The Business Processes of Marks and Spencer Plc - Case Study Example

BUSINESS CONTINUITY MANAGEMENT Insert Name TABLE OF CONTENTS Introduction 1.0 Operating Environment and Stakeholder Analysis 2.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption 3.0 Time Recovery Objectives 4.0 Critical Dependencies 5.0 Strategies for Maintaining Critical Activities/Dependencies 6.0 Critical Dependencies Monitoring Arrangements 7.0 Plan Invocation Arrangements 8.0 Generic Response Arrangements for Managing Disruption 9.0 Media Strategy for Internal and External Stakeholders 10.0 Plan Development, Review and Training Arrangements 11.0 Embedding the Plan into the Daily Management and Organisation Culture Appendices Introduction According to the Business Continuity Institute (2001), one out of every five businesses experience interruptions in its business operations within a period of one year. These interruptions result from the inability of the business to adjust or adapt to the environmental changes. Business continuity management seeks to address the core cause of business failures. Business continuity management refers to the systematic process that seeks to identify potential elements within the business environment that could possibly threaten the organisation’s operations. This report seeks to discuss the various perspectives of business continuity management by analysing the business processes of Marks and Spencer Plc. 1.0 Operating Environment and Stakeholder Analysis Marks and Spencer is a UK public limited company operating in UK’s retail industry with 399 stores located across the nation. Established in 1897, Marks and Spencer has become a retail giant of clothing, food, home products and financial services. Additionally, the company employs over 65,000 people and its total revenues are estimated at £8.16bn (Bevan 2007, p4). On the international platform, the company operates in 30 nations under international franchises as part of its expansion and growth strategy. According to the Retail Overview, the UK retail market is expected to grow at an estimated 15% over the next five years with an estimated industrial worth of £312 billion (Para.2). This has resulted into increased industrial competition levels as established firms conduct aggressive marketing campaigns and new organisations entering the retail industry. Towards the establishment of the company’s CSR program, the company considers the products, people and places principles. The CSR programs are developed by the CSR Committee that is constituted at the board level (Bevan 2007, p9). Objectively, stakeholder analysis seeks to evaluate the stakeholder’s interests and their impact on the operations of the organisation. Marks and Spencer’s stakeholder’s analysis is presented in the stakeholder’s matrix below Stakeholder Role in the Organisation Impact on the Business Operations Rank Shareholders Financing the organisation’s capital requirements in pursuit of wealth maximisation Their withdrawal will result into limited financial resources leading to reduced business activity 2 Customers Provide the company with a market and revenues through retail purchases Without their support, the organisation will realise declining revenues 1 Suppliers Provide the company with support business activities such as raw materials to enhance business efficiency The inefficiency of the suppliers would result into business inefficiency as customers are disappointed due to the lack of some commodities 3 General public Provides the company with the sole source for customers Negative publicity will result into a decline in business operations as customers shun being associated with the company 4 Local & State Authorities Provide a legal framework that guide the company’s commercial interests The authorities have a direct influence on the company’s operating procedures that determine the operating costs 5 2.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption Marks and Spencer’s critical business functions include selling retail products that are achieved by ensuring reliable products are offered in the retail stores. Sales depend on the human resources available within the organization that will determine the quality of services offered to the consumers. According to (Osborne 2007,p19), marketing campaigns and firm revenues are positively correlated and therefore in the absence of sales, the company’s operations would last a maximum of 6 weeks. The negative revenue streams will deplete the available financial resources resulting into slowed organizational growth. The second critical activity within the business involves the receipt of order and the delivery of services. Online shoppers are able to select their preferred products and collect them in a shopping basket where they pay for the purchases online. The company’s e-commerce model requires consumers to provide a UPC Code to make sure their actual selected products are delivered at an optimal price. Upon receipt of the consumer’s order, the company has to schedule shipping arrangements to ensure the delivery of the orders to the consumers. In the absence of the e-commerce infrastructure, the company’s sales would suffer although its operations would last for almost 8 months. Lastly, inventory control plays a great role in ensuring the strengthened customer relationships. Through enhanced inventory control, customers are able to locate various retail products in the stores as replenishment is done instantly. Without the warehouse system, the company could experience reduced business activity as dissatisfied consumers prefer purchasing their products from other retail stores. Without a proper inventory control system, the company will not be able to maintain its operations for more than 1 month due to the immediate decline in sales. 