M&S aims to save more cash, more quickly

12 November 2010
12 November 2010 | Peter Searle

Retail giant Marks & Spencer is set to save an additional £25 million-a-year from its logistics budget by transforming the way it operates its supply chain.

The British retailer’s half-year results report, released this week, said it will accelerate its 2020 plan to make its supply chain more efficient. Instead of its initial aim, announced in October 2009, to save £150 million-a-year from logistics by 2020, the company now plans to save £175 million-a-year by 2015/16.

M&S said the extra savings will come, in part, from moving from 110 small warehouses to a small number of super distribution centres. It described the first phase of its “warehouse consolidation programme” as a success. A one-million-square-foot “super” warehouse opened in Bradford in May 2010. A total of 30 smaller facilities have been closed over the past year.

M&S said it will also: “continue to reduce our dependency on our full service vendor suppliers, giving us greater control of our supply chain,” for its clothing and home businesses.

Full service vendors (FSVs) transport, store and deliver goods for M&S, while M&S transports, stores and delivers the goods for direct vendors. FSVs currently account for 43 per cent of the retailer’s clothing and home supply base, while direct vendors make up the remaining 57 per cent. By 2015, M&S aims to have a supply base comprising 35 per cent FSV suppliers and 65 per cent direct vendors.

Changes being brought about by the 2020 plan would lead to a nine per cent improvement in the availability of clothing and home items by 2015, M&S said. Another part of the plan would deliver a five per cent improvement in food availability by 2013-14.

A spokesman for M&S said: “The supply chain transformation element of 2020 will make us more efficient and deliver ongoing savings of £175 million, improved availability and provide an efficient platform for growth.

“[M&S’s 2020 plan] is not about reducing the number of suppliers, it is about creating a more efficient supply chain and preparing the company for future growth.”

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