Marks and Spencer (M&S) was once an internationally recognized department store for its quality, service, and value for money market proposition. However, changing market environment and poor management practices led to drop in profits, customer dissatisfaction, and disgruntled suppliers. Ultimately, the company is in a predicament as explained in this report. During the recession, the company’s management made different enhancements to improve distribution efficiency, outsource physical distribution to specialist suppliers, and restructure the sourcing strategy.
However, while these enhancements could help the company, poor communication between different stakeholders in the supply chain led to the current predicament. For instance, the upper-level management failed to communicate efficiently to the low-level management concerning the removal of children’s clothing from smaller stores. Consequently, store-level managers resisted the changes, which ultimately affected operations.
Poor communication also affected the company’s relationship with suppliers who were being forced to move their operations overseas without proper consultations. M&S also communicated poorly with customers, which led to declining sales and stock levels. Due to these problems, demand forecasting became inadequate and long lead times and price fluctuations were experienced, which culminated into the current predicament.
Increased overseas sourcing hindered M&S’s marketplace performance. The problem with sourcing overseas centered on several issues. First, replenishment lead-times were significantly extended and delays were experienced. Second, outsourcing to Asia meant low-quality products due to the associated less efficient working practices and expertise. Third, the company experienced constrained relationships with its suppliers and some of its largest, such as Coats Viyella, terminated their contracts with M&S. Lastly, the company’s marketplace performance was hindered due to protectionism and textile import quotas. All these factors affected M&S’s performance and competitiveness in the marketplace.
With proper preparation and the laying down of executable strategies, M&S can capture the potential benefits of low-cost sourcing and improve responsiveness at the same time. The first strategy that M&S should apply is to eliminate the extended replenishment lead times. This goal could be achieved by identifying low-cost source locations that are geographically close to the UK, such as Morocco, Romania, and Poland. In addition, the company could use airfreight as opposed to surface to minimize pipeline time.
However, a proper management process is needed to monitor and expedite other processes, such as production scheduling, clearance and forwarding, and last-mile surface transportation. Second, M&S should focus on creating and maintaining effective communication with its suppliers. A good communication network, albeit time-consuming and resource-intensive, forms the foundation for successful supply chain management with minimal conflicts.
Third, the management should implement electronic data interchange (EDI) to expedite data transfer, minimize errors, and avoid time wastage thus leading to a highly streamlined business process. Automation also reduces the cost of operations while improving efficiency and quality service/product delivery. Finally, the company should keep abreast with local restrictions such as import quotas, transportation restrictions, and labor laws among other factors that could affect its business operations. Additionally, there is a need for enhanced quality and efficiency standards when sourcing from overseas.
The current one-size-fits-all approach to supply chain management strategy is not the best way forward for the company. Creating a strategy that works for all the involved stakeholders is a challenge for most businesses and it requires dynamism and creativity. As such, different approaches should be employed as opposed to using a one-fits-all strategy, which rarely works. Therefore, M&S should come up with inclusive supply chain management strategies to meet the diverse market and product characteristics. For instance, all the standards and predictable products could be sourced from low-cost locations, such as Asia, ahead of different seasons through demand forecasting.
On the other hand, more fashionable, but less profitable lines could be sourced locally or from closer locations. In summary, basic sourcing could be done from Asia, fashion sourcing from Eastern Europe (Poland and Romania), and fast fashion souring from the United Kingdom, but in small quantities.
An end-to-end supply chain would allow M&S to integrate all areas of the chain to meet its obligations. This strategy gives all decision-makers the visibility to point issues early as they emerge and respond appropriately. M&S should start with gathering market information to assess the customer needs before coming up with a way of meeting them. The second step would be re-establishing strategic alliances with its suppliers through vendor-managed inventory (VMI) of the retailer-supplier partnerships (RSP) (Pasandideh, Niaki & Ahmadi 2018).
This approach would allow the company to assess what is in the pipeline, forecast demand, shorten lead times, and ensure timely delivery of products to customers without experiencing unwarranted excesses and obsolescence. The company may decide to focus on “up-to-the-minute” styles or “value-for-money” market positioning or both. The first strategy would require high agile supply chain strategy while the second option needs lean supply chain strategy to maximize economies of scale.
However, regardless of the strategy that the management would adopt, there will be associated organizational implications. For instance, the company will have to use cross-functional and probably multicultural teams, which might be challenging to manage. As such, more resources would be needed to hire the right expertise to ensure the success of such teams. Additionally, M&S will abandon narrow functional focus and adopt processes management. These challenges could be addressed via contracting a lead-logistics service provider to allow the company to gain access to global logistics information management systems for a successful supply chain management.
Pasandideh, S, Niaki, S & Ahmadi, P 2018, ‘Vendor-managed inventory in the joint replenishment problem of a multi-product single-supplier multiple-retailer supply chain’, Journal of Modeling in Management, vol. 13, no. 1, pp. 156-178.