3.2 Sea Freight
With the geographical expansions, sea freight offers a cost effective mode of operation. The service however is slow but there is easy and quick availability of service due to the regular routes and service offered. There is a delay caused in this mode of transportation as it involved additional investment in developing port infrastructure for loading and uploading of goods.
3.3 Road Freight
Road freight has to be put in place as a result of the strategic decision to ensure a balance between speed and responsiveness of the inventory management. Road Transport offers a fast and regular service but this can be a relatively expensive mode of transportation. This can be used in combination with roll on and roll off ferry services to cover intercontinental journeys.
3.4 Transportation Model for International and National Operations
For the national distribution of goods, Tesco has been following intermodal transportation policy using rail, road and canal as means of transportation. It follows a hub and scope model where in central warehouses are maintained and through them the goods are sent to the local stores. Inventory at both the warehouse and local stores is tracked by a central processing unit. Inventory reports are generated on a real time basis in the local stores and in case of inventory falling under safety limits, warehouse is informed and the stock is dispatched. Freight management system is put in place which makes sure that the least cost incurring transportation is selected. [Bearnon, B.M (1998)]
For the international operations, Tesco should look for standardizing their suppliers on an international level. A similar hub and spoke model can be implemented. The warehouses can be suitably located near the sea shore as dock units to ensure that the international supplies can be maintained on a relatively cheaper mode of sea transport. The choice of the dock units need to be made depending on the commercial and labour laws to ensure maximum profitability of the entire supply chain. Central warehouses can be maintained depending upon the location of the final local stores. An extended hub and spoke model can be realized with the goods being transferred from the dock units to the central warehouse and then finally to the end stores.