Inventory Management Practices in Marks & Spencer

This report covers the operational management practices of inventory management of Marks and Spencer. It covers the impact of inventory management practice on organizational efficiency and use of technology in this process. Further, it also covers the supporting functions in relation with inventory management and their contribution in organizational success.

BM563 Operations
and Service
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Operation management practice of inventory management in Marks & Spencer......................3
Impact of operations management practice on organizational efficiency...................................5
Use of technology in operation management practice of inventory management......................6
Supporting functions for chosen practice of operations management ......................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operations management is a factor of management that is associated with structuring and
monitoring of process of production and restructuring the operations of business in the
production of products and services. It is the administration of business practices for building the
top degree of efficiency in the business organization. It is associated with conversion of labour
and resources into products and services in an effective and efficient manner (Bui and Tseng,
2022). Some of the practices in operations management include stock and quality control,
delivery and supply chain management, information management and ordering & buying etc.
The following report will cover the operational management practices of inventory management
of Marks and Spencer. It is a multinational public limited company in retail sector dealing in
clothing , home and food products. The report will cover the impact of inventory management
practice on organizational efficiency and use of technology in this process. Further, it will also
cover the supporting functions in relation with inventory management and their contribution in
organizational success.
TASK
Operation management practice of inventory management in Marks & Spencer
Inventory management is a managerial as well as operational function. It needs the
appropriate following and maintenance of operational processes and inventory. It involves the
study and analysis of inventory management to control the inventory levels by effective decision
making. The practices of inventory management facilitate in in creating value with regards to
monitoring and maintenance of inventory. Sometimes, shortfall of stock makes company out of
stock and thereby reduces its revenues and keeping extra inventory leads to block of working
capital (Saha, Saha and Jha, 2022). So, the company needs to maintain suitable level of
inventory to ensure time delivery and earning more revenues. Many organizations employ
different practices and methods of inventory management to run their operation smoothly and
efficiently. In context with Marks and Spencer some of the practices of inventory management
are described hereunder :
 Periodical review of inventory : Inventory management is depend on the demand and
delivery time of supply chain. Companies need to consider the factors such as lead time
of receiving inventory and deliver time as well. Organizations can measure it by

analysing the demand patterns and past experiences for its stock items. So organizations
need to follow different patterns for its inventory management and not only one standard
policy. Because it could lead to shortfall or extra unuitilised stock and cause inefficiency
in management and thereby can impact overall efficiency of organization. Marks &
Spencer has a very wide range of products in the market that attract large number of
customers. It has a strong brand awareness in the market and large market share that
enables the company to maintain a large supply chain in the market and keep its
inventory management efficient by appropriate lead and delivery time of inventory.
 Better Supply Chain Management : It is a crucial factor in inventory management. The
growth and profitability of company depends upon efficient supply chain management. It
leads to brand awareness and customer satisfaction and thereby brings customer loyalty
to the organization. Effective supply chain management leads to better customer service
and enhances the better customers' experience (Agarwal and Kapoor, 2022). As Marks &
Spencer is one of the big companies in retail industry of UK, it has an efficient supply
chain management system. It has developed a wide network of suppliers on a global level
as it is a multinational company having operations in many other countries.
 Q; Quantum Retail Software solution : Marks and Spencer handles forecasting of
inventory its ordering , purchasing and replacement by the use of Quantum Retail's
software solution i.e. Q. It considers this practice to be efficient in its inventory
management. It uses this forecasting technique for real time decision making to manage
its inter as well as intra day sticking requirements. It forecasts the demand at individual
store level and does not consider average criteria for similar stores.
 Categorization of Inventory : Many organizations categorize their inventory by using
ABC analysis. This analysis is a method of diving the inventory into three categories i.e.
A, B, C. The items having high value are put in A category and the items that have low
value than A are put in B category, the lowest value items are put in C category. Marks &
Spencer has wide variety of food, home and clothing products that it can use ABC
analysis for . It can do this by gathering all inventory data and finding total value of each
item of stock as well as total value of inventory. Find the percentage of each item of
inventory for classification.

