Marks & Spencer’s New Distribution Centre

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Evaluating Current Problems

Summary of the current situation facing Marks & Spencer

Marks & Spencer made a heavy investment to revamp its supply chain in order to meet the emerging needs of its targeted clients and address a number of internal operational and external challenges which were affecting its operations. However, it is clear that despite this heavy investment into the new distribution center, M&N’s current situation shows that there are a number of issues that still need to be addressed. The case study shows that one of the biggest issues in the current operations of this firm is the movement of goods from the warehouses of this firm to the clients once the payments have been done. According to Petter (2006), operating in an online market has a number of fundamental differences from operating a brick-and-mortar store that a business entity must understand and appreciate. In a brick-and-mortar store, all that a retailer has to do is to avail the products on the shelves so that clients can pick whenever they need them. However, this is not the case when it comes to e-marketplace. In online trading, the retailer must make sure that the product that the client has purchased reaches him or her at the designated location. Under this context, it means that the retailer must deliver the purchases to the clients within the agreed timeframe. The case study given, it shows that this retailer is having serious problems in delivering products to the customers within the stipulated time. Some of the clients reported that they had to wait for over ten days for their products to be delivered, instead of three days as promised. The delays have caused concern among the clients who feel that this firm is unable to deliver on its promise.

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The electronic movement of information is another issue that comes out clearly from the case. There is a communication problem between various departments handling products at different stages within the newly constructed Castle Donighton Complex. This new complex is operating below its capacity because there is no proper communication and coordination among the departments involved with supplies, logistics, and sales. This has led to cases where orders have to be canceled because the sales department was not duly informed that some products are not available within the warehouse. In other cases, customers are informed that a given product is not yet available on the shelves while in essence it has been delivered at the firm’s stores already. This miscommunication is responsible for the drop in sales at this firm by more than 6% in 2014. The confessions from the customers also show that despite the heavy financial commitment to developing a state-of-the-art website, there are still problems when one is visiting this website. Many customers stated that they faced difficulties trying to register for the site because of new features whose functionality could not be understood easily. Some of the clients were met with error messages when accessing this website, while other complained of having problems when they were asked to reset their passwords. This is a clear indication that this firm failed to make a smooth transition from its old system which was already tried and tested, to its new system which was very ambitious but lacked some fundamental ingredients.

The real problems and where they originate

In order to address the issues which are currently affecting Marks & Spencer, it is important to critically evaluate the real problems that it faces, and where they originate. The biggest problem that this firm is currently facing is communication breakdown that has left the operations at this firm poorly coordinated. When this firm made a heavy investment to develop Castle Donington Distribution Centre and to revamp its website, everyone expected that operations at this firm will be more efficient. With a larger warehouse and up-to-date website, clients expected that their orders will be processed more efficiently and within a short time. However, they came to realise that instead of the delivery time being less than 3 days as was the case before, it was taking as long as ten days. Their orders were sometimes belatedly cancelled with excuse of excess orders that the firm has to deal with. This led to serious dissatisfaction among the customers because what they received from the firm was way below what was promised to them. The origin of this problem was lack of clear communication and close coordination among the departments within this firm. The sales department is unable to coordinate very closely with the logistics and warehousing units to meet the needs of the customers efficiently and within the shortest time possible.

Marks & Spencer is losing its clients to some of its major rivals in the market. While the sales volume at this firm has been consistently falling for the past four years, some of its market rivals have registered impressive improvements in their sales. This means that the problem that this firm faces is not significantly affecting other market players. This problem can be attributed to unfocused clear target market. Coyle, Langley, ‎and Gibson (2008) say that Marks & Spencer is still not sure whether it should target the young or the aging population in the market. For a long time, this firm has relied on the Baby boomers to propel its sales. However, most of them are now retired and their purchasing power is significantly reduced. Switching to the younger generation has been a major problem for this firm. As a result of this confusion, this firm has been trying to target both the young and the aging population. This has made it difficult to come up with sales and marketing programmes which uniquely target a specific market segment. Other firms which have their market segment clearly defined are performing better than this firm. The root cause of this problem is limited market research. The marketing department has failed in conducting a comprehensive market research that can help this firm understand the forces in the market that define the purchasing behaviour of customers.

The middle class, the most important market segment for any retailer in any part of the world, is falling out of favour with Marks & Spencer. According to Bolstorff and Rosenbaum (2012), time is one of the factors that the middle class values most. They have come to embrace e-market place because of lack of time to go shopping in brick-and-mortar-store. When they make any online purchase, they prefer having it within the shortest time possible. When the product they order is delivered after ten days, then they can get highly dissatisfied. They would even consider going to the physical stores to make their purchases. The length of time that this firm takes to deliver orders is making some of its clients to consider using services of the rival companies. The root-cause of this problem is poor coordination between the sales department and the logistics unit within this firm.

