Supply Chain Management of Mark & Spencer - Essay Example

1.0Introduction Mark & Spencer traditionally known in Europe as M&S Plc is a key and strategic player in the clothing industry, specializing on the sales of clothing, food and other household items in the United Kingdom market (Company Report 2008). According to the company’s Report (2008), by the end of the year 2008, the Company had 622 United Kingdom stores, including Simply Food franchise stores, as well as an international business (Report 2008). According to the company’s website and 2008 Report, the company has about 2000 direct suppliers of finished goods of which 1500 supplies clothing, footwear and home products while the remaining 500 suppliers supply other itimes. (Company Report 2008). Today, in businesses the world over, customer satisfaction lies at the heart of all modern thinking on quality and business management (Johnson et al 2007). Customers like a company’s suppliers are important stakeholders. “Stakeholders are those individual or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends” (JSW: 2005:179). Many corporate mission statements set customers as the focus of an organization’s business activities, while key thinkers have defined the quality of goods and services with reference to how well they satisfy needs and expectations of the customer base. At the other end, some companies are paying performance premiums (Christopher 2005, Mangan, Lalwani, &Butcher, 2008). These are companies that have failed to realize the strategic importance of their supply management processes. Such companies are victims of their actions as they have unintentionally set up conflicting objectives between engineering, marketing, purchasing and manufacturing that form barriers to good supply management (David and John1993P.1). This paper, examines the supply chain management functions of M&S. The next section of the paper presents a framework upon which the supply management functions of the enterprise revolves around. The paper looks into its relationship with the suppliers, its quality management system, its global sourcing principles, ethical trading, animal welfare and fare trade. The last part of the paper looks into the global sourcing principles, and how M&S can still remain competitive. 1.1 M&S Supply Management Framework North America Europe Scandinavia Asia Figure 1 above, depicts M&S supply management framework-own development As seen from the above figure 1, the activities of M&S is facilitated by a pool of suppliers and customers, dotted all over the world. With the ever growing scale of activities, suppliers in Europe were always grouped under Europe and the Scandinavian, though with difficulties in the free movement of goods and services before the period. Suppliers were dotted in different areas within Europe subject to domestic trade barriers of their respective countries. 1.2 M&S Relationship with Suppliers Qiao et al., (2003) contend that, there are two generic ways through which buyers and suppliers can work together. These are arms-length and collaborative. An arms length of working is a relationship defined between a buyer and seller which can be a one off event. Interaction between the parties is not in a continuous process. That is a low level contact is maintained. According to Qiao et al., (2003) initiative geared towards cost reductions will be absent. The only interaction is the exchange of information (e.g. invoice terms and delivery) necessary for the exchange to take place. On the other hand, collaborative form of working involves more interaction (e.g. close monitoring, exchange of resources, cost and forecasting information) as both buyers and suppliers can significantly invest time and resources towards the activities, with priority geared towards reducing cost and improving product functionality (Qiao et al., 2003). The researchers went further to postulate that previous research failed to see any of the two forms of relationship as a “continuum” that can fall anywhere along the line. The management of M&S company to boost its current world wide sourcing strategies, could institute an EDI systems through which suppliers could be sourced worldwide based on a suppliers rating system. This will encourage, competition amongst suppliers, facilitate on time delivery, reduced cost and defects and facilitate adjustment through just in time methods and continuous improvement. Relationship should be defined on continuous bases and within non adversarial collaborative interdependence where surpluses are shared to avoid conflict of interest. Here, we can logically argue that, the relationship between M&S with its suppliers is that of a collaborative form of working. That is long term relationship were these suppliers are considered part of its value chain process. 1.3 M&S Quality Management System M&S should consider it suppliers as strategic partners for to remain competitive in this line of business requires establishing a long term relationship with these strategic partners. No wonder, Jack. (2002p.1) argues that, “organisation that develops strong partnering with suppliers and customers will enjoy enormous returns for their courage and vision” (Jack. 2002p.1). According to Qiao et al., (2003) argue that, attention should be paid on the scarcity of resources being offered, availability of substitute, threats of new entrants. From the perspective of the rational underlying best practices, best practices involve looking for measures to curb down uncertainty, improve on product lead time, and reduce cost while maintaining product quality. Vakharia et al (2006) took this stance when they argue that successful relationship management necessitates an effective sourcing strategy to combat uncertainties in both supply and demand. In negotiating business with suppliers, M&S management place emphasis on a win win situation. Certain features are taking into consideration when analyzing which of the parties has power or is dominant. From the suppliers perspective , scarcity of resources being offered, availability of substitute, threats of new entrants etc, while at the level of the buyer it is how strategically and operationally important the resources in question is to the company(Qiao et al., 2003). M&S Company’s management failed to use this as the bases of negotiation with their suppliers. Here, goodwill and trust are fundamental to a successful