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The key lessons from the Plan A business case
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
03 Introduction
06 Lesson 1: Ownership & Management
08 Lesson 2: Finance Team
10 Lesson 3: Green Lens
12 Lesson 4: Innovation
14 Lesson 5: Cross Business
16 Lesson 6: Value Chain
Contents
19 Lesson 7: Not all Money
21 Lesson 8: New Revenue
22 Conclusion
©Rankin Photography
Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
The key lessons from
the Plan A business case
“
Introduction
We launched Plan A in January 2007, making 100 social and environmental
We believe
Introduction
commitments to be delivered by March 2012. We called it Plan A because
that sustainability there is no Plan B when it comes to conserving the earth’s finite resources.
We updated Plan A in 2010, adding a further 80 commitments – and we will
is both a moral continue to challenge ourselves by setting more as we continue the long
journey to build a sustainable business.
and commercial
”
At the end of this first five-year phase As a consequence of these
imperative. of Plan A it seems appropriate to interconnected opportunities and risks,
reflect on what we have learnt so far business models will be disrupted by
in terms of building a business case sustainability for the first time.
for sustainability. We believe that
sustainability is both a moral and Our use of the word ‘disruption’
commercial imperative. Unless we highlights just how crucial we believe
respond to the social, environmental the business case for sustainability
and economic pressures of the future, will become. In the short-term, the
not only will we struggle to compete, business case will be about insulating
we may also struggle to survive as business from short-term cost
a business. pressures; in the longer-term, a more
sophisticated business case is likely
A rising global population together with to emerge, predicated on opportunity,
a growing consumption-based middle innovation and new revenue streams.
class will create new cost pressures as
competition for finite resources grows. This document explains what we’ve
This is likely to be exacerbated by a learnt about the business case for
number of other factors: sustainability during the first five years
• the impact of climate change, of Plan A. We believe surfacing the
reducing the availability of raw business case is vital both to reassure
materials as extreme weather businesses that the first steps on the
events disrupt supply chains sustainability journey can be
• the ability to attract and motivate rewarding, but also to help build the
skilled labour into agriculture and strategy and structures that capture
food and clothing manufacturing an even more compelling business
will become even more challenging case in the future.
• social media will increase the
scrutiny and expectation of
“
business behaviour
• the policy, regulatory and taxation
framework around sustainability will Unless we
tighten in an unpredictable way that
makes it difficult for businesses to
respond to the social,
plan for environmental and
• new revenue streams will emerge as
consumers search for options that economic pressures
help them become more
sustainable in an easy, engaging of the future, not
and rewarding way
only will we struggle
to compete, we
may also struggle
”
to survive.
03
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
The Plan A journey
Plan A was developed in late 2006 to help us shift from a largely compliance-based approach to corporate social
responsibility (CSR), which focused on maintaining the business status quo, to a new mindset that embraced
the broader sustainability challenge and the need to radically improve the environmental and social aspects of
our retail business model.
One of the defining factors that makes In developing a methodology and
Plan A very different from our previous means of calculating the true costs Plan A covers:
Introduction
1000+
approach is its sheer breadth. Plan A and benefits of Plan A, we soon
covers all the social and environmental realised that there was a compelling
issues relevant to our business, and business case for sustainability. stores, offices and warehouses globally
commits us to achieve performance It saved us money, inspired our
1000s
improvements across our operations employees, opened up new revenue
(1000+ stores, offices and warehouses streams, drove innovation in
globally) and the thousands of factories, anticipation of disruption in our sector, of factories, farms and raw material sources
farms and raw material sources in our made our supply chains more resilient
3 billion
supply chain. It even encompasses and strengthened our brand.
the use and disposal of the three billion
individual items we sell each year to 21 Over the last 3 years, the business
individual items we sell each year to
million customers. It was, and remains, case for Plan A has become clearer
21 million
an ambitious programme; one that and more compelling: a cost in its first
requires fundamental and far reaching year, cost-neutral in its second, and
changes in the behaviour of millions of by 2011/12, delivering a net benefit
customers
people worldwide. of £105m. The substantive part of this
benefit comes from improved resource
Although we worked at speed efficiency, although we are now
to develop Plan A in just three deriving extra benefits from initiatives
months, we found time to estimate that drive our existing business and
its implementation costs. At the from new revenue streams.
heart of our costing exercise was
a presumption that mainstream
consumers would not pay more Net Benefit
for sustainability. On this basis
150
we estimated that the social and
environmental improvements we had £105m
in mind represented a potential £40m
100
per annum investment cost for M&S, £70m
with no on-cost for the consumer. We £50m
were not able to calculate potential
50
benefits at that stage.
£-40m Cost
In 2007, we briefed our top ten neutral
0
shareholders about our Plan A
investment plans. None of them were
critical (they recognised that a high -50
profile business such as M&S had to 2007/08 2008/09 2009/10 2010/11 2011/12
have a position on these emerging
issues) but none of them were
particularly engaged by Plan A; they
could not see how it would generate
an immediate financial return.
In 2008, recognising the scale of Plan
A, we put in place very tight project
management controls to ensure we
delivered some highly publicised
targets and to maintain tight control
over costs. With 100 work streams
across our business, there was a
significant risk that costs would run
out of control without this discipline.
04
Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
Based on previous economic In short, we believe that sustainability
downturns, who would have has the potential to be hugely disruptive We’ve identified eight key lessons
predicted that during a recession over the next ten years. Not just relevant to the Plan A business
in the UK market our input costs because of the cost challenges case. They’re explained in detail
(energy, commodities, labour and outlined above, but because it will later in this paper, but it’s worth
others) would be at or close to a also open up new markets and summarising them:
record high, increasingly volatile – associated revenue streams.
