Supply Chain Management is a crucial issue in today’s competitive business world. The profitability and profit growth of a company significantly depends on the effective and efficient management of its Supply Chain. Efficiency in this arena not only boost profitability but also increase profit growth, market growth, brand loyalty, customer satisfaction etc. So, Supply chain has to be managed in such a way that customer service is improving. So, it becomes more important in today’s business world to sort out that how businesses manage its supply chain so as to generate cost efficiencies while improving customer service.

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). Supply Chain Management must address the following problems:

Distribution Network Configuration

Distribution Strategy

Trade Offs in Logistical Activities

Information

Inventory Management

Cash Flow

Normally, there are 3 types of functions of Supply Chain Management. They are:

Strategic

Tactical

Operational

Marks & Spencer is one of the UK’s leading retailers with over 21 million customers visiting its stores every week. It sell high quality, great value clothing and home products and outstanding quality food. The main sources of its products are 2,000 suppliers around the world. Over 76,000 people work for M&S both in the UK and in 41 territories overseas, where it has a growing international business. Its core values of Quality, Value, Service, Innovation and Trust are as important to it today as were when M&S was founded over 125 years ago.

With an annual turnover of £8.4bn, its UK business has a broadly even split between General Merchandise (clothing and home) and Food. With more than 1 in 10 clothing items bought from M&S, we remain the UK’s largest clothing retailer and the first choice for stylish, great value clothes for the whole family. We lead the market in women ware, lingerie and menswear and have an expanding kids wear and home business. We are the UK’s leading provider of high quality food, selling everything from fresh produce and groceries, to partly-prepared meals and ready meals and an award winning range of wines. Underpinning this is our commitment to healthy eating, ethical sourcing and innovation.

Customers shop with M&S in many ways – in stores, online or over the phone. Its aim is that

everyone receives the same consistently high level of service from purchase through to delivery.

Mini Literature Review

As I have already mentioned the 3 functions of supply chain management, the details will be given below in terms of Marks and Spencer.

Strategic Activities

Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities.

Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities.

Information technology chain operations.

Where-to-make and what-to-make-or-buy decisions.

Aligning overall organizational strategy with supply strategy.

It is for long term and needs resource commitment

To have an efficient supply chain management system there has to have good materials management, Just-in-Time Inventory system, efficient supply chain coordination, Modern IT software etc. Materials management encompasses the activities necessary to get inputs and components to a production facility (including the cost of purchasing inputs), through the production process and out through a distribution system to the end user. Improving the efficiency of the materials management function typically requires the adoption of a Just-in-Time (JIT) inventory system, designed to economize on inventory holding costs by having components arrive at a manufacturing plant just in time to enter the production process or to have goods arrive at a retail store only when stock is almost depleted.

Marks and Spencer is the UK’s leading retailers having 21 million people visiting its store each week. Although, it offers stylish, high quality, great value clothing & home products, outstanding quality foods, the supply chain management is still a mystery and that will be solved in this study.

Tactical Activities

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise.

Milestone payments.

Focus on customer demand

Marks and Spencer is also the number one provider of womenware and lingerie in the UK and is rapidly increasing its market share in menswear, kidswear and homeware. 49% of its business is in clothing and homeware and the rest 51% in food. Besides that it is also environment friendly and to present us a green earth it has a 5-year eco plan named Plan A.

M&S Direct is key to improving customer convenience and service including via our website and our newly launched ‘Shop Your Way’ facility. Its target is to achieve £500m in sales by 2010/11. It remain committed to building a world-class retailer through increasing the pace of change and driving operational excellence in the business; building multi-channel capability; growing its international portfolio; and, as the economy returns to a stronger footing, reinvigorating its brand communications. Its progress was interrupted – but not altered – by the recession. Last year, It continued to implement short-term objectives to guide M&S through the economic downturn. As a result of this decisive action our long-term strategy remains in place. It has built a strong platform for growth and have improved or maintained market share in all its core areas.

It grew because it managed its costs prudently, listened and responded to its customers’ changing needs and stayed true to its core values of Quality, Value, Service, Innovation and Trust, reminding its customers of what makes M&S different. In 2010 it has worked hard to further improve its quality and customers have told that they have noticed this improvement.

Marks & Spencer has had a good year, with adjusted profits up 4.6% on last year to £632.5m. Before the £80.9m bonus it paid to colleagues to thank them for their extraordinarily hard work, profits were at £713.4m, a 17.5% increase on 2008/09.

It remain focused on helping its customers shop with it whichever way they want, bringing together its various shopping channels to provide greater convenience and flexibility. As explained on page 28 of the report, this year launched ‘Shop Your Way’, a new ordering service that has been rolled-out to over 300 stores, allowing customers to place orders either in stores, online or over the phone, for delivery to either a nominated address or free of charge to their nearest store.

