M&S Global Operations & Logistics: Achieving Competitive Edge

This report provides a detailed analysis of Marks and Spencer's (M&S) global operations and logistics strategies, focusing on how the company achieves a competitive advantage through effective supply chain management. It begins by outlining the global supply chain network of M&S, emphasizing...Read More

The Global Operations & Logistics Research on Mark and Spencer, UK

Running Head: Report
Executive Summary
In today’s globalized market, organizations are paying more attention towards delivering
additional value to the consumers. The emphasis on consideration of organizations is giving
products and administrations that are increasingly profitable contrasted with its competitors.
This powers supply chain network to be progressively responsive and achieve competitive
advantage. The phenomenon of competitive advantage is witnessed to be discussed very deeply
in organizational strategies. Modernized management approach locates the logistics on the
strategic level rather than placing it on simple support activity position in order to gain and
sustain a competitive position in the market. Logistics management has a huge contribution in
achieving competitive advantage; especially when the customer service and low-cost factors are
combined together. Effective logistics aims to meet the consumer's requirement at the
affordable prices along with facilitating the flow of information, funds and production material
amid the supply chain partners of the organization. From this point of view, logistics
management can place the organization ahead of all its core competitors by ensuring adequate
and efficient services like delivering the products to the customers as and when required at the
right time.
The report discusses the role of effective logistics management in achieving the competitive
advantage of the organization named “Marks and Spencers” that operates in a global supply
chain network. Such giant retailers like M&S need to focus on the procurement of material,
transportation, inventory, information & facility management, customer service while the
implementation of their strategic planning with the main objective of enhancing the efficiency
in all manner to accomplish competitive advantage. Right management of these components
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will leave no stone unturned for M&S to gain an advantageous position. Sharing real-time data
and information, much accurate forecast, agility and minimized cost in the supply chain network
can be accomplished by logistics-oriented strategy. The entire report is divided into four major
components. The first component discusses the global supply chain network of the selected
organization. The second component describes the rationale for M&S's facility location;
followed by the third component which presents how M&S have gained competitive advantage
via its impressive logistics management. The last component narrates the main discussions of
the report and also highlights some recommendations for Marks and Spencer to sustain its
position in future.
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Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................4
Inbound Logistics.........................................................................................................................4
Outbound Logistics......................................................................................................................5
Overview of M&S...........................................................................................................................6
The global supply chain network of M&S......................................................................................7
Supply chain & Logistics.............................................................................................................9
Supply chain strategies followed by M&S................................................................................10
The rationale for facility location..................................................................................................13
Competitiveness achieved.............................................................................................................15
Conclusion & Recommendation....................................................................................................20
Recommendations......................................................................................................................21
References......................................................................................................................................22
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Introduction
The supply chain is a dynamic process which incorporates the continuous flow of information,
funds and items amid different stages. A supply chain network consists of different components
which collectively work together to facilitate the continuous flow or moment of the products.
This network starts with the customers, which means that it gets initiated as soon as the customer
places an order to the company and it gets terminated until the order for the customer is
successfully completed. The market has emerged out to be very demanding and uncertain in
recent years, so it demands that organizations should be very flexible in terms of logistics
management and supply chain activities if they really want to achieve competitive advantage
(Svosve, 2018).
Logistics management includes the processes like planning, implementation, monitoring and
controlling of the adequate flow of material, final goods, spreading of information from
originating point till the desired end with the target of achieving customer satisfaction at utmost
priority. Logistics activities are majorly classified in two broad categories.
Inbound Logistics
This category of logistics is related to the smooth and financial savvy inflow of raw materials
and other pertinent input required from the suppliers to the production plant necessary for the
manufacturing process. Organizational management has to maintain cordial relationships and
regular interface with all the associated suppliers for the adequate management of this type of
logistics activity (Sai, 2018).
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Outbound Logistics
This category of logistics is also known as supply chain management which incorporates
moment of finished goods from manufacturing plant to the customer end. For the appropriate
administration of outbound logistics, the administration needs to keep up a persistent interface
with transport administrators and channels of dispersion (Li, 2014).