Introduction
and likely to remain so in the 1 O
wnership & Management:
foreseeable future? ‘Disruption’ of this kind is essentially budgets should be owned
unpredictable. We don’t know operationally, not centrally, but
The theory that prices would inflate precisely how it will affect us, only need to be supported with central
as BRIC countries (Brazil, Russia, that it will. It’s not inconceivable programme management.
India and China) matched Western that during the coming decade,
consumption levels is now a reality. the sustainability challenge and 2 F
inance Team: engage the
We believe that growing BRIC the availability of new technologies finance team; they are the experts!
demand will continue to drive input will trigger radically new ways of
costs, and that these will also be consuming food, clothing and other 3 G
reen Lens: looking at the
affected by the practical impacts of products. If M&S wants to remain business through a different
climate change (extreme weather relevant and successful beyond 2020, ‘green lens’ means people spot
and other phenomena) that are now we need to adapt now in order to new opportunities and challenge
affecting the supply of raw materials. create value in new ways; we need ‘sacred cows’.
to transcend the linear, volume and
There is evidence that the global physical product based model we 4 Innovation: innovation is key and
economy is now using less resource follow today. must be proactively supported;
per unit of production, but we don’t well-scoped pilot projects enable
believe that this ‘de-materialisation’ We’ve learnt a lot through our efforts you to take controlled risks in
will keep pace with the rapid increase to understand the business case for scaling innovative solutions.
in unit volume consumption. Plan A. We believe this understanding
Consequently, we believe relationships puts us in good shape to tackle the 5 C
ross Business: the business
between buyers and suppliers will even bigger sustainability challenges case needs to be addressed
change as demand rises for access and opportunities ahead. Now we want across the entire organisation.
to quality raw materials. to share what we’ve learnt with others.
6 V
alue Chain: there are potentially
much bigger benefits outside
your organisation in your wider
value chain.
7 N
ot all benefits are about money:
not all benefits can or should be
monetised.
8 N
ew Revenue: sustainability is not
just about making a business more
efficient; it’s also about creating
new revenue streams from more
sustainable products and services.
“ We’ve learnt a
lot through our efforts
to understand the
business case
for Plan A.
” 05
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 1: Ownership & Management
Budgets should be owned operationally, not centrally, but need to be supported
with central programme management
We initially controlled our Plan A – and when they realised that Plan A So whilst budgets were held locally,
budget centrally, requiring business wasn’t just about compliance but also the central team still retained a clear
Lesson 1: Ownership & Management
units to bid for investment money to opportunity, they started to search for overview of all investments and their
cover any additional sustainability cost savings with real enthusiasm. relevance to our progress against
costs so that we could avoid on-cost commitments.
to our customers. This gave our As teams started to share solutions
central team a clear picture of what that incurred no on-cost, they all These programme controls provided
was being spent, however we soon became more confident. They started us with the management information
realised that having this ‘helicopter to challenge the prevailing mindset that to make rapid decisions about where
view’ was not helping us to drive the ‘green comes with a price premium’. to accelerate or change activity.
ownership and cultural changes we
needed to achieve across the business. This was probably the most important Another key factor was the
step we took in ‘unlocking’ the introduction in 2010/11 of a Plan A
Business units didn’t feel they owned business case for Plan A. It enabled target for every M&S Director as part
their own budgets, and consequently many of the other lessons outlined in of their annual bonus objectives – and
didn’t really scrutinise their costs. this document. At the time, surrendering their ‘cascading’ through teams. This
They were too willing to accept the central control ‘felt’ like a risk: would has ensured that Plan A is not seen
premise that more sustainable raw empowered business units really as a ‘nice to have’, but a must-do,
materials and manufacturing processes ring-fence money for Plan A? Would that is every bit as important as hitting
would always cost us more and that there be a temptation in difficult times sales or margin targets. It also
a central budget would always for Plan A funds to be re-directed to ensures that Plan A progress is
subsidise them. more ‘commercial’ activity? We took reviewed by senior management on
steps to mitigate these risks by a regular basis over and above the
Centralised control also increased the putting robust controls in place. normal Plan A governance structure.
risk of colleagues across the business
seeing our 100 commitments as the
only sustainability issues that needed
to be managed, with no onus on
them to identify additional issues
and opportunities.
In practice, it proved impossible for
our central team to track every social
and environmental issue; we needed
to engender a dynamic view of
sustainability not a fixed one; a culture
in which everyone is constantly
looking out for new risks and new
opportunities. We realised we were
effectively controlling a centralised
‘sustainability philanthropy’ budget,
not a normal business budget.
Consequently, we implemented a
system in which business units held
their own annual Plan A budgets at
a local level. This produced much
greater scrutiny of costs and a
corresponding shift during year two
as Plan A became cost neutral (with
our investment costs matched by our
savings). M&S colleagues running
stores, logistics, product development
or other operations knew more about
‘their business’ than our central team
06
Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
CASE STUDY: CASE STUDY:
Closed-loop Director objectives
carrier bag
By introducing carrier bag All M&S Directors have a Plan A
charging, we’ve significantly target as part of their annual bonus
Lesson 1: Ownership & Management
reduced the number of bags our objectives. Our Executive Directors
customers use (reduction of 78% responsible for Clothing and Food
or 362m bags last year vs. are awarded bonuses on the basis
2006/07). However we also of our progress towards our target
wanted to ensure the volume of that every single M&S product has
bags used following this reduction a Plan A attribute by 2020 (50% by
represented the most sustainable 2015). This objective was selected
option available. specifically as its delivery is only
possible if dozens of our more
Using plastic bags with recycled detailed Plan A commitments are
content was identified as the best successfully implemented.
option. However these bags were
in limited supply and those available The work done since the launch of
had only a small percentage of Plan A to change mind sets and
recycled material – we wanted ways of working at M&S would
100% recycled carrier bags. inevitably have driven good
progress against this commitment.
