Posted: May 25th, 2022

Strategic Logistics Management at Walmart

Strategic Logistics Management at Walmart

Major clothing, home product and food retailers such as Walmart, Costco and Marks & Spencer are faced with some daunting challenges in their efforts to keep in touch with changing consumer tastes and preferences in ways that can promote more effective logistical management of their far-flung global resources. In order to gain some new insights into what is involved in this area, this paper provides a review of the relevant literature to develop (a) a listing and corresponding justification of the business strategy tools that could be used to identify the current strategic position of Marks & Spencer based on a case study by Canals (2000) from a logistics perspective; (b) an evaluation of the key strategic approaches to logistics management used in the Marks & Spencer case study; (c) a critical assessment of additional logistics strategy approaches that could have been used to develop existing logistics capabilities; and, (d) an identification and discussion of the management issues caused by implementing a new logistics strategy with consideration for available capital, technical and human resources at Marks & Spencer. Finally, a summary of the research and important findings are presented in the paper’s conclusion.

Review and Analysis

List and justify business strategy tools that could be used to identify the current strategic position of the subject company in the chosen paper from a logistics perspective.

A number of business strategy tools are available that can be used to identify the current strategic position of Marks & Spencer, including Six Sigma, balanced scorecard as described by Kaplan and Norton (2001), total quality management (or improvement) and others (Neely 2002). According to Johnson (2006), Six Sigma and other relatively new business strategy tools can be used to help business managers better understand how their products and services provide benefits to their customers, both internal and external, as well as identify opportunities for improving internal business capabilities, all the while using these tools to effectively respond to competitors’ initiatives and counter-moves in a timely fashion.

Other business strategy tools include a historical analysis of a company and how it has responded to changes in the marketplace as it pursued its organizational goals, particularly with respect to expansion abroad where different cultures required different business practices (Neuman 2003). In this regard, in his case study, “The firm’s history and its effect on the internal context,” Jordi Canals (2000) reports that, “The evolution of Marks & Spencer provides some reflections about the role of history in a firm’s evolution and growth, in particular, its past policies and the learning ingrained in the firm. A British institution venerated almost as much as the royal family, Marks & Spencer performed impressively for some thirty years. Its shares systematically outperformed the market. To get a job with Marks & Spencer would mean a job for life in one of the most admired European firms” (p. 73).

Despite these valuable corporate attributes, though, the case study quickly makes it clear that there is no “one-size-fits-all” approach to logistical management but the company developed an approach that was appropriate to its needs at the time. As Canals puts it, “At the heart of Marks & Spencer’s success there was a unique combination of factors. The first was its culture, kept under constant care from Baker Street, its corporate centre” (p. 73). The organizational culture that was in place at Marls & Spencer during its formative years was responsible in large part for its initial success in growing its domestic market and even its overseas operations to some extent. In this regard, Canals (2000) emphasizes that Marks & Spencer’s corporate culture “involved a very effective formal and informal communication flow within the company, a close connection between the corporate centre and the shops, a permanent ‘dissatisfaction’ and willingness to improve, and an obsession about quality and customer’s reaction” (p. 73).

The effectiveness of this original organizational culture in managing Marks & Spencer’s logical practices, though, tended to erode as more and more countries and territories were added to the company’s operations. Indeed, the company’s Web site boasts: “We are one of the UK’s leading retailers, with over 21 million people visiting our stores each week. We offer stylish, high quality, great value clothing and home products, as well as outstanding quality foods, responsibly sourced from around 2,000 suppliers globally. We employ over 78,000 people in the UK and abroad, and have over 700 UK stores, plus an expanding international business” (2021, p. 2). The company’s international businesses extend to 42 overseas territories, where it seeks to leverage its well established UK-based brand in these foreign markets.

The company also reports that in the UK market, it is the leading provider of womenswear and lingerie, and it continues to grow its market share in menswear, kidswear and home products; the company attributes its impressive growth in this business unit in large part to it is increasing presence online (About us 2012). The clothing and homeware business unit account for almost half (49%) of the company’s revenues, with the other 51% being generated by its food retailing operations (About us 2012). In this regard, the company notes that, “The other 51% of our business is in food, where we sell everything from fresh produce and groceries, to partly-prepared meals and ready meals” (About us 2012, p. 2). Clearly, the logistics required to deliver a shirt or dress to market in good order are far different than those required for perishable items such as lettuce or artichokes, but there are other corporate priorities that will affect how its supply chain is managed and how its suppliers are selected, as well as its responses to governmental regulatory requirements concerning carbon emissions and effective waste management practices. For instance, the company reports that, “Now more than ever, we’re also known for our green credentials as a result of our five-year eco plan, Plan a, which will see us, amongst other things, become carbon neutral and send no waste to landfill by 2012” (About us 2012). These are ambitious and laudable corporate goals, of course, but the company has experienced its fair share of mishaps and failures over the years in achieving its organizational goals, and these issues are discussed further below.

