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Efficient delivery

IT, Logistics & Supply Chain

PLAN A – TEAR DROP TRUCKS

The fuel used in logistics transport accounts for around 8% of our operational carbon emissions. We’ve already achieved our 2012 Plan A target – a 20% improvement in delivery fuel efficiency to our stores – and this year extended it to a 35% improvement by 2015. We’ve introduced a number of initiatives to help as achieve this such as a dual fuel trial for our Tear drop trucks. We’ve also adopted ‘loose loading’, enabling us to increase the stock carried on each truck by 50%, reducing the number of journeys required.

For more information about Plan A see here or visit plana.marksandspencer.com

In October – under Project 2020 – we set out a clear plan to deliver long-term sustainable growth through creating a more efficient IT and supply chain infrastructure.

In recent years we have invested in upgrading the inefficient, 20 year old systems that supported the business. This year we have begun to accelerate the pace of activity to fundamentally transform the way M&S does business.

Over the last 12 months we have focused on our immediate priorities – restructuring our supply chain, implementing new information systems and improving operational execution. These investments will lay down the foundations for future growth, especially in Multi-channel and International, as well as delivering tangible customer benefits, such as better availability and more flexible delivery options.

Supply chain

Our business operations have changed dramatically in the last decade – there are faster lead times, a wider range of products and extensive growth in both our International and e-commerce businesses. This year, we set out plans to restructure our supply chain to better support these changes. Our aim is to build a simpler supply chain that will improve customer availability and create a more efficient platform for growth. In addition these changes will deliver annual savings of £150m.

We have made good progress in 2009/10 and have saved £35m by consolidating some of our warehouses and implementing a number of efficiency projects.

Consolidation of warehouses

One of our biggest projects is the consolidation of our GM warehouse network, moving from 110 smaller warehouses to a small number of ‘super’ warehouses, based in prime central locations and a dedicated e-commerce distribution centre in the Midlands.

This is a long-term project but the first phase is well underway and we have begun the closure of 21 sites. Work has progressed quickly and the first of the new ‘super’ warehouses, a 1 million sq ft site in Bradford, is due to open in summer 2010. Our e-commerce site in the Midlands has been identified and we plan to start construction this year. All of our new warehouses will have a state of the art design, with the aim of achieving an excellent rating under BREEAM, a voluntary measurement rating for ‘green’ buildings.

Simplification

In addition to our consolidation programme, we have simplified operating processes in our warehouses to enable us to move products through our supply chain more quickly. We have done this in two ways, firstly by streamlining day-to-day processes – such as reviewing the floor layout of warehouses to reduce picking times and introducing a loose loading initiative, which has enabled us to carry more products on our trucks – and secondly by reducing the number of times we handle stock. Currently all stock goes to a sorting centre and then a regional distribution centre before being moved to a store. Following a successful trial this year, all stock will go via just one place in the future.

Our international supply chain

To support future international growth, over the next three years we will make our international supply chain more cost efficient and deliver more products direct to our international partners as opposed to going via the UK. This year we have made good progress and delivered 9.8 million singles direct to our overseas stores, our plan is to increase this to 30 million by 2013.

IT and systems

This year we completed the in-store pilot of a new Point of Sale System (POS) and will begin the roll-out to all stores later this year. The new system is not only more cost efficient but also helps deliver a better customer experience, through a simplified process for transactions and refunds.

Following another pilot, we have introduced new software to improve stock management. Staff representatives from all stores are receiving training in the new system and this will be rolling-out during 2010. The new centralised system provides real-time data from stores to a head office team, providing an accurate picture of stock levels at all times.

Business Foundation Programme

Having reviewed the operational processes across the business we established that our old core head office systems were no longer suitable to support the business’ needs. We decided the best way to solve this was to launch a Business Foundation Programme, rolling out a new integrated software application called SAP Retail.

The roll out of the new system will mean that M&S data is held in just one centralised location, replacing a myriad of old systems and will standardise core business processes across Clothing, Home and Food. The new systems will improve our visibility of sales, stock and margin data leading to better decision making and improvements in the way we manage our promotional spend. To ensure a smooth transition the project is being phased in and to date, we have successfully implemented SAP software across finance, purchasing and International.

Looking ahead

Our work to date has already achieved cost savings and efficiencies. But there is still more we need to do to build an infrastructure that will enable us to meet our ambitions of becoming a truly multi-channel retailer, with a stronger international presence.

We are confident we have an experienced team in place to implement these changes, without disruption to the day-to-day running of the business. The result will be a simplified, more efficient business that can respond flexibly to changing customer demands and give M&S a solid platform for growth.

Quality & trust

The Cape flora bouquet is arranged from seasonal flowers sustainably harvested from the Agulhas region of South Africa. The Cape floral kingdom is the smallest plant kingdom in the world but contains the highest known concentration of plant species – more than 9,000 plant species make up the region, 6,000 of which are found nowhere else on Earth.

Service

On shelf service Staff across our stores are receiving training on the new stock management software, which provides real time data to help us improve on shelf availability.

Service

Our new GM Warehouse in Bradford is
1 million sq ft – it could fit 12 Wembley pitches inside and it’s a one mile walk around the outside of the building. In the service yard there is a 2.1 metre diameter rainwater storage tank, which when full holds 4 million litres of water.

Service

Meeting customers’ needs ‘Shop your Way’ is underpinned by our new improved customer ordering system, delivering greater flexibility to customers and improving fulfilment.