Figure 1: Categorization of Logistics activities (Sai, 2018)
The main objective of each supply chain activity should be to maximise the total value
generated. This project report aims to determine the M&S’s accomplishment of competitive
advantage among its competitors through its appropriate effective logistics management. The
main objective of the assignment is to study and analyse how does M&S manage its logistics
activities. The secondary objectives are to search the information pertaining to the supply chain
of M&S, to discuss the supply chain management strategies, to interpret them
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(SCM) supply chain management process, to describe the facility location of M&S and to
measure the performance and efficiency of the company through logistics activities.
Overview of M&S
M&S (Marks and Spencer) is the largest UK retailer which offers fashionable clothes,
accessories, award-winning food products and unique stylish homeware. It is currently operating
in more than 57 countries from 1465 stores. This company was established way back to 125
years and is equipped with core values like quality, service, innovation and integrity. The annual
turnover of this company is £8.4bn and it has categorised its business in two segments that is
clothing and homeware falls under general merchandise and another segment is food. Customers
can purchase their preferable range of products through their online portal, physical stores and
through phones. The company aims to deliver consistent service to all its customers equally.
Every year the company is expanding globally and is trying to grab the market share in
menswear and kids section. It has made a five-year plan named "Plan A" under which the
company is trying to sell environmental friendly products (Marks and Spencer plc, 2019).
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The global supply chain network of M&S
Being such a prestigious brand M&S is aware of its responsibilities towards suppliers, customers
and other stakeholders. For this, the company pays off fair prices to its suppliers and it also
ensures that every individual is involved in the supply chain network should be provided with a
good working environment. M&S is a food specialist and does not own any farms or
manufacturing locations. The company has built a reputation for offering high quality,
innovation and environmentally friendly or sustainability just by maintaining healthy and long-
haul relation with its suppliers. The food supply chain network of M&S is quite complex as they
are in tie-up with more than 400 suppliers across the globe that produce the products for M&S at
different locations across 44 countries. Most of the supplier's locations are in Europe. The
company deals with rules of 70 countries to purchase its raw materials and commodities. Further,
the suppliers of M&S sources raw materials from different farms. Moreover, the nature of
M&S's portfolio implies that production quantity is not constantly steady, particularly inside
farming, where enormous varieties – both unsurprising and erratic – are driven via regularity and
varieties in a client request (Marks and Spencer plc, 2019).
M&S have designed an interactive map which clearly depicts the location of food and household
products made by the company, thereby highlighting the profiles of different factory location
sites utilized by its suppliers. This UK retailer sources only from those suppliers who fulfil the
criteria and meet the standards framed by it. Against this setting, M&S gives priority building up
a supply base that suits and can align with the company in near future, used and proficient, which
drives inventive items, benefit and enables everybody to reinvest. M&S have set out on various
activities to rebuild their supply with the target of improving their productivity and edges without
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bargaining product quality. It has likewise reinvested this cash in cost and quality and imparted it
to suppliers to enable them to make further efficiencies. The company has complied with a
different code of Practices, acts, Licensing etc to meet the standards set for supply chain
network. The table below describes the compliance of M&S
S.N
O
Compliance to Category Remarks
1. UK Groceries Supply Code
of Practice
Code of Practice To comply with
fair deal with
suppliers
2. Gangmasters Licensing
Authority
Licence To avoid worker
exploitation
3. Supplier Retail Protocol. Protocol To avoid worker
exploitation
4. UK’s Modern Slavery Act Act To respect
human rights
5. Technical terms of Trade Terms &
conditions
To meet the
minimum
required
technical
requirement
Figure 1: Table describing the compliance of M&S for its suppliers (Marks and Spencer plc,
2019)
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The Technical terms of trade followed by M&S are supported by certain policies such as
packaging, Non-GM, etc; codes of Practice and specific guidelines. The suppliers of M&S are
directed to access them through Quality Management System available online. The company
keeps on conducting audits of their associated suppliers to assure food safety and product
integrity.