Our supply base developed a However, by also making it part of
100% recycled content option, the annual bonus targets, we sent
but cost remained a challenge – out a clear message, to our
until we and our supplier jointly colleagues and to our supply base,
identified the opportunity to use about how seriously we take this
plastic waste coming from our commitment. It ensured that key
own distribution centres. issues and difficult decisions were
dealt with quickly. It drove
Working across our business innovation as our buyers and our
(procurement, facilities and suppliers found new ways of
logistics) a new system was delivering more sustainable
devised and put in place to ensure products without additional cost
this particular waste stream was or complexity.
segregated and could be
backhauled to our supplier. We’re In addition, it ensured progress
now repurposing over 200 million against this commitment was
protective plastic clothing shrouds reviewed outside of the Plan A
to make our plastic bags. governance structure.
We’ve now moved to 100% This sharper focus has enabled us
recycled content bags and are to make progress faster than we
managing costs whilst also envisaged and without significant
“
ensuring that this waste stream is on-cost – with 31% of M&S
recycled and not sent to landfill. products sold in 2011/12 having at
We implemented We’ve seen lots of other areas least one Plan A attribute. Director
where closed-loop recycling is objectives have built upon local
a system in which possible and can deliver ownership of budgets by
business units held commercial benefits. encouraging local ownership of
delivery of Plan A. Each part of the
their own annual business is now working to create
its own ‘route map’ on
Plan A budgets at implementing Plan A into its
”
products and associated supply
a local level. chains. Plan A has gone local.
07
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 2: Finance Team
Engage the finance team; they are the experts!
Devolving Plan A budgets to local every six months and signed-off by Running calculations in this way
business areas was an important the appropriate Finance Analyst and enables us to understand the true
Lesson 2: Finance Team
step for us, but to take this step Plan A contact, as well as the Central benefit to M&S – from capital
we also had to redefine our Finance Finance Team. expenditure and from the process
team’s involvement in Plan A. efficiencies achieved as colleagues in
In developing the business case for stores and offices help reduce our
Before ‘localising’ the central Plan A, Plan A, we’ve also identified a number energy usage.
budget was controlled by one of process and methodology
member of the central Finance team. challenges that require new tools and In 2011/12, our work on energy
Devolution required many more team ways of working: efficiency saved us over £21.8m and
members to get involved. with energy prices set to increase in
1. Which costs should be included? future, this benefit stream will only
How did this work in practice? One of the early challenges we grow. This work has delivered further
The Finance Group was engaged needed to resolve was around which financial benefits – reducing our cost
to help create the process and rules costs and benefits should be included exposure to the Government’s
for producing the Plan A business in the Plan A business case. For Carbon Reduction Commitment
case. Responsibility for capturing example, when we purchased a new (CRC) Energy Efficiency Scheme.
the information on costs and benefits eco-efficient lorry such as our Reduced energy requirements are
moved from the Plan A team to tear-drop trailer (which holds 10% also mitigating the risk of potential
Finance Analysts across the business more product and is 10% more fuel energy availability issues in future.
– each responsible for Plan A costs efficient) did we capture the whole If we hadn’t agreed our baseline, we
and benefits, alongside standard cost of the vehicle or just the additional would still be arguing over why the
costs and benefits, in their own area. cost relative to a conventional trailer? total cost of energy to our business
Given that the purpose of the business continues to rise (due to market
Our Finance Analysts provided case was to show the ‘additional’ factors beyond our control) despite our
a much better understanding of costs and benefits associated with efforts to improve energy efficiency.
finances in their specific area than sustainability, we decided that only
a central team could ever achieve – this ‘additional’ cost would show in 4. Profit from the sale of eco
improving our understanding of the business case. products
the business case and also the Following protracted debates about
opportunities to drive further benefits. 2. What about business as usual whether and when to include profits
However, this enhanced understanding initiatives? from the sustainable products and
has only been achieved by putting We also needed people to services that we sell, we concluded
a rigorous process and methodology understand that we were looking at that in certain circumstances where
in place. all initiatives supporting Plan A, even we could demonstrate that the sale
those already in place. In nearly all was directly due to Plan A (such as
This involves our analysts working instances, it is clear that the profile on M&S Energy) profits would be
with the relevant Plan A contact(s) and drive provided by Plan A has included. However, profit made from
in each business area to capture enabled us to significantly exceed the selling a Fairtrade T-shirt would not be
and calculate annual operating benefits that would ordinarily have included as we couldn’t definitively
costs, capital expenditures and all happened. associate its purchase with Plan A.
associated benefits or costs avoided
on a commitment by commitment 3. Robust baseline data required This is a very important point. Our aim
basis. This is done for each business to understand cost avoidance is to take all M&S products on a Plan
area and then collated to create a Calculating cost avoidance requires A journey (for example, making all our
company level view encompassing a clear baseline and a robust coffee and tea Fairtrade, all eggs free
all 180 commitments. calculation. For example, we’ve range and ultimately all fish from a
improved our energy efficiency by sustainable source) rather than create
This process has helped to create 28%. We’ve therefore put in place a dedicated ‘eco/ethical’ range in a
a virtuous circle – with both issue calculations to work out what we corner of the store – sales of which
owners and embedded finance teams would have paid today had we not can be broken out separately and
working together to identify and implemented these energy saving assigned to Plan A.