Assessing how the problems impact other functional units of the business

The problems mentioned above have had major impacts on other functional units of this company. Poor communication is affecting various other departments within this firm. For instance, the mistakes of the logistics unit and sales department when delivering products to clients directly affects the customer care unit. They spend a lot of time addressing grievances of the clients and trying to convince them that their issues shall be addressed within the shortest time possible. The finance department is one of the worst affected by these communication problems. When an order is cancelled due to miscommunication between the logistics unit and sales department, the finance department has to make refunds to the customers. This leads to time wastage and loss of resources that would have been used in undertaking other developmental projects. The marketing department is also affected by this problem. Instead of interacting positively with customers to understand their changing needs, they spend a lot of time trying to address the negative experiences they had with this firm.

Lack of clear customer target is affecting a number of departments within the firm. The marketing department needs to know the firm’s specific target market in order to develop effective promotional campaign messages which target them. However, this problem has forced this department to develop general promotional campaign messages which are less effective. The finance department is affected by this problem because it now receives less revenue which still has to be effectively planned for to meet the increasing needs.

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The severity of these disruptions on the business as a whole

These disruptions are severe to the business as a whole because they have the potential of forcing it out of the market. The firm is already losing its appeal among the middle class which forms the most important market segment. It has registered a consistent drop in sales over the last three years at a time when other rival firms are registering improved sales. Some clients have openly registered their disapproval of the services that it offers and moved to other firms offering similar services. If this trend will continue, then the future of Marks & Spencer is bleak. The competition is stiff, especially in the e-marketplace that is increasingly becoming popular. Having a trusted brand such as M&S is not enough. Clients need value and efficiency every time they make their purchases. Given that they have several options to make when planning to make their purchases, they can easily switch their loyalty to other firms. As Tallman (2009) notes, reclaiming a lost client is more difficult than getting a new one. Moreover, these unhappy customers tend to convince their friends to consider making their sales elsewhere to avoid the negative experience. If a solution is not found early enough, this firm may soon be forced out of the market.

Proposed Solution

Marks & Spencer is one of the biggest brands in the retail market, not only in the United Kingdom which is its home market, but also in the international market. It has been a trusted retail outlet for a long time with a strong base of loyal customers. However, the analysis of issues currently affecting this firm has clearly shown that the attractiveness of this firm is increasingly becoming deem despite the efforts that the management has put to make it more successful. As a consultant, the researcher seeks to find the most effective ways of solving the problems identified above.

Analysis of the issues and proposed solution for the most pressing problems

The major problem that has been identified above is internal and external communication breakdown that is making it difficult for the firm to deliver on its promise to the clients. This is the area that needs immediate attention. As Slack, Brandon, and Johnston (2012) say, customers should always feel that their interests are taken care of by the firm they have trusted. This is currently lacking at this firm because sometimes clients orders are belatedly cancelled and in other instances their orders are delivered several days after the agreed upon date. To address this problem, this firm will need to use Trissential Supply Chain Management Model shown in the figure below.

Trissential Supply Chain Management Model
Figure 1: Trissential Supply Chain Management Model. Source (Taylor 2004)

This model of managing supply chain activities is based on three pillars of effective strategy and planning, effective management, and exceptional execution. Marks & Spencer must understand that it is an important and trusted link between suppliers and customers. As such, it should have an effective strategy of getting the demand information from the customers and using it to source the needed items from the suppliers. The inbound and outbound logistics must be managed effectively in order to have effective execution of all the plans meant for smooth operations. The sales and marketing department is responsible for collecting relevant information about clients’ needs. This information should be shared immediately with the logistics unit which in turn will contact the suppliers to ensure that the flow of inventories into the firm and out to the customers is consistent and well coordinated (Thompson & Martin 2005). As a bridge between the suppliers and customers, this retailer should be able to regulate demand and supply for clients to get high value and the suppliers to remain satisfied with their relationship with this firm. Other than addressing the miscommunication problem within this firm, this model will also help in addressing the issue of target market. The sales and marketing department will use the information from the customers to identify the most desirable customer segments. With this information, this firm can focus on one or two segments as its main target market based on their desirability.

Application of appropriate concepts and models

The proposed solution focuses on improved coordination and communication in the entire process of supply chain at this firm. It emphasises on the need to promote proper coordination of all the departments within this company are to effectively meet the needs of the clients in the best way possible. As Anderson, Britt and Favre (2014) say, retailers have a unique business model that differs from that of manufacturers. For manufacturers, they often stand out on the basis of the quality of products they offer in the market. However, retailers only act as a link between the manufacturers and consumers. The value they offer their clients is, therefore, primarily based on the services rendered to facilitate the link between the supplier and the consumer. For M&S, the focus must be put on its supply chain. One of the models that can be used to address the current problems based on the solution given in the section above is the internal supply chain model shown in the figure below.