Supply chain & Logistics
Supply chain vision of M&S
“The supply chain of M&S will involve new facilities and the policies will target to improve the
visibility and product movement through the fast and upgraded system to further increase the
agility"
The supply chain has been modified since the past few years starting from the sourcing to the
procurement strategy. Before the year 2000, M&S used to source 90 % of its manufactured
products in two regions (Europe & North Africa). Till the year 2012, it only sourced 11 % from
these regions and rest from the other locations such as Indian sub-continent & Far East. Earlier
the company was associated with the full-service vendors but now it is shifting to a FOB regime.
This has enhanced supply chain visibility and has also reduced complexity. The segmentation of
the supply chain has become easy through the Regime. 60% of the product is seasonal and 30%
fall under the core category of product mix. Rest 10% comes under Fast track & trials segment.
The criticality lies in the short lead time ranging from designing till the final product. A new set
of logistics centres have been developed in the UK as a part of new supply chain strategy in
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order to replace the network of 110 different sites from where the company has distributed its
merchandise to all outlets in past (Akabo Media, 2013).
M&S has recently enhanced its global supply chain network by making a partnership with Zetes.
This partnership ensures the collaboration amid M&S and its all food suppliers through the
supply chain platform of Zete i.e ZetesOlympus. This platform is a visible platform which also
connects the company with all its logistics providers along with supply chain collaboration
(Henderson, 2018). ZetesOlympus gives real-time alerts to M&S regarding the availability of
fresh food and it also helps the company to foresee all upcoming disruptions.
Supply chain strategies followed by M&S
M&S offers many products like food, clothing and home products to its customers and side by
side it also deals with a number of suppliers, people and stores. All this requires coordination and
art of logistics and supply chain management. The company is aware of the importance of
delivering products to its customers at the right time, location and in the right manner.
The supply chain strategies of M&S vary according to the type of product. The company
manages its supply chain as per the requirement of the customers and the origin of the products.
The logistic policy of M&S also depends on the origin of the product (Khan, 2018).
The company uses two approaches of supply chain strategy for improving its supply chain
performance which is discussed below:
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Responsive supply chain
This type of approach focuses on managing the supply chain through flexibility. It mainly
stresses on consumer's reaction and onto the high level of service. M&S has placed its inventory
locations very near to the customers to accommodate the sudden changes in the customer's
demand and continuous supply. Authors have claimed in their previous researches as well that
the organizations should make their supply chains in a manner that it should be flexible enough
to harbour adverse conditions or uncertainty in business. This is the demonstration of responsive
flexibility as agility. M&S takes utmost care of the agility notion by regularly focusing on market
demand (Slack, 2011).
Efficient supply chain
This type of approach focuses on managing the supply chain in an effective manner. Efficient
supply chain strategy is to maintain a low level of inventory at all the relevant retail locations.
This approach helps M&S to pay more attention to its manufacturing and interrelated functions
thereby resulting in low-cost inventory. Moreover, the flow of information is faster from the
retailer to the manufacturer. This oversees supply chain network by conveying intense interest
period with adaptable lead time. Examination of the supply chain as a complete process to
discover delays so as to abbreviate throughput time is the reason for Lean supply chain idea
(NCHU, 2015).
Although M&S has made all strict arrangements to manage its supply chain and logistics still
there were some critiques heard about the company in this context. According to Logistics
manager news, M&S was recommended to upgrade its supply chain as the retailer revealed that
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there was the downfall of 62% observed in the pre-tax profit in the year 2018. The online centre
at Castle Donington was not able to meet the seasonal demands on online customers.
Marks and Spencer every year spend a compelling amount for restoring its trading (in stores),
supply chain and logistics. Along with this its high technology based supply chain system allows
the company to cut down its cost very efficiently. M&S utilizes the software to manage and
control its logistics activities. The software used is Paragon’s routing which helps the company
to produce route plans for the distribution operation based in Lincolnshire (Gist’s Primary).
The scheduling system is equipped with a fleet controller module that interlinks route schedule
with the vehicle tracking through latest technology from suppliers like actual time tracking. The
Paragon's routing software configuration is done via Gist to generate two schedules every day.
