Marks and Spencer 2012 Annual Report Download - page 49

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Overview Strategic review Financial review Governance Financial statements and other information
Governance Marks and Spencer Group plc Annual report and financial statements 2012 47
Description Mitigating activities
Selling channels We have ambitious plans for our UK, International and Multi-channel businesses as part of our commitment to becoming a leading
international multi-channel retailer by 2015.
New store format
Failure to deliver improvements across our store estate
to time, to budget or to the desired quality
We are delivering improvements to our stores to strengthen and
clarify our brand in response to customer research. As we move
into the second phase of the roll-out, adherence to programme
schedules, budget and quality standards will be key to
successful delivery.
– Our new store format initiative, designed to improve the customer shopping
experience and our brand positioning, is well underway and we continue to
implement a phased roll out across our store estate.
– Close monitoring of costs and of progress against plan is in place, with direct
reporting lines into the Executive Board. This will continue as we move into the
second phase of roll-out.
– We are closely managing the impact on our stores and have developed innovative
training programmes to minimise time off the shop floor.
Multi-channel
A new online platform with flexibility to support future growth
is not delivered by the time our contract with Amazon expires
To achieve our target to become a leading multi-channel retailer
and to make our brand more accessible, we are investing in a new
online platform that will provide both an enhanced shopping
experience and help to accelerate our growth.
– Our multi-channel growth strategy is underpinned by a clear plan for
implementation of the new platform both in the UK and overseas.
– We are working closely with our partner Amazon to ensure the quality of our
existing online offering is not compromised whilst we build the new platform.
– A phased approach for implementation of the new platform is planned.
International
Failure to leverage our systems, processes and controls
limits growth of our International business
To increase our international presence and build a leadership
position in priority markets, we must adopt an organisation
structure that is supported by robust systems and supply
chain capability.
– The appointment of Heads of Region for Europe, Middle East and Asia
will facilitate the implementation of our international growth plans.
– The focus on enhancing international systems and processes has continued
throughout the year in alignment with the development of our international
strategy and will remain a priority for the year ahead.
Day-to-day operation We are a customer-centric business and strive to deliver an efficient and effective operation.
GM stock management
Ineffective stock management control impacts either
gross margin delivery or product availability
Effective stock management is integral to ensuring that we
provide good availability to our customers, whilst minimising
markdowns which can impact profitability.
– General Merchandise (GM) continue to closely monitor stock levels, targeting areas
with more or less than required. Promotions are tightly controlled, and we are focusing
on our ability to respond in-season to current trends and sales performance.
– A Stock, Sales & Intake tool is now being used across GM and we have implemented
a new stock ledger in parallel run with legacy systems, prior to full business adoption.
Key supplier failure
Failure of a key supplier or third party provider
Economic or geo-political conditions, or changes to the way
we source our goods and services, cause a key supplier to fail,
or disrupt the supply of key product lines or services.
– We have strengthened our monitoring of top suppliers, with a quarterly risk
assessment process in place for key merchandise and non-merchandise suppliers.
– Alternative supply routes are continually monitored and, where appropriate, the
supply base has been consolidated.
– We continue to offer payment terms that are sufficiently flexible to assist suppliers
as required.
IT security
We experience a major breach in IT security
The business is subject to external threats from hackers or
viruses, or sensitive data is accessed without authorisation.
– Extensive security controls are in place in accordance with International Standards,
along with a number of policies and technologies designed to enhance security.
– Sensitive data is tightly controlled through limited and monitored access, and the
roll-out of systems incorporating enhanced security.
IT change
Unforeseen impact of IT changes to new and existing
systems disrupts business operations
As we undertake a number of significant change programmes,
the rate and scale of IT change is increasing, with potential to
significantly impact our complex and interdependent systems.
– We continue to proactively manage cross programme dependencies and have
introduced ‘release management’ to group system changes together.
– We have a clear decision-making process for system changes, including the
adoption of change freezes during critical trading periods.
– Disaster Recovery plans for critical business applications have been tested.
Business continuity NEW
We fail to adequately manage or respond to a Group-wide
disaster
The business faces a heightened level of risk as a result of the
Summer 2012 events taking place in the UK.
– Group continuity plans, incident reporting and management procedures are well
established. We monitor these through an annual crisis management exercise and
quarterly committee meetings.
– We have a number of policies and procedures in place to manage the safety of our
employees when abroad, and have links with the Home Office and government
agencies to receive information on known threats.
We have removed a number of risks from our Group Risk Profile since the prior year, including Food competition, Product costs and
Supply chain management. The Group has undertaken significant mitigating activity in response to these risks and as such their
inclusion in the Group Risk Profile is not deemed necessary at this moment in time.
The risks listed do not comprise all those associated with Marks & Spencer and are not set out in any order of priority. Additional risks and
uncertainties not presently known to management, or currently deemed to be less material, may also have an adverse effect on the business.
Further information on the financial risks we face and how they are managed is provided on pages 97 to 102.