 Batch cards : These cards are used to track the flow of goods across the complete
process right from procurement of goods to the shipping of final product. The batch cards
identify the individual process requirements and record the parameters used in each
process. Batch cards ensure consistency in operations related with inventory by
identifying the variation while tracking the flow of goods (Kusanke and Winkler, 2022).
Marks & Spencer uses this practice of inventory to facilitate smooth functioning of
organization and bring efficiency to improve its performance.
 Standard Operating Procedures (SOPs) : Marks and Spencer use this inventory
practice to improve quality of inventory and increase productivity. It employs this
practice to ensure saving in costs and reduction in wastage of stock. This describes how
the processes are conducted in the factory. It ensures consistency in processing for
delivering quality goods batch-wise. They assist in improving the quality of inventory.
Marks & Spencer have written SOP that provides the details to execute the tasks relating
with inventory management in factory as well as at stores.
 Optimization of Inventory turnover ratio : This ratio signifies that how many times the
inventory of a company is sold or replaced over a time. A high inventory turnover means
that the company has light inventory (Mustaffa, 2022). Thus, marks & Spencer spends
less money on storage , written down stock or obsolete stock. If the turnover is too low it
impacts the revenues as the company do not have required stock to meet the demand.
Impact of operations management practice on organizational efficiency
Marks & Spencer deals in different varieties of products such as clothing, households as
well as food products. It needs to maintain its inventory management according to features and
quality of its products as different category of products have different delivery time or lead
time that the company needs to consider while making decisions regarding management of
stock. The high degree of inventory management practice facilitates in getting competitive
advantage and efficiency in the organizational performance. The effective inventory
management system allows the company to be adaptive to the market demands and ensures
that the company has neither extra nor short stock. The strategic management system of
inventory helps in making the organization more efficient. Keeping too muck stock leads to
poor forecasting . Disrupted scheduling and ineffective process. It acquires more space , blocks
working capital and have possibility of damage or spoilage etc.

On the other hand, keeping too low inventory can make the company run out of stock
that leads to reduction in number of customers due to unavailability of stock and less revenues.
It also causes poor efficiency of organizational performance. As regard Marks and Spencer, its
Quantum Retail Software solution helps in better forecasting of inventory requirement and
thereby makes inventory management system strong that brings efficiency in the overall
organizational performance (Tunçel, Akyuz and Arslan, 2022). This company also uses batch
cards to keep track of movement of stock on a consistent basis that also ensures effectiveness in
the process.
Although the inventory management of Marks and Spencer has been affected by Covid19
as well as Brexit, but still the company is investing in supply chain and E-commerce to handle
the inventory movement on a global basis and for bringing efficiency in organizational
performance.
Use of technology in operation management practice of inventory management
Technology has a crucial role in inventory management system. It helps in forecasting
the demand for the products. It facilitates in preventing any shortfall in in production or
finished inventory. Technology helps in analysing the inventory on various devices. It facilitates
in preventing excess inventory keeping. Marks and Spencer has already introduced some
technological aspects in the company like Quantum Retail software solution for forecasting of
inventory requirement. Marks and Spencer has adopted technology in terms of E-commerce and
company's own website that help in creating a world wide customer base and efficient network
of supply chain management. Marks and Spencer has 100 % radio frequency identification
(RFID) following for all its clothing and general merchandise supply chain network (Vakula
Rani, Aishwarya and Hamsini, 2022). M & S also uses optical scanners for tracking the
inventory by the use of barcodes to scan each item of inventory. M & S used this RFID
technology for its clothing business almost across more than 120 stores as it enhances accuracy
of inventory by labelling and packing.
In the year 2013, Marks & Spencer expanded the RFID technology to its all clothing
departments and some home products stores as well.. In 2014, it had become a first retailer in
100 % RFID tagging for all its merchandise to ensure effective tracking of inventory across its
large supply chain. Apart from the above successful adoption of technology in inventory