By 2020 it aims to convert the 2.7 billion individual M&S food, clothing and home products sold each year, to ‘Plan A products’, so that each carries at least one sustainable or ethical quality. In doing so, it will make a positive contribution to the environment and society across everything it does and everything sells. This year our pudding experts created the inside-out trifle, with layers of Swiss roll on the outside holding a filling of custard and raspberry jelly. Also popular was the Snow Storm – inspired by old fashioned snow globes it’s made using transparent vanilla jelly interspersed with coconut flakes on a white chocolate panna cotta base. Cashmere Goats John Worley, M&S’s knitwear product technologist conducted a fact-finding visit to Inner Mongolia to discover more about the age old production of cashmere, which it use in our luxury knits. John’s hosts showed him how they comb and remove the goats’ hair by hand to ensure it’s of the highest quality. You have to comb one and a half goats to collect enough fiber to produce one men’s jumper. It’s Limited Collection geometric print dress was our take on the graphic prints displayed on the 2009/10 catwalk. Using the latest digital print technology, it was a hit with both customers and the fashion press, named by Sunday Times Style Magazine as ‘the best print dress on the high street – ever.’

Customers are the heart of its business so it’s essential it understands what they want from M&S. Our Customer Insight Unit (CIU) makes sure it is listening to its customers, understanding what they think and how they behave. Through a combination of market data analysis, research and customer feedback, its CIU identifies emerging trends and how external factors are impacting consumer behaviour. This ensures our customers’ needs are always recognized in business decisions. Price remains one of the main drivers for purchases, resulting in the continued growth of the value market. However, after a year of economizing consumers have moved beyond a wardrobe made up of cheaper staples and started to invest in quality versatile pieces, this trend is particularly strong among the over 45s. M&S remains the nation’s favourite in women wear and over the last 12 months it has grown its market share to 10.7% by value, up 0.2%, as women of all ages continue to turn to it for great value, stylish clothing. This year it has expanded its market share in casual wear, through the launch of Indigo collection and have listened and responded to its customers’ demands for more versatile investment pieces. It has remained focused on refining its brands to deliver the right looks for all its customers.

Marks and Spencer spends a significant amount in revamping its in store trading, supply chain and distribution systems each year. Besides that its high tech chain system enables it cost cutting process efficiently. It also uses logistics software firm Paragon’s routing and scheduling system that has a fleet controller module that links route scheduling with vehicle tracking via real time tracking technology from suppliers. The software produces route plans for Gist’s primary distribution operation, based in Lincolnshire. Gist has configured the software to produce two schedules a day: a morning schedule for same-day delivery and a second, in the afternoon, for next-day delivery. The software provides an early warning of any potential late deliveries caused by an unexpected delay so that corrective action can be taken to avoid missing delivery windows.

To retain its position as market leaders it know that it must continue to deliver clothing for ‘Every Woman, Every Time’. It can only do this by listening and responding to our customers, so it continually assess its clothes through focus groups with women of all ages and lifestyles. It is through its brands that it can deliver on this promise – providing looks that appeal to women of different ages and with different budgets. Over the last year it has continued to work hard to ensure that each brand has a clear identity, serving a different customer and addressing specific needs.

Objective

The main objective of this study is to find and analyze how does Marks and Spencer manage its Supply Chain Management efficiently while improving customer service.

Secondary Objectives of this report are:

To focus on the strategies widely used for efficient supply chain management.

To measure efficiency of Marks and Spencer in terms of the aggregate position in retailing industry.

To illustrate the supply chain management process of Marks & Spencer.

To identify the factors that work hand-in-hand with supply chain management and improved customer service.

To identify the Strategic, tactical and Operational supply Chain Activities of Marks & Spencer

To pin point the distribution network configuration and distribution strategy of Marks and Spencer

To analyze the trade-offs in logistical activities

To analyze the information, inventory management and cash flow of Marks and Spencer.

Methodology

To complete the report there will be some key variables like Network system, Distribution strategy, Advertising promotion, Logistic Activities, Strategic activities, tactical activities, operational activities, inventory management etc. For that purpose we need of retailing industry for a period of 10 years (2001 to 2010). These data will be then plotted into some statistical analysis such as SPSS, Excel for some technical analysis dictating the relationship between Perceived customer satisfaction and Efficient Supply Chain Management of Marks and Spencer. To complete the study there will be sections. The outline of these sections is given below:

Section-1: In this section there will be introductory part including the objective, purpose, methodology of the study.

Section-2: Some conceptual and literature review will be discussed in this part.

Section-3: this section will cover the company detail that means products, services, distribution, suppliers, outlets etc of Marks & Spencer.

Section-4: In this section there will be sub section like materials management, JIT Inventory System, Efficient Distribution System, Modern IT Chain system of Marks & Spencer for the improvement of customer service and cost cutting. In this section there will be analysis on the major 3 activities of Supply Chain Management of Marks and Spencer.

Section-5: There will be a comparison of marks & Spencer with the retailing industry in terms of the above variables.

Section-6: In this section there will be some analysis using SPSS, MS-Excel to depict the relationship between perceived customer satisfaction and efficient Supply Chain Management of Marks and Spencer.

Section-7: This section will have the findings and recommendations from this study.

Section-8: Finally, this section will conclude the study.