3.0 Time Recovery Objectives E-commerce seeks to enhance the company’s revenues to the comfort of the customers by providing convenient and customer-centred products. Technical problems with the IT infrastructure supporting this business model have a direct impact on the company’s sales and revenues. Small scale infrastructural issues should be sorted out within 6-24 hours whereas large scale issues should be resolved in 3-7 days. The recovery process seeks to ensure the smooth flow of business operations within the shortest time possible from the start of the disruption. Misunderstandings between the company and the suppliers could result into the scarcity of retail products in the company’s stores. The company’s supply chain should be highly efficient especially due to the perishable products. To recover from disruptions emerging from suppliers, the company needs to engage the suppliers immediately and they should resume normal operations within 24 hours. This seeks to ensure that the consumers find their preferred products on the shelves and continue using the company as their preferred shopping facility. Poor inventory controls will result into product shortages within the company’s stores as it is difficult to estimate the re-order levels. Additionally, the company will be required to place orders with the suppliers which increase the delivery time. Interruptions in the Multi-User Warehouse System (MUWS) that is used by the company may hinder the decision making process on the inventory replenishment. The objective of the recovery process is to ensure that the stores are adequately stocked and deliveries are made on time. System interruptions should be resolved within 24 hours to avoid major hold-ups in processing and dispatching the customer orders. 4.0 Critical Dependencies Human Resources The company’s human resource plays an important role in the internal processes of the company. Hiles (2007) states that, through employee motivation schemes, the employees will feel part of the organisation and therefore increase their job satisfaction levels (78). Additionally, employees should be provided with an equal opportunity of growth and development for career and personal development. Information Technology Owing to the company’s large scale operations, information technology plays an important role especially towards consolidating the stores revenues, inventory replenishments and home deliveries for the consumers. Marks & Spencer’s MUWS and e-commerce infrastructure should be regularly monitored and maintained to ensure their reliable utilisation. Buildings The company’s operations require housing with adequate space with the capacity to accommodate the consumers. Buildings provide the company with a safe source from which they can conduct their operations at the consumer’s convenience. Additionally, buildings provide a means of storage for the company where stores replenishment and customer orders are coordinated from. Vehicles Delivery vehicles are intended to deliver the customer orders within the locality and improve the existing customer relationships with the company. The company should possess a sufficient number of vehicles able to meet the seasonal customer delivery demands. 5.0 Strategies for Maintaining Critical Activities/Dependencies Human Resources Strategies Due to the great number of employees in the company:- The human resources department should conduct an assessment of the skill and capabilities required to uphold and improve productivity (BSi 2006, p19). Preferably, the company’s recruitment exercise should consist of a wide pool of candidates to ensure workforce diversity. Where 25 percent of the company’s workforce is unavailable, the company should re-distribute the available workforce to the various stores. Additionally, the company should provide people with adequate chances to learn on the company’s operations such that they can be called upon when their services are needed. However, employees should provide the management with a two-week notice on their absence to ensure adequate preparations. Buildings The company’s building infrastructure should be provided through third party agreements with building owners. Lease agreements are the most preferable choice as the company can renegotiate on the payment terms in response to changes in the business environment (BSi 2006, p20). Additionally, the location of the buildings should be convenient to both the company and the consumers to reduce operational costs. Technology Systems To focus on the core business operations, the company should outsource the establishment and maintenance of its IT infrastructure. A well-reputed company should be assigned with the responsibility of maintaining the company’s IT infrastructure at an optimal cost. On the other hand, the infrastructure should also be able to run on back-up systems to avoid the loss of data or hindered connectivity (BSi 2006, p19). With the M&S stores widely spread across the region, remote access of the system by the local entities should be enhanced to ensure coordinated operations resulting into business efficiency. Suppliers/Stakeholders Due to their impact on the business activities; The company should ensure adequate number of suppliers and avoid relying on a single supplier for a particular commodity. Standby suppliers should be made available to ensure the availability of reliable supplies. Bsi provides that, the company’s suppliers should have robust business control processes that enhance sustainable business operations (BSi 2006, p23). Inventory control systems should be based on the Just-in Time method where the stocks are replenished instantly upon depletion. The amount of product on the shelves should not be allowed to fall below 25 per cent, the level at which they should be replenished. Shareholders should be adequately informed on the achievements of the company especially in wealth maximisation. 