Marks and Spencer: A New Way to Compete

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The Problem

Marks & Spencer ( is a UK-base, upscale, global retailer known for its high-quality, high priced merchandise. Operating in more than 30 countries, the company faces stiff competition, especially since the beginning of the economic slowdown that started in 1999. Costumer service became a critical success factor for Marks & Spencer. Other critical success factors included an appropriate store inventory system and efficient supply chain activities. To attract shoppers, the company had to reduce prices at its stores, which drastically reduced profits. Several other big retailers were wrestling with similar problems, including Kmart, which had to file for bankruptcy. Will Marks & Spencer (M&S), a world-class retailer, be able to survive?

The Solution

M & S realized that in the digital era survival depends on the use of information technology in general and electronic commerce in particular. Electronic commerce (EC, e commerce) is a process of buying, selling, transferring, or exchanging products, services, and/or information via electronic networks and computers. M & S initiated several EC initiatives, including the following. Selling online. Like many other retailers, M & S sells some of its merchandise online. Shoppers can collect their merchandise in a “shopping basket”, pay online, and receive the merchandise the next day (in the UK). Online shoppers are encouraged to provide a UPC code in order to get the same product they see at a physical store, frequently at a lower price Security. A security system tracks transaction data in real time, looking for fraudulent events. If any fraudulent events are discovered, the system alerts the in-store security staff in the affected store by sending them a shot text message via cell phone. Warehouse Management. A mainframe-based warehouse management system, known as the Multi-User Warehouse System (MUWS), was installed first at M & S’s Hardwick distribution center near Birmingham, United Kingdom. Using Micosoft.Net infrastructure, store sales are reported to a data warehouse (a repository of corporate data), almost in real time. The data are then available for decision making on inventory replenishment (when and how much to ship to each store). The data are also available to the company’s third-party logistics service

providers, who run the warehouse operation and deliveries.
Merchandise receiving. The process of matching orders and invoices is automated, making it faster and free of errors. Information about arriving goods is passed automatically to both the warehouse and the stores. This way MUWS can do a real-time check of arriving and available stock. Also, the system enables M & S to pay suppliers more quickly, which makes them happier and more cooperative. Inventory control. The warehouse management and the merchandise receiving system, in addition to the real-time data reporting, improve customer relationships. Customers can find what they want because replenishment is accomplished quickly (sometimes within one-half hour). Speeding up the supply of fashion garments. Using special software, merchandisers can access and change allocation plans from any computing device (PC, laptop, pocket PC) anywhere and at any time in response to changing demand patterns. This is especially important for fashion garments, where meeting ever-changing demand is critical for competitiveness. Collaborative commerce. M & S can now pass more accurate forecast demands to its suppliers for fast delivery of goods, often directly to the M & S retail stores. The new information system enables M & S to work with suppliers to reroute merchandise to different depots and change allocations to where they are needed.

The Results

M & S’s CEO, in a message to the shareholders (summer 2002) indicated that a turnaround is underway. He sees M& S as a leader and example setter...
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