Supply chain management definition Case Study Example | Topics and Well Written Essays - 2500 words

Supply chain management definition - Case Study Example The service industry relies heavily on the customer experience as it is subjective and therefore introduces complexities into the supply chain. These complexities arise from the variety of goods and services demand from the customer, as they are not uniform in their demand. Therefore the value of the supply chain always starts with customer, as they want shorter times to market for new goods and services. The customer also wants some level of customisation and personalisation to their circumstances which means the service organisation has to reduce its inventories and keep lower stock to prevent losses from unsold stock. Lower unit costs allow the service organisation to pass on a cost advantage to the customer, and this involves improving its use of existing assets in the first instance to reduce disruption to its quality advantage. This essay will analyse a case study of Marks and Spencer and their management of the supply chain. ... Marks and Spencer (M&S) was established in an era where public opinion was still conservative and fashion dictated to the public. This was reflected in its styles and clothing lines, and its dated methods of supply chain management. M&S had two seasons which meant they had a large inventory and profits were dependent on the ability of the stores to clear this stock. This practice was significantly different to that of its competitors, who had realised that restructuring the supply chain process was the only way to meet the unstable customer demand. M&S had also failed to analyse its external environment, which led to its competitors gaining a competitive edge. For instance, Zara, a Spanish clothing retailer, had created its target market and its stock was only available in store for a maximum of 4 weeks, compared to 9 months for M&S. Zara was able to achieve this turnaround by managing its supply chain, which enabled it to be flexible to cope with fluctuating demands. The limited time for stock availability also meant that customers were exposed to more fashion ranges and designs and this created the perception of personalisation. So whilst Zara and other competitors were focussing their efforts on a niche market, M&S was still marketing to a non-descript market and not offering the choice, flexibility and speed demanded by the customer. M&S had failed to act on falling customer satisfaction ratings by simply ignoring them and not realising that part of this dissatisfaction lay in its earlier decision to withdraw the children's clothing range. By the time M&S had reached this realisation, profits had halved and the forecast was not promising. As they had not sold any of their stock, their warehouses were still filled with the previous