The morning schedule is generated to deliver the order on the same day and the second schedule
is generated to deliver the next day in the afternoon. This software intimates the company
officials well in advance through a warning message in case of any late delivery caused due to
uncertainty or delay so that the company can take any corrective action to avoid late deliveries or
missing delivery conditions (Christopher & Towill, 2012).
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The rationale for facility location
The decisions related to facility location play a very important part in the logistics activities
engaged with SCM (Supply chain management). Practically, the advancement of location and
allotment choices is frequently anticipated through an evaluation of current supply chain
network. The evaluation is preceded with the assessment of nature of the present areas of the
administration offices and the allotment of client requests to those offices (Kalcsics, Melo,
Nickel, & Schmid-Lutz, 2009). Determination of the facility is considered as a critical strategic
decision. There are many factors that influence the selection of facility location including
competition, cost structure, infrastructure, labour competency, environmental factors and
government rules & regulations. Researchers and managers consider the concept of facility
location as a scientific process which encapsulates different techniques. When an organization
successfully selects the right location it becomes accessible to its customers, skilled manpower,
transportation and many more such elements. Right location decides the success of the business
in the existing global competitive market (NCSU, 2011).
M&S is recognised as one among the leading retailer in the UK with 766 stores just in the UK
and more than 420 stores international stores. It has also nine international websites which are
completely dedicated to serving its customers across 50 different territories in the Middle East &
Europe. It has its own distribution centres. All together four sites are open in the UK to
distribute the merchandise to the outlets. A new distribution centre has been recently opened at
London Gateway which is considered as its third-biggest centre. It is spread in 900,000 sqft
which is used for storage purpose before the M&S products are actually transported to the UK
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and other international stores. This giant retailer has invested £200 in this distribution centre. The
supply chain has been made more efficient by shipping to this distribution centre along with low
cost and minimum fuel consumption. This means that Marks and Spencer moves its millions of
items to its new distribution centre located at London Gateway Logistics Park via ships. This
new facility location selected by M&S allows the company to access major UK cities which are
situated close by this distribution centre. This model has proved to be very cost friendly by
eliminating the millions of road miles along with a reduction in the consumption of CO2 in
thousands of tonnes. Moreover, the company has access to hundreds of skilled labour. At full
advancement, London Gateway port gives 3.5m teu limit and enables the world's biggest boats to
call only 25 miles from the focal point of London (Conroy, 2013). In all, M&S has transformed
its logistics operations into the modernized and agile supply chain; which suitably fits well for
the future of the company. Being an international distributor and multi-channel retailer, this new
distribution centre or facility location will help the company in locating their supply chain closer
to their stores in the home region as well as on international level. This will also add weight age
to their sustainability program i.e. Plan A (Rowe, 2018).
M&S has another e-commerce distribution centre is based in central England which is named as
Castle Donington. This centre has the capacity to accommodate 3,507 double Decker buses.
M&S was earlier using Amazon but now after combining this site with the newly launched- in
house internet platform, M&S has successfully replaced Amazon (Davey, 2013). Under the five-
year transformation plan of M&S, the company has opened a new distribution centre in 2019 in
Welham Green. This site is completely a mechanized distribution centre acquiring the space of
495,000 sq and is serving more than 150 stores open in South East. This facility location has
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fantastic transportation connectivity which assists the company to build good operations in
Hertfordshire (Conroy, 2013).
Competitiveness achieved
To gain a competitive advantage, an organization must have effective logistics management and
supply chain activities along with customer satisfaction by attaining lower operational costs. The
operational costs pertain to supply chain management and technology used. M&S has gained a
competitive position in the market and is a leading seller in the category of Women clothing and
lingerie. M&S knows that it must continue delivering its clothing to each and every woman &
every time.
M& S spends 1 billion pounds on its logistics, Information technology and systems activities in
almost six years to get better connectivity to its customers through its stores, phone and via the
internet. It accounts that this investment will deliver long term benefits and will help the
company in gaining competitive position (Davey, 2013).
Inbound logistics
M&S was honoured with GBS supply chain award and is leading among its competitors because
of its Sustainability program (Plan A) which aims to create significant changes in the global
supply chain. After the recommendation of EC, M&S also received European business award for
sustaining the environment. M&S is believed to have a stronghold on environmental
sustainability which has become its major advantage in comparison to other retailers (Butler,
2015).
