting in low cost and thus better profit realization. However, with the changes in macro environment and increasing competition from other retail stores, there was decrease in profit margins and the company was left with tarnished brand image. Hence under leadership of MacLaurin, who succeeded Cohen, TESCO decided to bring in fundamental, radical and dramatic changes in the business operations and a business re-engineering was done with a focus to build an effective and efficient supply chain aided with the innovative usage of technology.(Tescocorporate.com, History)
Currently, Tesco operates both local and global sourcing. There has been continuous evolution in the distribution and operation strategy of Tesco which can be split majorly into four phases. First was the time when there was direct delivery from the suppliers to the stores, this transformed into centralized regional distribution system as the second move in the late 1970's. The third move was a composite distribution strategy in the late 1980's and in the 1990's it was the vertical collaboration in the supply chain as the fourth move.
Under its vertical collaboration strategy, the focus has been to streamline the supply chain processes with the usage of technology and sharing of information across the supply chain to build an effective and efficient supply chain. Sharing of information with the suppliers started in 1997 with the