Evaluate the key strategic approaches to logistics management used in the chosen case study.

The key strategic approach described in the case study involved the use of an all-but-in-name ethnocentristic organizational expansion model to grow the company’s business in international markets. To its credit, Marks & Spencer has largely succeeded where many competitors have failed in projecting its operations into new overseas markets by applying an across-the-board approach to its logistics management operations through computer-based networks that facilitate communications between corporate headquarters and the company’s overseas operations (Visich, Suhong & Khumawala 2007). These initiatives have also facilitated coordination with the company’s thousands of suppliers that are increasingly being held to higher standards dictated by the company (Christopher & Peck 2003). Indeed, corporate leaders such as Marks & Spencer can model the way for others in developing best industry practices, even if the lessons learned are based on failures. For instance, Canals emphasizes that, “In a nutshell, Marks & Spencer’s trouble in 1999 shows how history has helped Marks & Spencer’s managers develop a sense about key success factors in this business and provided them and the whole company with an incomparable set of learning and knowledge in retailing. but, in a changing world, the factors that history had proved to be so successful seemed to be stopping the firm’s progress” (2000, p. 74). In this regard, Canals (2000) reports that, one of the driving forces behind Marks & Spencer’s impressive early growth was its use of technology that was controlled in large part by the organizational culture that had been in place since the company’s founding, but which ultimately failed to provide the responsiveness needed for effective integration of these systems in ways that could facilitate logistical management. According to Canals, technology at the company:

. . . was covered by a group of people who kept Marks & Spencer in constant contact with its suppliers and maintained contact among the stores. A close network of suppliers had been developed by Marks & Spencer to provide the merchandise needed. This network was in many ways a natural extension of the purchasing department. The integration between Marks & Spencer and its suppliers was backed up by a range of formal and informal, but regular meetings, and a close electronic connection. Marks & Spencer always considered these relationships as long-term commitments. (2000, p. 74)

The historical analysis of the organizational culture in place at Marks & Spencer over time is useful in identifying how complacency and ingrained attitudes can adversely affect the ability of corporate leaders to respond to changes in the marketplace, as well as their efforts to expand their operations into new overseas markets. A different outcome to the company’s early failures in expanding its operations abroad might have been avoided if the leadership team had climbed down from their ivory tower long enough to take a hard look at their logistical needs in their new markets, and these issues are discussed further below.

Critically assess any additional logistics strategy approaches that could have been used to develop existing logistics capabilities.

The company initially failed to adopt flexible strategic approaches to its logistical needs in its international operations based on longstanding corporate practices and an ingrained organizational culture. According to Canals, “Marks & Spencer’s growth was based upon the values and policies that had served it so well for so many years. Its achievements were a springboard for new challenges. However, in 1999 Marks & Spencer was facing challenges that seemed to require approaches that were different from the ones the firm had executed so well in the past” (p. 74). In fact, the company had a lot at stake during these early years as it sought to apply the same approach to logistical management that had proven effective in the past. In thi regard, Canals reports that, “As the British retailer faced the reality of a mature market at home, with stagnating retail sales, it had to reconsider wholeheartedly its timid and so far not very successful — international expansion” (2000, p. 74).

The research is consistent in describing Marks & Spencer’s branding efforts as being highly effective, but the same approaches to marketing were not being matched by responsive logistical management practices to support them. As Canals points out, “Marks & Spencer was overwhelmingly dependent on the home market, and only a few of the international ventures in the retailing industry had been successful. A more aggressive international expansion would mean that some of the experiences, values, and policies that had been so successful in the past in the British market would have to change” (p. 74). Based on the foregoing, in order to overcome these initial challenges to the internationalization of its operations, Canals suggests that there was more involved than just fine-tuning the supply chain, and the changes needed had to begin at the top. According to Canals, “The British retailer would have to forgo some of its most cherished practices to adapt to a new world — among them its branding ‘Buy British’, its buying policies, its network of British suppliers, and its strong centralization around the corporate centre at Baker Street” (2000, p. 74).

