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Session9handout - Supply Chain Modeling...

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Supply Chain Modeling Session 9: Marks&Spencer vs. Zara Atalay Atasu
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Outline of Today’s Class What is innovative about Zara? What are the major  differences in Zara’s supply chain when compared  with that of M&S? Why is it so difficult for M&S to start playing the  “fashion” game? What do you think of the programs  launched by Peter Salsbury in response to the troubles  at M&S? What, if any, guidance would you offer for turning  M&S around?   Compare M&S’s approach to that of Inditex, Zara’s  parent company? 
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Classic Textile Business Process: 12 month leadtime Design Purchase Raw Mat Mfg Dist Sell Discount M&S Business Process follows the classic textile business process with 12 months leadtime PUSH mentality One year before store delivery Top 15 suppliers accounted for 80% of turnover Warehouses hold seven weeks of inventory Majority of stores owned by M&S and EDI link between store warehouse and head- office
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Why is profitability in apparel so low when margins are so high? Expected Demand Excess stock : Value loss due to discount sales when actual demand is lower than expected demand Excess Demand : Value loss due to unrealized sales when actual demand is higher than expected Perfect Forecast : Does not exist in real life! Lost Sales Waste
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M&S Business Model Customer segments? M&S follows the classic textile business process  where long lead times are required  M&S has to manage different production processes  corresponding to different collections: permanent,  seasonal, trends, etc.
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Recent Problems at M&S
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Marks & Spencer MARKS & SPARKS ISN'T THROWING OFF ANY , Nov 16, 1998 Marks & Spencer, the $ 13.7 billion retailer, sells one out of 4 men's suits bought in the country. Former Prime Minister Margaret Thatcher buys her underclothes there, along with 40% of British women. Chances are nearly everyone on a British street is wearing something from Marks & Sparks, as it is affectionately nicknamed.
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