Should we reorder? - the Marks & Spencer approach

A special case of the 'How much to order?' decision in inventory control is the 'Should we order any more at all?' decision. Retailers especially need continually to review the stocked lines they keep on the shelves. For example, Marks & Spencer (M & S) has a simple philosophy: if it sells, restock it quickly and avoid stock-outs; if it doesn't sell, get it off the shelves quickly and replace it with something which will sell. The M & S approach often means putting a new line on the shelves of a pilot store and watching customer reaction very closely. The store most often used for these trials is the company's Marble Arch store in London. Sometimes it is possible to make a restocking decision within a few hours - not surprising when the time-frame for stock rotation can be as little as a week.

For more routine stock control decisions the company uses an automatic stock-ordering system which it calls ASR (Assisted Stock Replenishment). This helps always to have the right stock of textile products in the store at the right time. The system, which is now installed in its flagship Marble Arch store, takes into account all goods bought at the till through the electronic point-of-sale (EPOS) system and automatically generates an order to replenish that item. The system anticipates orders for each item based on the previous week's sales and delivers in advance. The current day's sales are continually reviewed and any extra items required are delivered the next day. Orders arrive at the store from the local distribution centre at Neasden in North London. New orders are usually placed before 8.30 am and 85 per cent of these will arrive before close of business that day. The remainder arrives the following morning before opening time. The number of deliveries each day varies between 14 and 24 depending on the level of business.

On the sales floor, the main stock control tasks are to ensure that all the clothing rails are fully stocked, that the stock tickets reflect the sales information on display and that everything is neatly and correctly arranged. During the day the area supervisor watches the stock levels and the flow of customers around the displays in case any changes to stock location need to be made. The store has a policy of not bringing stock out onto the floor during opening hours; but in the case of fast-moving items, this can at times be unavoidable.

Questions

1. Why is it particularly important for retail operations such as Marks & Spencer to make judgements quickly about how well a product is likely to sell?
2. What do you see as the major advantages of using the electronic point-of-sale (EPOS) system?
3. What kind of inventory policy seems to operate in Marks & Spencer's stores?