Supply Chain Strategy study for Marks and Spencer

The performance of most businesses it heavily relied on

effective supply chain strategies. Marks & Spencer (M&S now
onwards) is leading UK department stores. This assignment is
the study of M&S product categories by concepts of responsive
and efficient supply chain.
Supply Chain: Definition
The material and informational interchanges in the logistical
process stretching from acquisition of raw materials to delivery
of finished products to the end user. All vendors, service
providers and customers are links in the supply chain. (SCM
Glossary, 2010)
Elements of the Supply Chain
A supply chain consist of different elements which coordinate
and work together to facilitate movement of products. The
customer is start and end of the supply chain (Murray).
Customer: the customer is starting point of supply chain. Chain
starts as soon as customer places order for the product. Further
the customer contacts the company to purchase the product
and giver order which constitutes quantity and specifications.
Planning: after receiving order planning department will
prepare production plan and material requirements. Delivery
date is estimated according to customers requirement and raw
material availability. In nest step production planning will send
material requisition to purchasing department to purchase raw
materials required for order.
Purchasing: after receiving purchase requisition, purchasing
department sends purchase orders to suppliers quoting
quantity and delivery date of materials. Price negotiations are
carried out at this stage.
Inventory: when supplier delivers raw material they are
accepted into warehouse after checking of quality and
specification required. This storing of material into warehouse is
the inventory which is issued time to time as per production
demand.
Production: after receiving production plan, production
department will schedule actual production activity by
collection raw materials from warehouse. as the product is
produced and tested for quality they will transferred to
warehouse department for shipping.
Transportation: after receiving finished products from
production department, warehouse will arrange delivery and

transport of ordered products. Delivery dates and locations are

specified by the customer and agreed by the both customer
and supplier. When the goods are received by the customer,
the company will send an invoice for the delivered products.
The supply chain is a contributions and functions of its
participants namely retailer, distributors, transporter,
warehousing and initial suppliers. As a result supply chain is
formed by many companies who coordinate which other to do
business.
Source: Google
The stages of supply chain (Chopra and Meindl, 2007, p4)
Manufacturer
Component/raw material suppliers
Manufacturers
Wholesalers/distributors
Retailers
Customers
A supply chain is dynamic and involves the constant flow of
information, product, and funds between different stages
(Chopra and Meindl, 2007, p4).
Objectives of supply chain
The objective of every supply chain should be to maximise the
overall value generated. (Chopra and Meindl, 2007, p4).
The value is generated by difference in cost of final product
offered to the customer after processing it through the supply
chain. For example, a customer purchasing bottles of wine from
TESCO for 100. TESCO receives payment via online system
and delivers the wine bottles to the customer by its efficient
supply chain. So the difference between 100 the customer
paid and sum of cost incurred to manage supply and
distribution of wine bottles is the Supply chain Surplus. The
more value generation in the supply chain can be achieved by
getting more revenue and cost optimisation. Success of the
supply chain is measured in terms of supply chain profitability
and not in terms of the profits at an individual stage.
Competitive advantage of supply chain
To achieve competitive advantage supply chain operations
must be efficient and customer satisfaction is achieved by
lowest operation cost. The cost is associated with supply chain
management process and technology. Supply Chain
Management has three levels of activities that different parts of

the company will focus on: strategic; tactical; and operational

(Murray).
Source: Google
Supply chain at Strategic level: At this level, company will
integrate its corporate strategy with supply chain policy.
Decision are made regarding products category, manufacturing
locations and plant capacity, supplier partnerships, sales and
distribution channel selections.
Supply chain at Tactical level: Tactical decisions will search for
solution of producing cost efficient techniques and strategies.
This level is for suppliers selection, and developing logistics
partners for cost effective transportation. Warehousing and
inventory control strategies are evaluated at this stage.
Supply chain at Operational Level: Operational objectives are
satisfied at this level by selection of material handling system
for products and production processes. Operational decisions
involve making schedule changes to production, purchasing
agreements with suppliers, taking orders from customers and
moving products in the warehouse.
Supply Chain Management (SCM)
Supply Chain Management is the systemic, strategic
coordination of the traditional business functions and the
tactics across these business functions within a particular
company and across businesses within the supply chain, for the
purposes of improving the long-term performance of the
individual companies and the supply chain as a whole (Mentzer
et al., 2001).
Concept of Supply Chains as pipelines can be defined by help of
above definition. Supply chain management is the
interconnections of different companies working together that
relate each other via upstream and downstream links between
different processes that produce value in the form of goods and
services.
Background:
Marks & Spencer is one of the UKs leading retailers with over
21 million customers visiting our stores every week (Annual
report, 2009). Marks and Spencer is well known for selling
quality cloths, home products and food at reasonable price. The
company has 665 stores in the UK, 291franchisee stores in
about 40 countries. This helped the company to become the
UK's largest clothing and footwear retailer in terms of both
value and volume (Datamonitor, 2009).