6.0 Critical Dependencies Monitoring Arrangements Towards identifying the critical dependencies, it is important to identify the critical activities and establish the underlying resources. Where the critical activities pose a threat to business continuity, the underlying resources should be noted and labelled as critical dependencies. Due to their importance in the business, these resources should be regularly monitored and evaluated. Bsi states that, monitoring involves identifying and selecting appropriate strategies to reduce the business impact arising from resource inadequacy (2006). The company’s vehicles should be serviced on a weekly basis where the operators are provided with a checklist on the various areas to concentrate on. These maintenance areas should be directly involved with the company’s delivery function. The head of the company’s vehicle fleet should arrange and assess the maintenance activities conducted on the vehicles. Buildings provide the business with a secure location to conduct business and should therefore be monitored. The company should commit to lease agreements depending on its business prospects. Where the retail market indicates a growth trend, the company should seek to acquire buildings in selected regions to cater for the growth. This information is available from market surveys conducted by various organisational researchers. Bsi (2006) states that, stakeholders should be continuously informed on the company’s financial and business performance to improve decision making on their part (32). Through the shareholder’s grid, the company should assess the influence that the various stakeholders have on the company operations on a quarterly basis (Burtles 2007, p91). Marks and Spencer’s information system should be constantly reviewed and maintained preferably on a weekly basis. This will avoid major shut downs that negatively impact on the business processes. A taskforce comprising of competent technicians should be established to ensure prompt response in the event of a system malfunction. 7.0 Plan Invocation Arrangements Upon the occurrence of an incident, the crisis response team has to develop a document outlining the procedures to adhere to when implementing the developed response to ensure continued business activities. Towards making preparations on the plan invocation, the company’s management Ought to develop clear procedures of implementing the business continuity plan (BCP). For example where the company’s IT infrastructure fails, the crisis response team has to outline the procedures to be adhered by the IT taskforce in reactivating the IT infrastructure. These procedures should be developed in such a way that they have less impact on the business functions (Bsi 2006, p36). Additionally, the revival plans should be invoked systematically to minimise deviations and increase the probability of achieving the expected outcome. The plan should specify a focal point from which the plan is enacted, implemented, controlled and evaluated. The plan should appoint an individual who has sole command on determining whether the emergency at hand requires the deployment of the plan (Bsi 2006, p35). For Marks and Spencer, the various department heads have the mandate to enforce the plan as they oversee and evaluate their departmental operations in relation to the overall organisational performance. Although the departmental heads have authority in determining the occurrence of an emergency, consultation with other members of the organisation is vital (Bsi 2006, p36). This seeks to ensure that sufficient measures are taken to contain the situation such that the organisation does not misuse its resources in situations that have little impact on the business operations. Once the decision to enact the plan has been made, this information should be communicated to all the relevant individuals. This ensures a harmonised approach towards resolving the emergency situation. 8.0 Generic Response Arrangements for Managing Disruption Disruption in business activities present themselves in everyday business operations and this requires the organisation to develop sound arrangements for dealing with the disruptions. The BCP highlights the various responsibilities and those individuals in charge of the invocation of the plan (Bsi 2006, p35). However, this plan should be implemented systematically to ensure a co-ordinated approach in managing the business disruption. The following arrangements are to be included in the BCP towards the management of the disruption:- The departmental head should be notified of the disruption immediately so that they can assess the impact of the disruption (Fulmer 2005, p21). This will involve gathering adequate information on the events that resulted into the disruption. With the necessary information and an assessment of the magnitude of the disruption, the departmental head should inform the executive management. Once notified, the departmental head has to convene an internal crisis meeting to address the issue and consult with other members of the department on the necessity of invoking the BCP. Fulmer states that, this will depend on the direness of the disruption and its potential threat to the continuity of the business operations (2005, p21). Additionally, the department head should assess the capacity of the available resources in managing the disruption and decide whether external support is necessary. When the department members agree on a decision, the head should inform the senior management on the decision and the department’s approach in invoking the BCP. This seeks to approve the execution of the department’s decision as well as acquire the necessary support from the executives and provide an assurance that the situation has been contained (Fulmer 2005, p87). The response information is shared with everyone else in the department and any other relevant third parties. This provides a common approach to the disruption that result into the effective utilisation of the available resources. Where the response is inter-departmental, a cohesive approach should be developed in the earlier stages and information disseminated to the relevant parties. 