relationship. These researchers further echo that one way will be for the buyer to try to increase, in conjunction with the supplier, the surplus value. The problem of supplier quality management requires seeking solution to customer’s loyalty, creation of long-term relationship with suppliers and stakeholders, collaboration with other dealers and not competition, creating an organizational structure and developing operational procedures. It has thus become necessary for the company to adopt a strategy that fits well with the present circumstances. By creating a vertical relationship with suppliers, retailers and customers, retailers are prevented from selling competitive product. John (1991) refers to this as a key element in present day business strategy. However, such a vertical relationship must be developed with Just in time production methods and continuous improvement. As a solution to its supplier quality management, M&S should benchmark against the best performers across the industry, and built a network of collaborative partners. This could be facilitated with an Electronic data interphase, through which suppliers become responsive in just in time and continuous improvement. 1.4 M&S Global Sourcing Principles M&S company should seek suppliers who value and leverage technology to create business advantage. This should be based on mutual trust, merit and more importantly how the suppliers will benefit their customers and not the company. In-house and in system supplier’s rating systems should be put in place for suppliers to be able to rate themselves. These systems should be systems that are easy to understand and give immediate feedback to suppliers. Attention should be driven by the need of the customers. M&S should consider it suppliers as strategic partners for to remain competitive in this line of business requires establishing a long term relationship with these strategic partners. No wonder, Jack. (2002p.1) argues that, “organisation that develops strong partnering with suppliers and customers will enjoy enormous returns for their courage and vision” (Jack. 2002p.1). According to Qiao et al., (2003) argue that, attention should be paid on the scarcity of resources being offered, availability of substitute, threats of new entrants. From the perspective of the rational underlying best practices, best practices involve looking for measures to curb down uncertainty, improve on product lead time, and reduce cost while maintaining product quality. Vakharia et al (2006) took this stance when they argue that successful relationship management necessitates an effective sourcing strategy to combat uncertainties in both supply and demand. Thus if best practice means overcoming uncertainty, this should form the bases for suppliers development. 1.6 Ethical trading, animal welfare and fare trade At M&S, everybody is a winner, M&S organization does not exist in isolation. Under the resource based view, it is thanks to the environment that new resources are sourced out; stakeholders interactions are facilitated, new partnership develop and created. Through and understanding of the external environment, firms take advantage of the resources available in its environment; define the nature and structure of its activities. In order to maintain service, quality and logistic standards, companies periodically audit their environment and compared to overall corporate performance through benchmarking. Companies that, fail to take advantage of its environment will lag behind. Today, the requirements of an organization’s stakeholders including, customers, employees, suppliers, shareholders, government, etc are on a continuous rise. It is only through an environmental assessment that companies understand and take advantage of this. In addition, , to providing an annual report to the company’s shareholders organisations are expected to provide alongside a corporate social responsibility report that details how they interact with society and the environment in which they operate. Failure would be interpreted as irresponsibility. M&S Company championed the campaign for the fight of animals welfare, the company has been at the forefront of environmental development activities. 2.0 What Mark and Spencer do to Retain It customers and Win More? Supply chain management (SCM) is a strategic management tool used by present day business to efficiently integrate suppliers, manufacturers, warehouses, and ensure goods and services are produced at the right quantity and quality and get to their destination at the required time ( Cheng, Lai & Gunasegaram 2006). M&S places the customers at the core of their activities, no wonder, according to the interview granted by the managing Director, “Customers know what M&S stands for”. At M&S, quality time and cost is at the centre of the company’s activities, as the company’s management places emphasis on SCM. At M&S SCM is used as a present day managerial competitive weapon for improving performance (Ramsay 2000). At M&S, the problem of supplier quality management requires seeking solution to customer’s loyalty, creation of long-term relationship with suppliers and stakeholders, collaboration with other dealers and not competition, creating an organizational structure and developing operational procedures (Ramsay 2000). This is the company’s emphasis to retain and win new customers. The company’s management has created a vertical relationship with suppliers, retailers and customers, with retailers prevented from selling competitive product. John (1991) refers to this as a key element in present day business strategy. This at M&S has been successful thanks to its vertical relationship that have been developed with Just in time production methods and continuous improvement. Karimi et al., (2007) argue that, procurement encompasses a broader scope of the supply chain as it includes not only the scheduling, but also the crude selection and purchase decision-making. Cheng, Lai, & Gunasekaran (2006) echo that, today companies have numerous challenges. To the researcher, this is not just providing high quality product but the ability to provide these products at a lower cost, price and time. At M&S emphasis is placed on these features when selecting suppliers. 2.1Conclusion Conclusion In the past, many companies under looked the importance of suppliers’ management. 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