The purpose of this report to analyse and discuss supply chain

strategy for four different product sections adopted by Marks
and Spencer. The study is carried out by visiting store and
identifying products. Objective of visiting store is to look at
various department and product category. The products are
from different section such as Food, Beauty, Fashion
accessories and Home furnishing. In this study origin of
different products of M&S is identified to get idea about their
influence on supply chain. Another objective of study is how
M&S is managing inventory of different products. Explanation of
supply chain strategy by sourcing decision studied.
M&S supply chain strategies
M&S have different supply chain strategies for different
products. M&S manages their supply chain with customer
requirements and origin of product. Companys logistics policy
is also dependant on product origin. Hence to improve supply
chain performance of company using two approaches of supply
chain strategy (Fisher, 1997).
A focus on managing supply chain by flexibilityResponsive supply chain
Responsive supply chain policy gives stress on high service
levels and customer reaction. The inventory locations are
placed close to customer. The reason is to continuous supply in
case of sudden changes in demand. Therefore supply chain
needs to be sufficient flexible to accommodate uncertainty. So
this explains responsive flexibility as Agility (Slack et al 2004).
M&S focuses on concept of Agility by concentrating on market
demand continuously.
A focus on managing supply chain efficiently - Efficient
supply chain
Efficient supply chain policy is to keep low level of inventory at
retail locations. This helps company to concentrate more on
manufacturing and allied functions making inventory cost less.
Information flow is quick from retailer to manufacturer. This
manages supply chain by delivering high demand period with
adjustable lead time. Analysis of supply chain as whole to find
delays in order to shorten throughput time is the basis for Lean
supply chain concept (Slack et al 2004).
Products characteristics and Impact of origin on supply
chain
French wine, Syrah Grenache 2009, Food & wine section

French wine, Syrah Grenache 2009 wine is from collection of

Marks & Spenser Food & wine department. It is priced about
3.869. This wine is from France, specially sourced for Marks &
Spencer. The fruity red wine is blended from grapes grown in
the sunny warm winemaking region of southern France called
the Languedoc.
Impact of origin of French wine on supply chain
decisions and Strategies of retailer M&S
The facilities required for red wine production are located in
France. However warehouses and distribution centres are
located in all over UK to provide balance between demand and
supply. Supply chain for wine is responsive supply chain to
meet customer demand. For French wine M&S deploying
strategy to store wines in local warehouses to cope with high
demands. In this way supply chain can still supply even when
dramatic changes occur in customer demand (Slack et al 2004).
French wine transportation is main link between its supply
chains. Wine is transported to UK stores by Rail. About 40 % of
wine is transported to UK by rail (Rail fright group case study).
Global sourcing of wine from grape producing country is wise
decision for M&S. It provides dedicated infrastructure for
logistics from supplier side as the origin is major wine
producing region in the world. M&S has benefit of wine logistics
companies which has developed in European countries.
Autograph collection leather bags, Womens Accessory
section
The bag in above picture is from Autograph collection of M&S.
This bag collection is sourced from India and costs about 125.
Important sourcing reason from India is ECOMARK certified
products from TATA international.
Impact of origin of the Autograph collection leather
bags on supply chain decisions and Strategies of retailer
M&S
TATA international group is leather product supplier for M&S. All
Production facilities are located in India for the leather bag
section. Demand of the leather bag collection in of seasonal
pattern. M&S uses efficient supply chain policies for leather bag
supply chain design. M&S keeps optimum inventory in local
warehouses and concentrates more on decreasing
manufacturing inventory cost. In high demand period
information flow is directed towards manufacturing units from
M&S retail locations. So manufacturing schedule is adjusted

with this lead time to supply high demand. Then supply chain
efficiently manages leather bag inventory to retail locations
where stocks are kept low.
M&S apply policy of global sourcing for Leather bag collection.
Sourcing from India is beneficial and supports companys
supply chain policy. India is hub for cheap labour and good
quality leather products. However M&S get assurance of
committed delivery from Indian suppliers.
Essential Colour Lipstick, Cosmetics section
The Essential colour lipstick shown in picture is sourced from
China for M&S. Priced about 2.50 and it is for Autograph
collection.
Impact of origin of an Essential Colour Lipstick on supply
chain decisions and Strategies of retailer M&S
M&S follows responsive supply chain policy for the Essential
colour lipstick. For this cosmetics item high inventory levels are
maintained at UK store locations and Distribution centres. M&S
strategy decision of sourcing Lipsticks from china is based on
cost efficiency factors. Raw material prices and relatively cheap
labour are also more important factors.
As Lipstick is manufactured in china logistics is more important
part of supply chain and lead time for supply is more. But
supply chain surplus from operations of The Essential colour
lipstick are positive for M&S.M&S adopts global sourcing policy
for The Essential colour lipstick brand. China is major supplier
of cosmetic products to M&S.
Abbey Love seat, Home & furniture section
This love seat is for M&S sourced from UK supplier. Costs about
799. Comes with choice of fabric and leather colour of 79
varieties.
Impact of origin of Abbey love seat on supply chain
decisions and Strategies of retailer M&S
M&S sourcing its furniture products from local manufacturers.
As supply chain for Abbey Love seat is efficient supply chain.
Low inventory are kept at M&S warehouses. As per customer
specification order is processed at manufacturing units. So the
local origin of supplier is beneficial to M&S for reducing cost
and total lead time. In addition to this, keeping low inventory
objective is satisfied, which further reduces inventory cost. This
helps M&S to concentrate more on in store function of Home
and furnishing processes to achieve balance. M&S strategy of
local sourcing for Abbey love seat is depending on local tastes