More importantly, the company was faced with the need to identify better ways to coordinate its supply chain to facilitate the design-to-market process. In this regard, Baker and Bass (2003) report that:

Having greater consistency and control over production realizes savings. The biggest advantage, however, lies in the reduced amount of time it takes to get a design on to the shop floor; the organization can react quickly to the fickleness of pre-teen fashion. Traditionally, this process has taken 28 weeks and [the company] aims to reduce this t 12 weeks. The potential rewards are great as children’s wear accounts for about 10% of Marks and Spencer’s non-food sales. (p. 155)

This level of consistency, though, does not just fall out of the sky but is rather the result of technological solutions that are used to promote a company’s strategic goals for growth, but implementing and sustaining these initiatives over time requires more than seat-of-the-pants management and these issues are discussed further below.

Identify the management issues caused by implementing a new logistics strategy with consideration for available capital, technical and human resources.

According to Baker and Bass (2003), Marks & Spencer was faced with a number of factors when it first expanded its operations abroad. For instance, in its primary domestic market in both clothing and groceries in the UK, the company was confronted with more and more consumers purchasing online, but from suburban and even rural regions of the country, further complicating its logistical operations (Baker & Bass 2003). The company needed to decentralize its operations in some ways, and centralize them in others, but there was little room for experimentation and no room for false starts since customer satisfaction was at stake. With around 78,000 employees, the company possesses the human resources capacity to implement and administer new logistics strategies, but organizations by nature are unwieldy and require time to change.

At present, the company appears to possess the corporate know-how and requisite resources to achieve logistical harmonization along its entire supply chain if it applies the lessons learned from its earlier failures to coordinate its logistical function abroad by taking into account local cultural preferences and business practices as well as the purchasing clout to make its requirements stick. For instance, according to the company’s “How we do business” report from 2011, “Marks and Spencer is one of the UK’s leading retailers with around 21 million customers visiting our stores every week. We source our products responsibly from 2,000 suppliers around the world. Over 78,000 people work for Marks & Spencer in the UK and in 42 territories overseas, where we have a growing international business” (p. 2). Clearly, the company did not achieve this level of growth without learning from its mistakes, and it is reasonable to suggest that the corporate leadership team will demand a formalized approach to its logistical management function that does not rely on informal long-term commitments from suppliers and the strategic implications of this are discussed further below.

Outline the strategic significance of new technology developments and business trends on future logistic strategies for the chosen case study.

Because a great deal of the company’s growth has been attributed to its online presence, the degree to which Marks & Spencer is able to avoid developing an inflexible organizational culture that fails to include all of the company’s stakeholders will likely be the degree to which it fails to achieve its organizational goals abroad. In this regard, Canals (2000) suggests that, “Generally speaking, an organization’s internal context conditions, shapes, and influences its members’ behaviour in various ways. In particular, this context has a significant influence on investment or growth decisions, as we have observed in companies such as Marks & Spencer” (p. 74).

Therefore, the strategic significance of new technology development and business trends on future logistic strategies depends on the ability of the leadership team to coordinate timely responses to changes in the marketplace along its entire supply chain. Fortunately for the company, Canals concludes that even corporate giants can change: “[T]he context not only determines growth decisions, but also an organization’s capacity to perceive and tackle opportunities, discover new ideas, turn these ideas into projects, make decisions with respect to these projects, and, finally, implement them. The effects of the internal context, however, are not irreversible, because people are not totally conditioned by the context in the decision-making process, even though it can be very influential” (p. 74). Taken together, the company’s succeeded in overcoming these initial challenges to the expansion of its operation abroad by learning from its early failures and applying technological solutions in more informed ways. As Baker and Bass (2003) point out, “Marks & Spencer has made cost savings by changing its traditional relationships with suppliers, eliminating areas of duplication and increasing the speed with which its goods come to market” (p. 155).

Conclusion

The research showed that Marks & Spencer employs about 78,000 people in the United Kingdom and 42 territories abroad, with almost half of its revenues being generated by its home products and clothing business unit, and slightly more than half of its revenues being generated by its retail food operations that include conventional grocery items as well as prepared meal products that are finding a receptive market among the growing middle classes in its overseas markets. The company attributes much of its growth to its effective use of technological solutions to grow its business in these overseas markets, but the research also showed that the process has not been seamless and Marks & Spencer experienced some early failures its applying these solutions to its logistical management needs. Nevertheless, in spite of these early failures, the company appears to have learned some valuable (and expensive) lessons concerning the need to avoid allowing complacency and an ingrained organizational culture to prevent responsive and timely communications with its thousands of suppliers and tens of millions of customers in its increasingly globalized operations.

References

‘About Us.” (2012). Mark & Spencer. [online] available: http://corporate.marksandspencer.

com/aboutus/company_overview.

Baker, S. & Bass, M. (2003). New Consumer Marketing: Managing a Living Demand System.

