Marks & Spencer has raised IT and supply chain savings targets by a further £50 million, as work progresses on an SAP rollout and investment begins in a new e-commerce platform.
Under plan called Project 2020, in which the retailer said it would “transform” IT and distribution, it will aim to save £125 million from direct technology costs and £175 million from its supply chain.
The plan is costing £400 million this year alone, but M&S said it will not need to increase spending to improve the cost cutting overall. With the new systems it is able to close warehouses – with 30 closed out of the 110 planned – and increasingly concentrate operations at a one million square-foot warehouse in Bradford, which opened in May.
A second site, in the East Midlands, will be constructed next year.
M&S is rolling out SAP enterprise resource planning across its operations as its new “core business system”. The rollout, run by supplier IBM, is complete in its food and clothes divisions, and the final phase will include a new stock ledger next year.
The company has trialled new forecasting, space planning and ranging systems in its food division, and plans to roll out those systems in 2011.
In-store, a new stock management system is providing “more accurate real-time” data, M&S told investors today as it revealed half-year results. It is also rolling out a new electronic point of sale system, which is already live in 40 stores, across the rest of its stores by 2011.
Marks & Spencer reported first half revenues, to 2 October, had risen six percent to £4.6 billion, and pre-tax profits jumped 14 percent to £349 million.
The company’s new chief executive, Marc Bolland, outlined a new strategy that will see M&S spend £150 million improving its e-commerce offering, alongside a £900 million investment to grow store space and revenues.
The retailer said it will “build and manage a new platform” for online sales, but a spokesperson did not give details of the platform.
In the meantime, it will continue to work with supplier Amazon to “maximise the performance” of its existing hosted setup. This will continue until the contract expires in 2013. M&S declined to state which supplier it will work with on the new platform.
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