9.0 Media Strategy for Internal and External Stakeholders Internal and external stakeholders should be provided with sufficient information which is a crucial component of the incident management plan (IMP). Upon a disruption in business activities, a brief press statement should be drafted immediately and released to the media at the earliest opportunity. This will reduce the inconveniences caused on the various stakeholders and especially the retail consumers. However, the management ought to providing a separate document detailing on the cause, impact and effect of the disruption and the actions taken by the management towards resolving the issue (Bsi 2006, p38). A media liaison officer (s) should be appointed to provide the media with information as the events unfold. The officer (s) should be adequately trained and possess the required competency to handle the media. Additionally, the officer(s) should be approved and authorised to release information by the management. Due to the diversity of the stakeholders, various suitable venues should be identified and liaison officers sent to these venues to brief the internal and external stakeholders (Bsi 2006, p38). Additionally, the company should provide incident information through all available and beneficial mediums such as its website, television and radio stations, newspapers etc 10.0 Plan Development, Review and Training Arrangements The initial BCPs should be constantly reviewed as a response to the changes in the business environment and operations. The crisis response team is responsible for developing the overall BCP as well as the departmental BCPs to contain disruptions that are departmental. These departmental BCPs should be developed by directly involving the departmental heads for a dialogue and/or consultation. Practically, BCPs should be developed from the departmental stage where the interests of the various departments are taken into consideration in developing the overall BCP. The BCP should assign various responsibilities to individuals and ensure that the responsibilities are interdependent. This will ensure that the business interests are taken into consideration when the BCP is initiated. Once drafted, the BCP should be reviewed through constant audits, self-assessments and evaluating the applicability of the plan by engaging other participants. The review process seeks to amend the initial BCP to accommodate changes in the business operations and resource availability. Due to the abrupt changes in the retail industry, the BCP should be reviewed on a monthly basis to provide an efficient response in the event of a disruption. Training forms an important aspect of the BCP as it outlines the BCP’s practicability within the organisation. According to British Standards, the exercising component of the BCP is important as it develops teamwork, competence, knowledge and confidence required during the time of an incident (35). In assessing the practicality of the BCP, the incident response team should exercise the:- Technical, operational, administrative and procedural systems of the BCP BCP infrastructure, responsibilities and arrangements Validate the recovery of important business data that might be exposed or lost 11.0 Embedding the Plan into the Daily Management and Organisation Culture The BCP has to conform to the organisation’s norms and values therefore becoming an integral part of the company’s management. Towards incorporating the BCP into the organisation culture, leadership and support by the senior management is important. Firstly, the management at all levels should raise awareness of the BCP and constantly evaluate its applicability through exercising. Awareness should be raised among the internal and external stakeholders and enlighten them on the existence of a procedural response to a disruption in business activity. The stakeholders should receive sufficient training on the BCP incident response to improve on their competency and therefore reduce the impact of the disruption on the business operations. Training should be conducted through practical training and active involvement in the exercises. Appendices More Influence Public Society (Customers, Employees) Less Impacted More Impacted Upon Upon Local and State Shareholders Authorities Less Influence Fig.1: Stakeholders Analysis Grid References Bevan, Judi 2007. The Rise & Fall of Marks & Spencer: And Hw it Rose Again, Birmingham: Profile Bks. BSi, 2006. Business Continuity Mgmnt: Code of Practice. Burtles, Jim 2007. Principles & Practice of Bus. Continuity: Tools & Techniques, Denver: Rothstein Assoc. Inc. Fulmer, L Kenneth 2005. Bus. Continuity Planning: A Step-by-step Guide, Denver: Rothstein Associates. Hiles, Andrew 2004. Business Continuity: Best Practices: Wrld-Class Business Continuity Mgmt, Denver: Rothstein Associates Inc. Hiles, Andrew 2007. The Definitive Hndbk of Business Continuity Mgmt, 2nd Ed, California: John Wiley & Sons. Osborne, Andy 2007. Practical Bus. Continuity Mgmnt: Top Tips for Effective, Real Wrld BCM, New Jersey: Practical BCM. Retail Overview. Accessed on Apr.28, 2010 from < http://www.prospects.ac.uk/cms/ShowPage/Home_page/Industry_insights/Retail/overview/p!egiLLL >. Read More