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Operations
For the enhancement of customer's experience M&S is working on to increase the customer
visits by providing them effortless experience. The store teams of M&S are trained in a manner
to offer very good service to the customers and are being awarded as well for their motivation.
There was a time when M&S faced the issue in managing its online operations; this was due to
the problems in Castle Donington distribution centre which resulted in decreasing 2% sales
online. To cater to such situation M&S invested in upgrading its Information system (IT) so that
the company can provide improved supply chain management (Butler, 2015).
Outbound logistics
M&S allows the customers to purchase through its physical stores, home catalogue and online
option. The company keeps on investing in warehousing which can be witnessed by their
acquisition of a new warehouse in Bradford. This warehouse serves as an NDC (National
Distribution centre) for the home and fashionable clothing industry. This retailer also focuses on
merging small warehouses for improving the efficiency of its supply chain and distribution
network.
Competitive service
All the service aspects of M&S are based on enhancing & maintaining the product's value. The
company is aware that in order to attain customer loyalty, it needs to offer highly efficient
customer service. The company mainly focus on the availability of the product at a fast speed to
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its customers. M&S also offers free delivery charges above the purchase of £50 and it also serves
customers with the free return policy in 35 days after they get their product delivered. The
company also has service like home delivery under which the customer gets the ordered product
in a maximum of four days. While under its premium membership it has the capability to deliver
the very next day to the customers.
The logistics network of M&S has now changed to single- tier network for clothing and home.
This single-tier network allows the company to forward products from its suppliers to stores at
low cost and fast speed. This has been achieved by shifting to small networks of large DCs
which are placed at a strategic position in the UK. For handling larger capacity; M&S has
automated its entire distribution centre. M&S operates through third-party logistics with
transport operations administered by XPO logistics and DHL logistics (Butler, 2015).
The core competitors of M&S are Aldi, Asda, Centra, Tesco and Farmfoods. Other retailers are
selling different types of brands of goods and some traditional retailers are selling less variety of
own-brand goods. M&S is selling tailored speciality goods that too of own-brands. M&S is
believed to sell selective goods. Currently, 80% of M&S working products have the brand of St.
Michael. Marks and Spencer's approach lies from store to gather from the client perspectives and
requests for wares, and afterwards from Martha's specialized improvement office for item
advancement and plan (or with the producer to structure), and after that conveyed the maker to
deliver the last (M&S Sells through dissemination frameworks). Consequently, Martha has
turned into the world's biggest "no plant makers." M&S continues forming its very own image
into a picture of a solid situation, in its own brands contains a reasonable exchange, practical,
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non-hereditarily adjusted items, creature welfare, etc. M&S sells almost 100% through own-
brand which is the greatest USP of the company and makes it stand out of the competitors (Sai,
2018). This innovative brand strategy constructs its own –brand endemic in the UK as the
portion of shopping culture. M&S has unmatched brand equity.
Unlike M&S; the food retailer company named Aldi which is considered as one of the
competitors of M&S utilizes a just-in-time ordering system to manage their supply chain. This is
because the company delivers dairy products to the customers which cannot be stored for a
longer duration. The strategy used by this company is Responsive supply chain and agile
whereas M&S utilizes both responsive as well as an efficient supply chain. This company
majorly focuses on the reduction of cost and is seen as lacking in focusing on the aspects of
supply chain activities.
Another competitor of M&S i.e Tesco utilizes transports like rail, hired trucks, ships and planes
for their global supply chain. This company has quite a complex supply chain system as it owns
many of the distribution centres across different locations (Dissanayaka, 2017).
