John Hancock head of MFI, Britain’s biggest furniture store chain has stepped down following an unsettled appointment. A spokesperson for MFI insists that Hancock’s departure has nothing to do with the supply chain problems that the company faced but rather was motivated by external market forces. The troubled group is also set to issue a profit warning following a further deterioration in trading amid concerns that it needs to renegotiate its banking covenants. The slow down in consumer spending has taken its toll on the company but has hit all areas of commerce with equal spite.
The management was called into question in September 2004 when MFI experienced problems implementing a new £50M supply chain and had technical problems integrating various software packages into its IT system. This led to inventory shortages and incomplete orders being sent out to customers. It later revealed that the cost of changes and compensation amounted to £17.1M. The technical problems arising around the quality of data and inaccurate inventory forecasting were described as “critical” and were worse than initially thought. The failings meant that orders were not met on time and the problems quickly snowballed into a series of warnings about sliding sales, unexpected problems and mounting costs. In order to counteract the supply chain problems the company:
- Improved stock availability by optimising manufacturing capacity, and focusing management attention on stock planning and data quality.
- It increased the effectiveness of its home delivery and order fulfilment, ensuring the accuracy of pick lists
- Rectified and optimised system performance – improved electronic interfaces with supplier systems, improved the stability of its database and increased data processing capacity and re-wrote critical software components.
In February the company said that the supply problems had cost at least £30M to sort out and reported an operating loss of £46M for the year. MFI stress that its supply chain is now “running fine.” Matthew Ingle, executive director of Howdens Joinery, the profitable division of MFI that supplies kitchens to trade customers will take the reins as chief executive. He joined MFI in 1995 and has served on the board since 1998.