Marks and Spencer has been in the news announcing changes that will affect and transform their supply chain. The announcement comes following yet another disappointing trade period over Christmas which saw the company once again record poor sales, as consumers continued to be price-led and more willing to hunt online for greater value for money. Even though the company sales grew by 3pc, the industry average for online fashion sales was 8pc.
This comparatively low sales growth shows that the company still faces an uphill battle to modernise its clothing and homewares, along with how the brand is perceived in general. To turn this around, M&S is deploying a package of measures including significant changes to its supply chain and logistics network.
Firstly, the company announced that it plans to close its London Distribution Centre at Neasden. This centre employs nearly 400 people through the sub-contractors XPO Logistics and the delivery company DHL.
The announcement is part of the current chief executive Steve Rowe’s 5-year supply chain turnaround strategy. The reason for the closure was to consolidate and open a new supply chain operation, which was the second big announcement that they made.
In this logistic network move, the company is planning to open a mechanised clothing and homeware logistics centre in Hertfordshire. This facility will be opened next year and create over 500 jobs in the local community.
The new facility looks to drive better service and heightened availability to customers who are demanding lower prices from retailers. The logistics centre, which will be managed by a third-party logistics supplier, is planned to be a 495,000-square foot facility and will be the hub for 150 stores in the South East of England.
It is felt that this change will help update Marks and Spencer supply chain which even the new Chairman, Archie Norman, has described as “drifting” over the past decade.
Time will tell whether the logistics centre will have the desired effect the company hopes for. With the company already having heavily invested millions of pounds in its technology and website, it still has more to do to improve online availability.
With this new investment (estimated between £300-350 million), Marks and Spencer is hoping that the logistical efforts transform its current supply chain. The company continues to invest heavily as they have also revamped their back-office technology as well as announcing that it is working with Indian Tata Consulting Services to try and make cost-efficient savings. These moves involve outsourcing more than half of their 430 IT team to save £30m and move 250 jobs to Tata Consultancy Services.
They have also closed a string of poor performing retail outlets and withdrawn from international markets – all part of a series of changes that are being pushed through by Steve Rowe to rejuvenate the ailing retailer.