To gain a competitive advantage above all its core competitors, M&S utilizes different supply
chain strategies according to the products offered to the customers. For example, the production
of red wine requires facilities that are only available in France. However, in order to balance
amid demand and supply of red wine, all the warehouses and distribution sites are located in the
UK. For red wine, M&S uses responsive supply chain and it stores the wine in the regional
warehouses to meet the high demands of customers. By this manner, the supply chain of M&S
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can supply even at the times of high product demands. Red wine from France is transported
through rail to the UK. Global sourcing from grape producing country i.e France is a very tactic
decision of M&S as it provides committed infrastructure for logistics from supplier end. M&S
have the advantage of wine logistics firms which is witnessed to be developed in many European
countries (Akabo Media, 2013).
M&S sells an autograph collection of women handbags and leather accessories. This collection
is sourced from India through ECOMARK certified products obtained from TATA international
group. The production facility for leather bag collection resides in India and in order to meet the
customer demand this company uses its efficient supply chain approach for obtaining an
uninterrupted supply of leather bags and accessories. M&S keeps ideal stock in local warehouses
and focuses more on diminishing manufacturing stock expenses. In extreme demand period, the
data stream is coordinated towards assembling units from M&S retail stores. So assembling
calendar is balanced with this lead time to supply intense demand. At that point, supply chain
network proficiently oversees leather bag stock to retail stores where stocks are kept low. This
implies that M&S applies the policy of global sourcing for this particular product collection.
Sourcing from India is advantageous for the company and supports its supply chain policy as
well as India is known for supplying quality especially for leather products and this country has
also the availability of cheap labour (Davey, 2013).
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Conclusion & Recommendation
Effective logistics aims to meet the consumer’s requirement at the affordable prices along with
facilitating the flow of information, funds and production material amid the supply chain partners
of the organization. This report highlights the supply chain and logistics activities of the leading
UK retailer “Marks and Spencer”. The achievement of competitive advantage for M&S has been
discussed in detail through its effective logistics management. M&S sells its products through its
physical stores, online mode, brochure and smartphones. The goal of the global supply chain of
Marks and Spencer is to maximize the overall profit of the company. Profit in context to supply
chain is the difference amid revenue obtained from sales and total cost acquired at all stages of
the supply chain. M&S utilizes the software to manage and control its logistics activities. The
software used is Paragon's routing. The scheduling system is equipped with a fleet controller
module that interlinks route schedule with the vehicle tracking through latest technology from
suppliers like actual time tracking. Such automation in the logistics has improved the agility and
visibility in the tracking system.
The planning and management of supply chain largely depend on the origin and specification of
the product. The two strategies mainly used by the company are responsive chain and efficiency
chain strategies depending on the type of product. This company tries to attain strategic fit
between these two strategies by maintaining the right kind of balance between the two. M&S
keeps on investing in the logistics after the regular interval which can be witnessed through its
facility locations. It keeps on adding new distribution centres to improve its logistics activities
and add value to the customers which is the main motive of the effective logistics management.
The supply chain activities and effective logistics of M&S have helped the company to achieve a
competitive advantage over its other core competitors like TESCO and Aldi.
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Recommendations
Utilization of core strengths to increase the opportunities
This is the era of online business as most of the customers today prefer purchasing online.
Amazon can grab the customers of M&S in this segment. M&S should try to increase its market
share in online selling category by utilizing its strong financial position and brand name to grab
the significant pie of the market in the retailing industry. Customer’s trust can be created by
using the brand name of the company (Gunasekaran & Rahman, 2017).
Utilization of core strengths to decrease the threats
M&S is providing many jobs to UK citizens. The company can use the political lobby and can
negotiate the tax implications by communicating with the UK government. Also, it can ask for
some favourable conditions from the government on the aspect of the employment generation in
the UK. Another store model can be used to target the niche market by M&S by using its strong
financial aspects. Also, M&S should invest in its R&D to become more compatible with the
technological world. Right now M&S is dependent on the UK, but it can open stores in other
countries as well such as China and Asia to minimise the dependence on the UK market. The
logistics cost can further be reduced by making partnerships with regional local suppliers in other
countries. Cost advantages grabbed by the company can be consumed to reduce the cost of raw
materials and this benefit can be passed on its customers directly or indirectly (Gunasekaran &
Rahman, 2017).
It is recommended that M&S should try to construct a simpler supply chain aiming to improve
consumer availability and thereby creating a more efficient platform for its future growth.
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