Chichester, England: Wiley.

Canals, J. (2000). Managing Corporate Growth. Oxford, England: Oxford University Press.

Christopher, M. & Peck, H. (2003). Marketing Logistics. Boston: Butterworth-Heinemann.

Fernie, S. & Moore, C. (2003). Principles of Retailing. Boston: Butterworth-Heinemann.

‘How we do business.’ (2011). Mark & Spencer. [online] available: http://corporate.

marksandspencer.com/documents/publications/2011/how_we-do_business_report_2011.

Kaplan, R.S., and D.P. Norton. (2001). ‘Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Parts I and II.’ Accounting

Horizons, vol. 15, no. 1, pp 87-89.

Neely, a. (2002). Business Performance Measurement: Theory and Practice. Cambridge,

England: Cambridge University Press.

Neuman, W.L. (2003). Social Research Methods: Qualitative and Quantitative Approaches, 5th

ed. New York: Allyn & Bacon.

Visich, J.K., Li, S. & Khumawala, B.M. (2007). ‘Enhancing Product Recovery Value in Closed-

Loop Supply Chains with RFID.’ Journal of Managerial Issues, vol. 19, no. 3, pp. 436-

COPY of CASE STUDY: THE FIRM’S HISTORY and ITS EFFECTS on the INTERNAL CONTEXT by JORDI CANALS (2000)

The evolution of Marks & Spencer provides some reflections about the role of history in a firm’s evolution and growth, in particular, its past policies and the learning ingrained in the firm. A British institution venerated almost as much as the royal family, Marks & Spencer performed impressively for some thirty years. Its shares systematically outperformed the market. To get a job with Marks & Spencer would mean a job for life in one of the most admired European firms.

At the heart of Marks & Spencer’s success there was a unique combination of factors. The first was its culture, kept under constant care from Baker Street, its corporate centre. This culture involved a very effective formal and informal communication flow within the company, a close connection between the corporate centre and the shops, a permanent ‘dissatisfaction’ and willingness to improve, and an obsession about quality and customer’s reaction.

As with any quality retailer, product selection was a central ingredient in the spectacular growth of the firm. The classical business role of ‘Buyer’ had been replaced by four different functions. The first was that of the merchandiser, who had responsibility for the operational and control duties for the merchandise, including store stocks. The second was that of the selector, whose responsibilities included the creation of new product ranges and new product selection. The third function was that of the designer, who analysed and forecast fashion trends, through a powerful database on customers’ tastes. The fourth function was technology. This was covered by a group of people who kept Marks & Spencer in constant contact with its suppliers and maintained contact among the stores. A close network of suppliers had been developed by Marks & Spencer to provide the merchandise needed. This network was in many ways a natural extension of the purchasing department. The integration between Marks & Spencer and its suppliers was backed up by a range of formal and informal, but regular meetings, and a close electronic connection. Marks & Spencer always considered these relationships as long-term commitments.

Marks & Spencer’s growth was based upon the values and policies that had served it so well for so many years. Its achievements were a springboard for new challenges. However, in 1999 Marks & Spencer was facing challenges that seemed to require approaches that were different from the ones the firm had executed so well in the past. As the British retailer faced the reality of a mature market at home, with stagnating retail sales, it had to reconsider wholeheartedly its timid and so far not very successful — international expansion.

Marks & Spencer was overwhelmingly dependent on the home market, and only a few of the international ventures in the retailing industry had been successful. A more aggressive international expansion would mean that some of the experiences, values, and policies that had been so successful in the past in the British market would have to change. The British retailer would have to forgo some of its most cherished practices to adapt to a new world — among them its branding ‘Buy British’, its buying policies, its network of British suppliers, and its strong centralization around the corporate centre at Baker Street.

In a nutshell, Marks & Spencer’s trouble in 1999 shows how history has helped Marks & Spencer’s managers develop a sense about key success factors in this business and provided them and the whole company with an incomparable set of learning and knowledge in retailing. but, in a changing world, the factors that history had proved to be so successful seemed to be stopping the firm’s progress.

Generally speaking, an organization’s internal context conditions, shapes, and influences its members’ behaviour in various ways. In particular, this context has a significant influence on investment or growth decisions, as we have observed in companies such as Marks & Spencer. We have argued that the context not only determines growth decisions, but also an organization’s capacity to perceive and tackle opportunities, discover new ideas, turn these ideas into projects, make decisions with respect to these projects, and, finally, implement them. The effects of the internal context, however, are not irreversible, because people are not totally conditioned by the context in the decision-making process, even though it can be very influential

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