achieve additional business benefits. initiatives. Because we launched
Performance figures for every Plan A in 2007, we’re using our We do however have separate
business area are reviewed in detail financial year 2006/07 as a baseline. reporting in place to ensure that we
08
Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
know what proportion of our sales The Macro-model is designed to The programme aims to connect
comes from products with a Plan A evaluate an entire store – it takes into sustainability and financial agendas
Lesson 2: Finance Team
story to tell (a Plan A attribute). There account not only the Micro-model, more closely by showing how
are also clear commitments in place but makes adjustments because commercial success can also benefit
to ensure this proportion grows year different technologies working in society and the environment. We see
on year to reach 100% of M&S conjunction can impact the results. this ‘business case’ as an important
products by 2020. For example, if we modify the lighting first step towards managing our
in the store, this affects how much business in the round, providing us
5. Hurdle Rates heating or cooling is required and with information on our financial,
As the business case for Plan A therefore the amount of energy we use. social and environmental performance.
became more clearly defined, we
decided that we would not introduce This evaluation process means our
lower hurdle rates on investment teams now have to think much harder
We’ve improved our energy efficiency by
decisions (i.e. paybacks, internal rates about future costs and their potential
of return, net present value)
specifically for Plan A/sustainability
initiatives. The two key reasons for
impact on our business.
7. Integrated Reporting
28%
saving us nearly
this were: In the UK and internationally a lot
1) Ensuring that we always worked
hard to drive the best deals and
innovate in ways that enabled us to
of work is being done to develop
‘Integrated Reporting’ and we’re
taking part in the International
£22 million
a year
deliver projects within standard M&S Integrated Reporting Pilot Programme.
investment criteria – i.e. driving Plan A
to become business as usual as
quickly as possible.
2) Inevitably, there is a limit as to
what funding can be made available,
so it is important that we constantly
evaluate and prioritise the various
spending opportunities to ensure we
select projects that deliver the best
environmental, social and economic
outcomes.
6. Whole Life Costing
From a property perspective, we’re
changing the way we think about and
manage our investments, moving
away from focusing solely on upfront
capital cost, to consider the whole life
operational costs as well.
To support this, we’ve implemented
two new evaluation models. The
Micro-model is designed specifically
to evaluate individual initiatives such
as the implementation of LED lighting
or new types of refrigerants. The
model involves the evaluation of some
35 parameters in addition to the
upfront capital cost – such as energy,
Carbon Reduction Commitment
liability and maintenance.
09
Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 3: Green Lens
Looking at the business through a different ‘green lens’
means people spot new opportunities and challenge
‘sacred cows’
Many of our Plan A targets were very call to protect the planet by reducing
ambitious – for example, those on waste and resource use that also CASE STUDY:
Lesson 3: Green Lens
carbon neutrality, zero waste to landfill saved money. Many businesses have Reducing waste:
and obtaining key raw materials from seen this but the scale and visibility of knowing the facts unlocked
sustainable sources. Our ambition Plan A within the business has been new opportunities
signalled a different mindset – one a very powerful motivator to reach
about transformation and innovation further and faster to save resources As part of our efforts to reduce
rather than incremental change. and money. waste (see page 14) we had to
Back in year one, our energy and improve our management
packaging teams didn’t believe that Plan A has also helped us to challenge information systems.
a 25% energy efficiency improvement some ‘sacred cows’ – including food
or a 25% reduction in packaging waste, packaging use and business These helped us understanding
could be achieved. Yet, both met travel. We would have struggled to how much of our waste was being
these targets on or ahead of time. confront such well established ways recycling and for the first time
If we’d set more ‘realistic’ reduction of working without the high profile of provided insights about what types
targets we believe we would have Plan A. Today our people have greater and volumes of waste we produce.
limited our capacity to innovate more confidence to challenge long Armed with this information we
and add business value. established ways of working. were able to identify many
opportunities to reduce waste
Our ambitious targets forced us to We’ve also realised that Plan A is a (-31% by year 5 of Plan A), to
measure underlying activities more powerful tool in tackling small, local make our recycling operations
precisely than ever before and in costs that collectively add up to a big more cost efficient and to lower
doing so we acquired new knowledge, potential saving. In any one store or our initial manufacturing costs.
insights and ideas around reducing business unit these small cost savings
costs. For example, we initially tried to were often previously overlooked, but We’ve achieved particularly good
reduce business travel costs by now they’re aligned with a powerful results when it comes to M&S
traditional means – for example, central motivator, (for example, a decor and publications (including
securing better procurement deals. corporate aim to send zero waste leaflets and magazines) – cutting
This approach saved us money but to landfill), people do something to the volumes printed without
didn’t confront the fundamental reduce them – cumulatively delivering impacting on customer messaging
motivations for travel. Once we multi-million pound benefits. and delivering a saving of
introduced a new Plan A requirement £935,000 in 2011/12.
to reduce flights by 20%, we started Last but not least, we shouldn’t
to understand the reasons for travel, underestimate the galvanising affect
the key routes that could be switched that ‘going public’ on Plan A had.
from plane to train and the types of Regular public reporting and external
GIRLS’ KNITWEAR
business meeting (e.g. approval of assurance of our achievements all knitwea
from r
garment fit) that could be held using helped ‘keep our feet to the fire’. C
£7
videoconferencing technology. B
A
Putting clear, well publicised
STAYNEW D
commitments in place whilst also
de-centralising budgets delivered GirLs’
another benefit: better day-to-day knitwear
our soft wool and cotton look out for
blends are gentle to wear extra colours
cost control and more people actively and easy to care for B. WOOL BLEND CABLE
CARDIGAN NEW
50% wool, 50% acrylic.
Age 3-6 yrs £11; 7-10 yrs £12;
11-14 yrs £14; 15-16 yrs £17;
D. COTTON-RICh CABLE
CARDIGAN
88% cotton, 12% polyamide.
