Tesco UK food department
a.) Legislative risks: The decision to provide healthier food by labeling the ingredients on the packages to include the calories, sugar, fat, sodium, and saturated fat content needs to also comply with the U.K. food and labeling law. According to the Department of Food and Nutritional Sciences, The University of Reading, "In most cases, ingredients have to be listed in weight descending order determined as at the time of their use in the preparation of the food. This is commonly referred to as the 'mixing bowl stage'. The following exemptions are however permitted" (A Guide to UK Regulations, 2011)
Water and volatile products used as ingredients have to be listed in order of their weight in the finished product. The weight of water is calculated by subtracting from the weight of the finished product the total weight of the other ingredients used.
If an ingredient is reconstituted from concentrated or dehydrated form during preparation of the food, it may be positioned according to its weight before concentration or dehydration.
Where a food consists of, or contains, mixed spices or herbs and no particular spice or herb predominates significantly by weight, those ingredients may be listed otherwise than in descending order of weight if in the case of a food which consists entirely of such mixture, the heading of the list of ingredients includes or is accompanied by the words "in variable proportion" or other words indicating the nature of the order in which the ingredients.
The difference between legislation and regulation is often a difference between the words compliance and oversight. The business must comply with the legislation that the regulatory agencies use as the basis of oversight duties on business activity. Therefore, the regulatory requirement is for Tesco to comply with these regulations given the move to healthier and more desirable foods. Foods sold that are heavier than others within the composition must be listed before the lighter foods, even if the heavier foods are not as healthy as the lighter foods.
Regulatory Requirements: Tesco has to comply with the current regulatory framework that oversees the food and drug operations in the U.K. According to CSPI Reports: International (1998), "Although specific legislation addressing functional foods does not exist in the United Kingdom, medicinal claims on foods are specifically prohibited. The UK, like the U.S., draws a dichotomy between foods and medicines. Medicines must be licensed and must fulfill pre-market approval requirements to obtain such licenses (a narrow exception is made for herbal products that are minimally processed and do not make health claims). It is important to note that the term "health claims" has different meanings in the U.S. And the UK. In the UK, the term "health claims" refers to claims that a food has "specific health benefit. In the UK, the Ministry of Agriculture, Fisheries and Food (MAFF) has authority to draft regulations for foods, with enforcement responsibilities delegated to local trading standards officers (TSO) (or environmental health departments of local authorities); drug regulation and enforcement, including labeling and advertising violations, is carried out by the Medicines Control Agency (MCA)." (CSPI Reports, 1998)
Risk Assessment: With respect to the needs of shareholders, a part of the marketing plan, specifically the idea to offer 150 products in a 'free form' is inherently risky because the idea immediately segments the market into a demand constraint that only includes the customers that would purchase the non-allergic food items. The decision to respond with such a large, exclusive food item section is a function of surveying the population and the expected population that has or may enter the region that are allergic to these foods.
The higher rate of inventory turnover due to more stringent in-store inspections by the staff will ostensibly cost the store more in revenue. Many stores continue to sell items with small dents in the cans or with sticky labels on the soda pop. These items would be removed from the Tesco stores shelves and replaced with fresh stock from inventory. That inventory will now have to be replaced with no sales to offset the cost of next month inventory order.
The oversight of the online is again mission critical. The downtime, when there is downtime, is the critical test to the human resources ability to minimize the downtime and rectify situations immediately.
Risks to the supply chain can cause inventory delays and increase the Cost of Goods Sold. The budget can be negatively impacted if expenditures were directly in line with expected revenues. An increase in the indirect cost arena can have detrimental effects on the budget, causing the need to strike a loan with the local bank or to sell notes to local banks or corporations.
The use of the Ten Steps to Quality Improvement is a nice beginning however, the activity of the plan may not be dynamic enough to react quickly and effectively enough to the demands of the plan. The plan is comprehensive, certainly, but there needs to be a methodology to catalogue the activity outside of the system in a real time environment.
b) Minor improvements to the plan include adding that the new health foods initiative is consumer centric to improving waistlines and heart rates yet is fully compliant with UK legislative requirements and will meet all national regulatory inspections. Additionally, the needs of the stakeholders are more engaged when the decision to roll out a national change is first gauged with survey studies and demographic analysis into the type of consumer in the target population and their dietary habits.
To improve the bottom line associated with the turnover, Tesco can sell the unfit goods on the secondary market to other stores. The UK may have stores where food is not a primary draw to store sales. Many stores such as The Dollar Store and small markets and goods stores carry canned items and other small food items. Often, these markets cater to the secondary food market and generate revenue.
Training of the human resources staff is important given the nature of the system interaction. Meetings should be held in the break room to speak about how to react more quickly and assess situations in an efficient manner. The choke points of the system should be identified on the flow chart and there should be individuals assigned to specific tasks associated with the operations of the system. Additionally, there should be an individual assigned to address specific types of problems of the archetype of the system.
The supply chain risks can be mitigated by researching additional supply chain vendors in different geographic regions of the world. If Florida oranges are going to have a supply shock in April, causing demand of oranges to spike, then regional growers in other areas where there is not a supply chain disruption and where demand for those particular oranges is not high, a forward contract can be entered into to take delivery of that stock in April at a price below market.
The Ten Steps to Quality Improvement can be improved by using quality charts and scorecards to gauge in real-time the effectiveness of the operations. These results can be displayed on a LED high on the ceiling so shoppers can visually see how well the store is trained to better service their needs.
According to Research and Markets (2011), "Ensuring a process is in control is critical to any Six Sigma project, but how do you determine with certainty if a process is on track or requires improvement? Where do you find the 'proof' or the solid facts that a process is out of control and requires intervention? By applying statistical process control (SPC) methods, a Six Sigma team can identify and control variation in a process. This course covers the basic concepts in statistical process control methodology, including the selection of variables and rational subgrouping." (Research and Markets, 2011)
According to Research and Markets (2011), "One of the most important tools used in SPC methodology is the control chart, and this course explores how select the right control chart for the variables being measured, and how to interpret specific patterns they reveal. This course covers the basic concepts in statistical process control methodology, including the selection of variables and rational subgrouping." (Research and Markets, 2011)
c) The wider implications of the proposed changes are how other businesses will do business for its clients. Perhaps not in the food services business but in other businesses as well. The labeling changes are likely to become a part of the framework of other food services organizations as the trend is increasing for stores to include the ingredient labeling on the packaging.
The movement to more healthy offerings is also a trend that is catching on with popularity. Consumers that traditionally did…
CSPI Reports International (1998) Functional Foods: Public Health Boon or 21st Century Quackery? http://www.cspinet.org/reports/functional_foods/uk_regltry.html
Feindt, P.H. & Flynn, A. 2009, Policy stretching and institutional layering: British food policy between security, safety, quality, health and climate change, Palgrave Macmillan.
Food Labels: A Guide to the UK Regulations. Department of Food and Nutritional Sciences, The University of Reading. http://www.reading.ac.uk/foodlaw/label/index2.htm
Lacey, R. 1992, Scares and the British Food System: Problems and Policies in Relation to Food-Related Health Issues, Emerald Group Publishing, Limited.
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