M&S chief sets out supply chain priorities

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Marks & Spencer’s new chief executive Marc Bolland has moved quickly to make his mark at the retailer –  outlining ambitious growth plans and targeting an extra £50m in supply chain savings over the next three years.

Bolland used the company’s half year results to set out his strategy not only to grow in the UK but to develop a new organisational structure to enable growth overseas, “where necessary reshaping our supply chain and building up our capabilities in international design, marketing and customer insight”.

M&S also plans to accelerate the benefits of Project 2020, the plan to transform IT and logistics, and increase the original target cost savings from £250m to £300m, comprising £125m from improvements in IT and £175m from logistics, with no increase in capital investment.

“In Clothing and Home, we will continue to reduce our dependency on our full service vendor suppliers, giving us greater control of our supply chain. By 2015 we will aim to have a supply base comprising 35 per cent FSV suppliers and 65 per cent Direct,” it said.

“As a result of these actions we will deliver a five per cent improvement in Food availability by 2013/14, and a nine per cent improvement in Clothing and Home by 2015.”

[asset_ref id=”1054″]  Marc Bolland

Bolland has set out an ambition to grow the business to between £11.5bn and £12.5bn of revenues by 2013/14. Over this period, the focus on the UK business is expected deliver £1bn to £1.5bn of revenues, and M&S aims to become a leading multi-channel retailer with sales of £800m to £1.0bn, as well as growing international revenues (excluding Republic of Ireland) to between £800m to £1.0bn.

The group said it had made good progress on Project 2020 over the past six months.

“The first phase of our warehouse consolidation programme is now well under way with the closure of 30 of the 110 sites. Our new one million sq ft warehouse in Bradford opened in May of this year.

“Planning permission has now been obtained for a second site in the East Midlands which will be a combined National Distribution Centre and a dedicated e-commerce facility, with construction due to begin in the new year.”

In addition, it has completed the implementation of a new stock management system in the stores, which is providing more accurate real-time stock level information.

“We are in the process of rolling out the new Point of Sale System (POS), currently in 40 stores, and due be completed in 2011.”

M&S is rolling out SAP across the business and said the first phase was nearing completion. The final phase, which will include the new stock ledger, is due to start commence in the new year.

“We have also started the trial of a new forecasting and space planning and ranging systems in Foods, which will deliver improved availability and waste management, and are due to be rolled out in the new year.”

Group sales in the first half were up 5.4 per cent at £4.6bn while adjusted operating profit was up 12.1 per cent to £409m.

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