Age 3-6 yrs £8; 7-10 yrs £9;
11-14 yrs £11; 15-16 yrs £14;
engaged in spotting Plan A and
chest 97-109cm (38-43in) £17 T76 1327 Grey, navy (only
T76 1337 Grey, navy up to age 14), white (100%
cotton, only up to age 14)
See page 66 or online for more details.
A. CARDIGAN
With Fairtrade cotton and
stretch. Stay New. 82%
C. SLIM-FIT TANK TOP
Upd
cotton, 18% polyamide.
Age 3-6 yrs £8; 7-10 yrs £9; 50% wool, 50% acrylic. E. WOOL BLEND
11-14 yrs £14; chest 97-109cm Age 3-6 yrs £7; 7-10 yrs £8; CARDIGAN
associated cost saving opportunities.
(38-43in) £14 11-14 yrs £10; 15-16 yrs £13; 50% wool, 50% acrylic.
T76 1329 Grey, black, navy, chest 97-109cm (38-43in) £13 Age 3-6 yrs £11; 7-10 yrs £12;
royal blue, bottle green, red, T76 1336 Grey (only up to 11-14 yrs £14; 15-16 yrs £17;
burgundy, brown age 12), black, navy (only up chest 97-109cm (38-43in) £17
E to age 12) T76 1326 Grey, navy
a
youter
†
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free delivery to over 450 stores including 150 Simply Food stores† • check online for latest schoolwear offers 45
sensa ies
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136-13Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
Lesson 3: Green Lens
CASE STUDY:
Printing
The true cost of printing isn’t
always understood – and many
“ If we’d set more ‘realistic’
reduction targets we believe we
would have limited our capacity
people are still surprised when we
explain that it comprises not only to innovate more and add
”
the cost of the paper and the
toner, but also the electricity and business value.
cost of the engineer to replace and
recycle the toner. Using this cost
calculation has helped us engage
colleagues across the business to
think differently about printing and
reduce it by 25% to achieve a
£550,000 saving in 2011/12.
11Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 4: Innovation
Innovation is key and must be proactively supported;
well-scoped pilots enable you to take controlled risks
scaling innovative solutions
Given the scale of the environmental reducing their willingness to continue
and social challenges ahead, we pushing the agenda. CASE STUDY:
Lesson 4: Innovation
know that we need to innovate and Packaging improvements
do things very differently right across To avoid these negative consequences
our business. we’ve piloted sustainability solutions The move to vacuum packing fresh
at a local level – trialling them in a meat cuts led to a 75% reduction
By driving ownership of Plan A across small number of stores, factories or in packaging and delivered fresher,
the business we’ve started to integrate dye-houses to help us establish what better quality products for our
sustainability into all of our business works and what doesn’t. We side-line customers. It also boosted sales,
units’ core product development and our failures, nurture our partial cut store waste and reduced
innovation programmes. successes and roll out aspects that customer complaints.
work at scale. In many instances,
In addition, we’ve developed a central initiatives judged unsuitable for wider Not all packaging reduction
Plan A Innovation Fund to support rollout became viable as circumstances initiatives deliver multiple benefits,
innovative initiatives that are too risky changed – and our pilot studies meant but almost every time we’ve
or too long term for business unit we were ready to take roll them out at reduced packaging we’ve saved
expenditure; ideas that cut across pace at the appropriate time. on cost – in food as well as
the business or reside in areas of the clothing. By tracking what our
business that have not traditionally Running pilot studies has underpinned costs would have been without
run innovation programmes before. the careful management of Plan A packaging reductions, we know
costs, allowing us to take controlled that in 2011/12 packaging
Our central innovation fund has risks and model what wider roll out reductions delivered savings
helped us overcome these costs are likely to be. But pilots must of £16.3m.
challenges. It’s supported over not be seen as an excuse for avoiding
70 projects so far. Some of these large-scale change, a token green
projects have and will fail (the store or factory. They are a beginning
inevitable quid pro quo of innovation) not an end in themselves.
but others are already paying back
way above our initial investment.
There is also a secondary benefit. The
funds are disbursed via an Innovation
Fund Committee, comprising key
innovators from across the business.
Bringing these individuals together
every month sparks conversations
about sustainability innovation that
cut across the business and help us
to generate ideas about improving the
M&S ‘ecosystem’ and not just its
constituent parts. Only this type of
collaboration will allow us to ultimately
innovate to create a truly sustainable
“
business model.
We’re aware that it’s very easy to Our central innovation fund has
spend an awful lot of money on
sustainability ideas and technologies supported over 70 projects so far. Some
that are initially very enticing, but
which – for unforeseen operational or of these projects have and will fail (the
cultural reasons – ultimately fail.
These failures not only waste money
inevitable quid pro quo of innovation) but
but can also sap the confidence of others are already paying back way above
”
individuals who are embarking on
a personal sustainability journey, our initial investment.
12Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
CASE STUDY: CASE STUDY: CASE STUDY:
Lesson 4: Innovation
Eco factories Closed loop wool & cashmere Sustainable learning store
There are lots of technologies that With raw material prices on the Our sustainable learning stores,
can save emissions in stores and increase, our clothing technical including Ecclesall Road in
factories and in the desire to team spotted an opportunity to Sheffield, have a host of
demonstrate progress against use waste wool and cashmere environmental features such
environmental targets there can be garments (either garments donated as 100% LED lighting, 100%
a temptation to simply ‘do lots of to Oxfam but not fit for resale, or sustainable timber and reclaimed
different things’. Our commercial faulty garments within our supply bricks. We generally find that
teams remind us that we also need chain) to reprocess in to new fibres. around 60-70% of the initiatives
to make best use of another we trial in our Learning stores
scarce resource – cash! Following a successful bid to the are successful and consequently
Plan A Innovation Fund, the team get rolled out as standard store
Our 3 model eco-clothing factories put in place a trial to test the specifications.
initiated a long list of different business case and processes
projects with different paybacks to involved in delivering a new garment Further information on Ecclesall
explore how they could reduce made from these waste garments. Road and other M&S sustainable
energy, water and waste. We used learning stores can be found at:
this to draw a line at 18 months The trial helped us to learn many http://www.marksandspencer.
payback. We then assessed the lessons on closed loop processes com/construction.
energy saving potential of those and is informing our strategy
projects above the line and going forward.
established that a typical clothing
factory could save up to 10% The output of the trial was the
energy at an acceptable payback. successful launch of a limited edition
That gave us commercial coat. Further details can be found at:
confidence to commit to our top http://social.marksandspencer.
100 clothing factories saving 10% com/fashion-2/what-makes-this-
energy by 2015 by focusing on coat-so-extraordinary/
lighting, insulation and heating
controls. This helped us to engage
our supply base as we were able
to demonstrate that we weren’t
asking them to do things that didn’t
make good commercial sense.
13Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 5: Cross Business
The business case needs to be addressed across the
entire organisation
Sustainability demands a joined up
solution across our entire business. CASE STUDY:
Lesson 5: Cross Business
Plan A forced us to leave our silos Achieving zero waste to landfill
and work together – thinking and
running the business in the round. In February 2012, we achieved our recycling issues. For example, some
This in turn has brought wider cultural zero waste to landfill commitment – packaging materials and substrates
benefits to the business. ensuring that all of our operational could not be recycled and had to
and construction waste (from every be sent to landfill. The team worked
We know that some parts of the one of our stores, offices and with our supply base to change the
business will probably save more in warehouses) is recycled. materials being used, helping us
the near term from Plan A activity meet our goal of sending zero waste
whilst others will have to invest for a This is one of our most complex to landfill which in turn had benefits
longer period. Without the unifying Plan A commitments, touching on for our customers, making it easier
nature of Plan A, there’s a danger that every single part of our business and for them to recycle our packaging
we would focus only on quick wins all of our colleagues. We spent over at home.
and lose out on benefits that take 18 months developing the strategy
longer to achieve. to ensure it was feasible, robust, The revenue we derive from
and commercially viable, whilst also recycling, coupled with the
We’ve found out that many costs and ensuring that we didn’t increase avoidance of landfill cost and a
benefits are cross-business; achieving carbon emissions by adding reduction in staff time associated
them requires many different teams to significant transportation to achieve specifically with processing food
work together in ways they’ve never zero waste to landfill. waste, delivered an annual benefit
done before. In many cases, this has of £6.3m in 2011/12.
required teams or units to take on Waste had previously been
additional cost or give up financial managed directly by different parts
benefits in order to deliver a better of the business; so the processes in
outcome overall for the business. place for our clothing warehouses
were different to those for our stores
Our willingness to do this has and different again for our offices.
improved over time, and there’s no We realised that this was inefficient
doubt that it has improved team and would prevent us delivering
working across the business and our target, so we agreed that
helped us to identify further responsibility for waste should
opportunities and financial savings. be centralised.
The formation of a governance
structure centred on our How we do However, some areas of our
Business (HWDB) Committee, which business, such as logistics, already
comprises senior managers from right derived revenue from recycling and
across the business, has enabled us this was factored into their operating
to resolve these cross company issues. plans – something they didn’t want
to lose. Other parts of the business
Our five-year time horizon for Plan A needed additional investment to
has given us the space to resolve enable 100% landfill diversion to be
complex cross business issues. put in place. Working with Finance
Plan A has also created a unifying and senior managers from across
reference point against which different the business, over three years we
business needs could be assessed restructured our operating plans and
and prioritised. moved funding between areas to
enable us to put in place a new
recycling solution.
We’ve also had to work more
collaboratively to resolve waste
14Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
CASE STUDY:
Lesson 5: Cross Business
Efficiency every day, not just for Christmas
In support of our commitment to Through discussions with our
improve transport fuel efficiency by Retail team in stores they also
20%, our Logistics team is always realised that delivering larger
looking for ways to make our volumes in fewer deliveries could
operation more efficient. in fact help stores to plan more
effectively and maintain better
For many years, M&S transported stock levels on the sales floor.
clothes from our distribution
centres to stores on wheeled Working together to deliver
clothing rails which allowed us to business and environmental
unload rapidly. At peak times of the efficiencies, our Logistics and
year (for example Christmas) time Retail teams successfully
and equipment constraints forced implemented this business wide
us to ‘loose load’ products on to change, which along with other
fixed bars within each vehicle, fleet management improvements,
resulting in additional workload allowed us to reduce our clothing
in stores as lorries took longer vehicle fleet by over 25% and
to unload. delivered a 30% fuel efficiency
improvement.
The Logistics team realised that
although loose loading created Using the detailed information we
additional work in stores, it track to calculate fuel efficiency,
significantly increased the volume we’re able to work out what our
of garments that could be fuel costs would have been had
transported on a single vehicle. we not driven improvements. In
They concluded that loose loading 2011/12, fuel efficiency delivered
could help us reduce our fuel savings to M&S of £2.1m. As the
usage and the number of vehicle price of oil continues to rise, this
journeys made to deliver clothes. saving will increase further.
We have reduced our clothing vehicle
“
fleet by over
We know that some parts
of the business will probably save
25%
and delivered a fuel efficiency
more in the near term from Plan A improvement of
activity whilst others will have to
30%
invest for a longer period.