management, it can take some other below-mentioned technologies to create better inventory
management :
 Real -time data software : For meeting the high expectations of customers regarding
inventory, businesses need to develop connectivity with partners throughout their
supplier chain and adopt the real-time data software for advancement in inventory
management. It will create access timely availability of goods and managing the stock
levels (Orlando and et. al., 2022). Also, it will provide suppliers benefit to be able to plan
for stock deliveries. For example, Cohesio supports and integrates the retail activities by
stock management such as automation in inventory management for saving the time on
activities such as cycle counting etc. So Marks and Spencer can use this technique of
inventory management to bring efficiency in the organization.
 Autonomous Robotics : These help in making the physical labour easier and help the
company in inventory management. Organizations can use autonomous robotics for
picking and packing functions of stock to improve efficiency in operations and
completing the orders timely. The main task of supply chain management robotics I to
merge robust hardware and GPS navigation for locating and transporting the inventory in
factory. For example, company can use Cohesio's Geek+robots to bring efficiency in
inventory control processes. Marks & Spencer can use this technology for locating and
transporting its inventory in the organization by the use of robotics that can create an
effective management of inventory across all its product lines.
 Point of Sale systems : The point at which the customer makes payment for the product
and goes from the store is called the point of sale. To have a better control over the
inventory , companies can record the point of sale in their systems so as to track it with
convenience. This system provides the required inventory for every product. This ensures
updation of inventory as it reduces the amount of inventory every time the product is sold
(Shi and Ding, 2022). The user gets information when the store is out of stock. This
facilitates in consistency of inventory orders as well as management for better efficiency
in the overall process.
Supporting functions for chosen practice of operations management
Here, the chosen practice of operations management is inventory management. It requires
various functions to be performed for managing the inventory. The inventory consists of raw

material, Work in progress and finished goods. Raw material is required to have the function of
production to get converted into finished goods (Mollajan and et. al., 2022). These are the most
crucial assets of the company as they create a direct impact on the sales of the company. The
company has to use various techniques to perform the functions of inventory management. Some
of the basic supporting functions of inventory management are explained below :
 Production : The timely completion of production process i.e. conversion of raw
material in finished goods facilitates in having the stock of finished goods that saves the
company from being out of stock (Singh, Chhetri and Padhye, 2022). Company must
strive to enhance its production process or productivity to ensure sufficient availability
of stock to increase revenue of the organization. Effective production process assists the
organization in increasing efficiency and productivity as well.
 Purchase : This function assists the company in keeping sufficient quantity of stock at
the lowest prices according to the trends of market. This function supports the inventory
management in following various techniques such as EOQ i.e. economic order quantity
that helps in purchasing the optimum quantity of stock or order size and helps the
organization to prevent shortage of stock.
 Sale : Organizations should keep safety stock to meet the unexpected demands of the
customers. It helps in getting the competitive advantage to serve the customers by
meeting their demands unexpectedly. Company can sale the stock by following the rules
of stock ledger such as FIFO method etc.
In context with Marks & Spencer, apart from the above basic functions, the other supporting
functions of inventory management are as follows :
 Provides effective customer services : With the use of technology and E-Commerce,
Marks & Spencer has created access to a large number of customers globally. Better
inventory management helps in taking orders of a large customer base for wide range of
products such as clothing , food and household products that the company has to manage
the sufficient stock of.
 Ensures smooth movement of goods : As M& S uses RFID tagging for the inventory
management to track the inventory , it helps in tracking the flow of goods and identifying
any variations to ensure consistency. It supports in inventory management and enhances
the production processes as well.

 Lead time management : As, Marks & Spencer deals in grocery and food products that
are of perishable nature, the proper lead time management helps in effective inventory
management and timely acquirement and delivery of perishable products (van Sambeeck
and et. al., 2022).
CONCLUSION
From the above discussion, it has been concluded that operational management helps in
bringing efficiency in organizational performance. There are various organizational practices that
facilitate efficiency of operations in the business processes. One of the practice of operational
management is inventory management that helps the company in maintaining the inventory. It is
necessary for the organizations to have effective and large supply chain network to facilitate
stock management. Businesses should conduct audit of their stock to ensure match of revenues
according to the amount of stock. Inventory management helps in forecasting of the requirement
to meet the unexpected demands of the customers. It also facilitates company to prevent out of
stock situation. Organizations should enhance the use of technology such as RFID tagging and
point of sale systems etc. to ensure better and effective inventory management. It will support the
efficiency in organizational performance.

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