and preferences of customers. This helps M&S to get integrated

with local community and share economic benefit. M&S and
Abbey sit manufacturer have developed positive buyer supplier
relations which is desirable for retailers reputation to
customers.
Comparing and contrasting strategy of different
products
Reasons for not having same supply chain are decided on
logistical drivers namely facilities, inventory and transportation.
In addition cross functional drivers such as sourcing decision
and pricing.
Logistical drivers
When a company creates a logistics strategy it is defining the
service levels at which its logistics organization is at its most
cost effective (Murray).Marks & Spencer has adopted different
logistics strategy from functional category of products.
French wine is sourced from grapes producing region of France.
Logistics strategy for this classified as Food logistics. Autograph
collection leather bags are the example of fashion logistics. The
characteristic of fashion logistics is quick response (Christopher
et al, 2004).Essential Colour Lipstick is the cosmetic brand of
M&S. The supply chain of Lipstick falls under fashion logistics
category. For Abbey Love seat, which is categorised in home
and furnishing section logistics strategy, is dependent on low
volume local sourcing market.
Facilities:
Facilities are key drivers of supply chain performance in terms
of responsiveness and efficiency (Chopra and Meindl, 2007,
p49). Location of each product production facility is very
different. Responsive supply chain of French wine and the
essential colour lipstick requires centralised distribution centres
while efficient supply chain of leather bag collection and abbey
love seat require comparatively lower inventory volume.
Inventory:
Inventory plays a significant role in a supply chains ability to
support a firms competitive advantage (Chopra and Meindl,
2007, p49). M&S strategy for French wine and the essential
colour lipstick is to locate large amount of inventory close to
the customer i.e. retail locations. In contrast strategy for
leather bag and abbey love seat is reducing inventory by using
efficient supply chain management. This eliminates waste of
excess stock for leather bag and abbey love seat furniture.

Transportation:
Transportation has large impact on both responsiveness and
efficiency (Chopra and Meindl, 2007, p53). As M&S sourcing its
product from different locations its choice of transportation
mode is different for each product. Also transportation mode
and supply network is depending on size and quantity of
product ordered. Hence shipment size of French wine, the
essential lipstick, leather bag collection and abbey love seat are
different.
Cross functional drivers
Sourcing strategy:
M&S adapted global and local sourcing of its products. Sourcing
products from local market has advantage for M&S as to
participate in local community business. While sourcing local
product such as Abbey love seat low inventory issue is tackled
by M&S. Though products such as Leather bag, Lipstick and
wine are sourced from origin of their raw material countries.
The advantage of this sourcing is M&S is getting quality
products from global supplier. These suppliers has
infrastructure suitable for producing and distributing their
products. For M&S sourcing wine, leather bag and Lipstick is not
possible as local suppliers are not producing such products. To
supply for demand of customers M&S selected source origin
from other countries and region.
Pricing:
Pricing is the process by which a firm decides how much to
charge customers for its goods and services (Chopra and
Meindl, 2007, p60). The M&S products selected in this study
have price range very low to high. Product such as lipstick is
costs about 2.5 however abbey love seat pricing is about
800. Pricing depends upon how complex product company
offering and what are the functional specifications. Supply
chain of products is affected by the pricing as it influences level
of responsiveness and demand profile (Chopra and Meindl,
2007, p60).
Conclusion:
The goal of M&S supply chain is to maximise companys profits.
Profits of supply chain are the difference between revenue
generated from sales and total coast incurred in all stages of
supply chain. Product specifications and origin impact largely
on supply chain design and planning. Supply chain decisions at

M&S are influenced by strategic, tactical and operational

objectives of company.
Marks & Spencer is trying to achieve strategic fit by having
right balance between responsiveness and efficiency. But in
real market competition this balance is affected by logistical
and cross functional drivers. The supply chain strategy practice
for French wine and the essential colour lipstick increases
responsiveness of M&S overall operations functions. While
practice of efficient supply chain for the leather bag collection
and abbey love seat keep balance on inventory levels reducing
load on M&S operations functions. Use of faster transportation
for products such as wine, leather bag items makes supply
chain responsive. While transportation modes of Sourcing
decision made by M&S for products such as wine, lipstick,
leather bag and furniture makes right balance of choosing
suppliers providing customers good quality products.
Impact of origin on supply chain has resulted positive for M&S.
Under Project 2020 M&S aim to build a simpler supply chain
that will improve customer availability and create a more
efficient platform for growth (Annual report, 2010).