” 15Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 6: Value Chain
There are potentially much bigger benefits outside your
organisation in your wider value chain
We know Plan A activities in our M&S’ procedures and standards. build capacity in supply chains
supply chain are delivering financial They’re also spotting new through our Plan A Supplier Exchange
Lesson 6: Value Chain
benefits to our suppliers, primarily sustainability opportunities Programme. We believe this has been
through resource efficiencies and themselves. vital in convincing suppliers that we’re
increased productivity – we inevitably serious about Plan A. It’s also proven
benefit from this, although in many 2. Our ambitious commitments force more efficient to create one central
cases it is often hard to quantify. us to look end-to-end along our hub for all suppliers on all aspects of
Consequently, we haven’t assigned product supply chains rather than just Plan A rather than interact with them
monetary savings from Plan A activity its individual bits – in the process in an ad hoc fashion.
in our supply chain to our Plan A we’re uncovering opportunities for
business case. improvement around raw material We know that our supply chain will
specifications, the network of increasingly be the focal point for our
As our suppliers implement Plan A it suppliers that make up a supply sustainability journey. It’s where much
helps them to contain price inflation chain, factory and product quality of our social and environmental
despite increases in raw material, standards and the impact of our footprint is created, but it’s also the
energy and labour costs and to buying processes. rich source of knowledge that will help
improve product quality, for example, us deliver innovative ways of working,
with food life extensions, which in turn 3. We’re identifying win/win improved products and ultimately
reduces waste. opportunities: improvements to make M&S a truly ‘closed-loop’
product availability and quality that sustainable business. That’s why we
This is a complex area and further work make good business sense for M&S, want to nurture, rather than impose,
and analysis is currently underway to our supply base and our customers ownership and understanding of
ensure we can capture and report on - as packaging improvements have sustainability in our supply chain.
future performance and progress in a demonstrated.
robust way. Despite the difficulty of A ‘demand-direct’ approach would
‘monetising’ Plan A benefits in the All this has been made possible as we have helped us make some initial social
supply chain we are seeing benefits have scaled up support to suppliers. and environmental improvements and
emerge for us and our suppliers: probably also delivered commercial
Our Plan A Supplier Exchange benefits in our supply chain. However
1. We’re seeing the same attitude programme concentrates our efforts it’s clear that true commercial
shift in our relationships with suppliers and provides a format for suppliers to breakthrough only comes when our
as we’ve seen internally (lesson 3). learn from one another and accelerate supply chain owns sustainability and
Plan A allows suppliers to safely progress. We’ve been working with is as excited by the potential future
challenge ‘sacred cows’ arising from suppliers to raise awareness and business case as we are.
16Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
CASE STUDY: CASE STUDY:
Lesson 6: Value Chain
Better cotton Complex supply chains
Better Cotton Initiative (BCI) is As with most retailers, we have
about helping producers adopt complex supply chains, with
better management practices in thousands of suppliers and raw
growing cotton. Using less water, materials. Every time we create
less pesticides and fewer fertilisers new fabric blends, new colour
is clearly good for the environment shades or new recipes, there is a
as well as a way to improve the cost attached. In most cases, this
efficiency of the farming system. is something our customers value
We’ve learnt that farmers who and hence the right thing for us to
follow the BCI model are more do, however, Plan A has made it
efficient and can reduce their input possible for us to challenge some
costs. The latest results from our of the complexities.
project with WWF in India show
the BCI farmers are over 30% For example, when we wanted to
more profitable than comparable introduce a new sustainability
non-BCI farmers. For M&S, BCI certification for a particular raw
means farmers are more likely to material which covered multiple
grow cotton rather than other product categories, we initially had
crops; and because they’re to map out the number of
disconnected from major increases suppliers and the range of product
in input costs and shortages, we’ll specifications we had. This
have cotton sources for the future. sparked a debate about whether
we really needed the sheer number
This ensures our market for buying of product variations and
cotton is more stable, and greater associated products. In many
stability means fewer price cases, where we identified
fluctuations for our supply chains. consolidation opportunities, we’ve
What’s more, BCI has empowered achieved not only the sustainability
cotton farmers to trade standard we wanted, but also
independently, removing local reduced costs in the supply chain.
middlemen who take a cut of the
business and add costs within the
supply chain. Empowerment
‘connects’ the farmers more
intimately to their final customer
and reduces costs along the whole
supply chain.
“ We know that our supply
chain will increasingly be the focus
In 2011/12 packaging reductions
delivered savings of
of our sustainability journey.
” £16.3m
17Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
Lesson 6: Value Chain
CASE STUDY:
Plan A Supplier Exchange: Building closer relationships and ways of working with suppliers
Soon after launching Plan A, we usage. At a supplier exchange regions of the UK, water is in
implemented a programme to help session they presented data scarce supply and Plan A
us engage with our supply base on highlighting their efforts over two encourages improved water
sustainability issues. We ran face years to reduce water use in farms efficiency. Our suppliers’ site
to face events and created a and transport operations. engineers knew there were
website to share lessons learnt However, because of a recent opportunities to recycle grey water
with our suppliers globally, this change in M&S Head office on site and use it for non-critical
allowed us to work together to instructions to stores calling for uses such as vehicle washing and
resolve challenges. more water buckets in store, their raw material cleaning. However,
water savings had been negated. because their quality managers
We mentioned the need to change In the past this issue would never were concerned about breaching
attitudes and challenge ‘sacred have been raised – now, armed M&S strict food hygiene standards
cows’ earlier. Supplier Exchange with data showing the impact on this was never sanctioned at
has provided a safe forum for our our targets, we were able to supplier site. A number of suppliers
suppliers to highlight ways in which challenge the flower category to raised this issue and consequently
we could change the way we operate see if the requested increase was we clarified our policy by issuing a
to reduce social and environmental really necessary. formal statement from the M&S
impacts while saving money. technical team, giving suppliers the
As another example, our food confidence to adopt these
For example, one of our flower suppliers pay a lot of money to techniques and save money and
suppliers had been asked to obtain water and to discharge water on site without compromising
significantly reduce their water effluent. We know that in many product quality.
18Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion
Cross Business Value Chain Not all Money New Revenue
Plan A business case lessons
Lesson 7: Not all Money
Not all benefits can or should be monetised
Although we have focused great effort Staff Wellbeing
on establishing and articulating a One of the things that kick-started
Lesson 7: Not all Money
financial business case for Plan A we growth of the M&S business model in
recognise that not every benefit to the the 1930s was its commitment to the
business can be monetised, as the welfare of its employees – the
diagram below highlights: provision of hot meals, chiropody
services and other benefits. These
benefits were socially and commercially
beneficial because they helped M&S
£££
build a healthier, happier workforce
that gave great service to our
customers. Today we believe it’s just
Brand Supply Chain as relevant to support our employees’
Protection Resilience wellbeing. There may be different
issues to tackle, but the approach still
delivers benefits for both employees
and employer.
We have a suite of initiatives to
Staff support the wellbeing of our people in
Innovation The Motivation place – including healthy food options
and an occupational health team. In
business 2011, together with several partners,
case we launched a dedicated website to
help employees with specific issues
ranging from stress to fitness. This
proved so successful that staff asked
Staff if family members could also use the
Partnerships
Wellbeing service. The end result has been a fall
in absenteeism levels – with M&S
now reporting one of the lowest rates
in retail.
Planning Brand
Brand Enhancement
Permission Enhancement
Trust is an increasingly important
component of business success.
In a totally connected world where
everyone has the ability to ‘see into’
our value chain; where there is little
Staff Motivation confidence in regulatory systems to
Business in the future will need In interviews, candidates often demonstrate businesses are behaving
leaders, not just managers: people mention Plan A as a reason why they ethically and where anyone can drive
who can deal with the many different want to work for Marks & Spencer a global, viral campaign via social
expectations on our business, interact and we know they’re not just saying media, the ability to demonstrate to
with stakeholders, deal with it to get the job! The Plan A team are your customers and stakeholders that
ambiguity, inspire others to change regularly contacted by new starters to you be trusted will be a powerful
and innovate to create a more find out more about how they can get business differentiator.
sustainable approach to business. involved. Our employee survey also
confirms that Plan A contributes We regularly get positive press and
Businesses who provide leadership significantly to job satisfaction. media coverage of our progress.
on sustainability today will attract the Many studies have identified Plan A
best, most talented leaders – leaders as a key positive driver for the M&S
who will create value for society and brand and a number of awards have
the environment but also exceptional reinforced this fact:
commercial value for their employers.
19Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4
Ownership & Management Finance Team Green Lens Innovation
Plan A business case lessons
• 2012 Interbrand Best Retail Brand Plan A is helping us anticipate these The plan has given us the credibility
– M&S placed 2nd in the UK (Plan A challenges and cost effectively and momentum to seek out the best
Lesson 7: Not all Money
highlighted as a driver) mitigate their impact. Compared to partners on our journey to sustainable
many retailers we already go to retail.
• Goodbrand 2011 Social Equity considerable lengths to trace and
Index – M&S placed 3rd and top for manage our supply chain. While it may be possible to attribute
the UK Nevertheless, we know we need to an estimated financial value to many
extend our understanding in order to of these other benefits, we’ve taken
• WPP Top Green Brands Index secure the best raw materials and the decision not to do so as there are
2011– M&S placed fourth manufacturing sites. many different methodologies and
little current consensus on which is
• Kelkoo UK Best Brand Survey 2011 best. We could spend a lot of time
– M&S placed third and top for Trust Planning Permission and end up trapped in very complex
and Environment Acquiring planning permission for new methodological debates by trying to
stores is becoming more challenging monetise their benefits. Confusion,
• Havas Media Meaningful Brands – but thankfully, Plan A has shown uncertainty and criticism would in turn
– M&S top UK retailer M&S is a business that cares about jeopardise the hard won confidence
the communities in which we trade we’ve built in our Finance and
We cannot yet put an economic value and is willing to work to mitigate our commercial teams that sustainability
on the value of Plan A to our brand but environmental impact and enhance can become ‘business as usual’.
we are looking at new ideas to enable the social outcomes we deliver.
us to do this in the longer term. We recognise that research and
stakeholder dialogue is required to
Partnership think through these less tangible
Supply Chain Resilience A number of important partnerships benefits, but we’re ready to introduce
We depend on the consistent have helped us deliver the business them into the formalised reporting
availability of high quality, good value case for Plan A. These include our system we use.
raw materials that can be efficiently work with Oxfam on clothes recycling,
manufactured into finished products. Forum for the Future and Jonathon
Deforestation, overfishing, drought, Porritt on strategy, WWF on sustainable
flood and soil loss are all growing sourcing and partnerships with local
environmental threats to the authorities to improve kerbside
availability of raw materials. recycling. These would not have been
possible without Plan A.
Rising energy costs threaten the
whole supply chain. In some regions,
governments are already limiting the
use of gas and water for industrial
purposes at periods of peak demand.
Migration, wellbeing, skills, diversity
and worker perception of an industry
are some of the social challenges.
Economic pressures and new
opportunities are causing farmers to
question what crop to grow based on
the price they receive – in some cases
moving away from wheat for milling
or cotton if they can receive higher
prices for other crops. Attracting
skilled workers to careers in
agriculture and manufacturing is
a challenge for industries in all
geographical regions.
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