Internal Supply Chain Model
Figure 2: Internal Supply Chain Model. Source (Berggren, Bergek, & Bengtsson 2013)

This model lays emphasis on the internal activities that take place from the time that products are obtained from the suppliers to the time they are finally delivered to the customers. At M&S, it is apparent that the internal supply chain activities are not properly coordinated. As shown in the figure above, once supplies are obtained from the suppliers (purchasing the suppliers), the process of production should commence immediately. In the case of this giant retailer, production may basically involve giving the product a unique packaging that would differentiate it from what other rival firms offer in the market. The next step will be distribution to the customers given that this will be based on the concept of e-marketplace. According to Laudon and Laudon (2015), each of the stages in the internal supply chain activities must be accompanied by proper communication to all the relevant departments. A customer care officer should be able to know whether a given order is already dispatched to the client or not. A sales representative should be able to determine whether a given product that a client wants to purchase is available or not. This close coordination will eliminate all possible miscommunications which are currently affecting the ability of this firm to operate effectively.

The Supply Chain Management Hierarchy may also help in bringing order and understanding within this firm at the time when it is faced with possible boycott from its trusted customers. This model will outline specific issues that the leadership of this firm needs to focus on at different levels of management in order to achieve success. The figure below shows the model.

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Supply Chain Management Hierarchy. 
Figure 3: Supply Chain Management Hierarchy. Source (Grant & Jordan 2015)

This model classifies supply chain management activities as strategic, tactical, operational, and execution. The top management unit need to re-evaluate the entire supply chain system which is currently in use. At the top management level, strategic issues such as objectives, policies, and network design should be clearly defined based on the information gathered from the clients. This should happen in every financial year because of the changing environmental forces. These objectives, policies, and network design will determine all the supply chain strategies that will be used for the entire year. The departmental heads should then come up with tactical approaches of achieving the set objectives. The logistics unit, sales and marketing department, procurement unit, and all other related departments should share their tactical approaches to achieving the set policies and objectives to promote uniformity and cohesion. The unit head will then be expected to develop operational practices which are in line with their department’s set tactical approaches. At the lowest level, there should be execution procedures that can be made on a daily basis or regularly to help each department achieve the set target. According to Carr (2003), one of the main benefits of this model is that it promotes uniformity in the operations of all departments within a company because they share a common goal. It makes it easy for the departments to closely coordinate their activities and work as a unit. This is what is needed at Marks & Spencer to redeem its image that is already tainted because of the poor strategies it employed in the recent past.

How well the solution will meet the immediate and long-term needs of M&S

The proposed solutions will help in addressing the immediate and long-term needs of Marks & Spencer. The Trissential Supply Chain Management Model and Internal Supply Chain Model are particularly important in addressing the immediate needs. When used properly, this firm will be able to streamline its supply chain activities and improve its communication systems. This way, customers’ needs will be met more efficiently and within a shorter period than what is currently the case. It will help improve the experience of the clients visiting the e-retail stores of this firm. The Supply Chain Management Hierarchy Model will help this firm in its long-term planning processes. All the departments will have to come together and form a strategic plan that should be achieved in each year. These departments will then come up with tactical plans to achieve the strategic goal. These models will help in ensuring that the top management of this firm is able to coordinate all the departments within this firm.

List of References

Anderson, D, Britt, F & Favre, D 2014, ‘The Best of Supply Chain Management Review: 7 Principles of Supply Chain Management’, Ten Classics from Supply Chain Management Review vol. 4, no. 6, pp. 3-8.

Berggren, C, Bergek, A & Bengtsson, L 2013, Knowledge Integration and Innovation: Critical Challenges, Addison-Wesley, Boston.

Bolstorff, P & Rosenbaum, R 2012, Supply chain excellence: A handbook for dramatic improvement using the SCOR model, American Management Association, New York.

Carr, N 2003, ‘IT Doesn’t Matter’, Harvard Business Review, vol. 81, no. 5, pp. 5-12.

Coyle, ‎J, Langley, ‎C & Gibson, B 2008, Supply Chain Management: A Logistics Perspective, Wiley, New Jersey.

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Grant, R & Jordan, J 2015, Foundations of Strategy, Wiley, Hoboken.

Laudon, K & Laudon, J 2015, Management Information Systems: Managing the Digital Firm, Pearson, New York.

Petter, G 2006, Ebusiness Strategy, Sourcing, and Governance, McMillan, London.

Slack, N, Brandon A, & Johnston R 2012, Essentials of Operations Management, FT Prentice Hall, New York.

Tallman, S 2009, A New Generation in International Strategic Management, Prentice Hall, New York.

Taylor, D 2004, Supply chains: A manager’s guide, Addison-Wesley, Boston.

Thompson, L & Martin, F 2005, Strategic management: Awareness and change, Thomson Learning, London.

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