Value Chain Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inbound Logistics

 

Tesco would use the food waste from its entire chain of supermarkets across the UK (Express, Metro, Superstore, Extra and Homeplus). We will also establish long-term contracts with the other supermarket chains to dispose of their waste for them. This biomass will be collected from the stores and transported to the distilleries.

 

The collection trucks will be designed to be more energy efficient than normal refuse collectors, by using the practice of an electronic bin lift, which also shuts down the engine when it is in use.

 

Operation

 

In 2010 the company streamlined its operation through the Tesco Digital Program, which is a 3rd generation ERP solution for the company. This company-wide ERP system has facilitated the minimization of stock-holdings within the company [1]. Within the first 2 years of the project, Tesco and Greenenergy will jointly implement new IT systems which will optimize the operational efficiencies and manage biofuel storage at the refineries terminals ensuring that our customers will never be out of stock. This technology will be used on a trial basis and used in Tesco’s own refinery when it is operational, if it is deemed successful.

 

Outbound Logistics

 

Under the initial contract Tesco will be able to outsource the food waste conversion process to Greenergy. We will also be using our own fleet of trucks to transfer the biomass to the refineries. Greenergy will use the Fischer Tropsch process to extract the usable fat and oil content from the food and convert it into usable combinations of bioethanol and biodiesel.

 

Tesco will sell its biofuel primarily in a B2C capacity, through its own filling stations, but we will make provisions for potential B2B transactions, to other fuel suppliers, major airlines and companies such as Transport for London (TFL).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tesco’s in-house drivers would deliver the biofuel using road tanker fleets to the Greenenergy owned terminals/storages across the UK before transporting them to the petrol stations.  The trucks and road tanker fleets would be using the biofuel in order to reduce the CO2 emissions and achieve a sustainable purpose.

 

Marketing and Sales

 

The produced biofuel would be sold directly to customers in their nationwide petrol stations. Should the opportunity arise to increase supply and sell to B2B customers we would initially target the following two businesses and sectors:

 

• Airlines:   British Airways set their climate target to 50% cut in net emissions by 2050 and using sustainable low-carbon fuel is one of its approaches towards the climate change target [2].  Therefore, they would be most likely to purchase the biofuel.

• Transport for London (TFL): It now is running trails of a combination of diesel and Bio-diesel for the London buses and aiming to reduce the carbon emissions (Bus Investment, TFL). The target would be to improve London’s air quality. Therefore, TFL would need more renewable fuel for its buses.

 

Tesco will not invest heavily on the marketing activities because the brand is already well known in the UK market. Also, the advertisements have little impact on the biofuel customers because they may use this type of renewable energy because of the goodwill to generate more positive externality for the community. The key is to raise awareness rather than to advertise, and this product marketing will be localised on Tesco stores and petrol stations advertising this alternative fuel source. The significant volume of traffic within our stores will mean that it will be incredibly easy to communicate with the public.

As people do not choose where to buy petrol on the product itself (they target accessibility and price, which changes rapidly in the current market) we deem word of mouth to be a much better alternative to national advertising.

 

Services

 

The main focus in terms of service in this industry will focus on the quality of the product. Customers are primarily focused on cost and quality (and by this we mean the longevity measured in miles per tank). As long as our price is better than the competitors and we do not suffer significantly quality issues we will have a competitive advantage.

 

In terms of the service we provide at our service stations, we will focus on speed of service, with automated payment available at the pumps in addition to an adequate supply of pumps themselves so that customer queuing can be minimized. Individuals are not particular concerned with face to face interactions at petrol stations, so a staff presence would be minimized but we will concentrate our training on education so that they can be helpful and informative to customers who may be interested in converting to biofuels from traditional gasoline or diesel.

 

In terms of the potential B2B business, Tesco would be focusing on its customer relationship management. It would implement an online customer support service to deal with the queries and complaints and aim to create long-term relationships with its customers.

 

The following diagram shows how we intend to add value throughout the process.