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M&S warns of prolonged supply chain issues

11 November 2021

In its latest results, the leading retailer sais it was planning for supply chain sot increases.

In its half year results, it said: ‘We are planning for significant supply chain cost increases in the second half of the year with further on-costs next financial year. However, because of our concentrated supplier base and much improved working relationship with our logistics partner Gist, the Food business is comparatively well placed for these challenges.

‘As widely reported, there are growing issues of driver, warehouse and supplier labour shortages creating additional pressures for all retailers, including M&S. We have a number of recruitment initiatives which include targeted incentives for drivers. We are also increasing truck, cage and tray-fill, and resetting delivery schedules and depot picking processes to help manage the pressures.’

SCALA executive director Rob Wright said: “We are likely to see many more businesses experiencing increased supply chain costs over the coming months, driven largely by a shortage of warehouse staff and, in particular, drivers to transport goods from warehouses to store shelves. To properly combat the issue, we need to see long-term increases in driver wages and better working conditions. 

“If companies wish to avoid supply chain costs spiralling further in the coming months, it is time for real action from both companies and the government. Companies need to be reviewing pay levels and the T&Cs they are in control of, and the government needs to be looking at how facilities out on the road can be improved.

“Given the need to encourage more young people into the industry, action must be taken to improve HGV driver training, which is currently too costly and time-consuming to be fit-for-purpose for many.”

PFS Europe managing director Christophe Pecoraro, added: “If retailers and brands are to overcome these challenges and maintain resilience from now through to 2023, they will need to have more than one contingency plan in place to ensure they’re in the best shape possible to meet the rising expectations of customers as more and more disruptions enter the fray. Multi-node fulfilment operations and temporary pop-up or micro-fulfilment centres across various locations (including in-store) are just a couple of solution considerations. These infrastructures enable brands to spread inventory and avoid further delays further down the line. Shortening the supply chain can vastly reduce the transit time for goods, removing much of the uncertainty involved in last-mile delivery, minimising shipping delays and avoiding increased transportation costs.

“Keeping up-to-date real-time inventory records will also be crucial to staying one step ahead. A Distributed Order Management (DOM) setup will ensure your order management system (OMS) can divert orders to the appropriate inventory pool – depending on several factors – including delivery address and product type. Regular comparisons of in-store data with the digital will have a significant impact on your ability to keep orders moving to meet consumer demand.”