Q&A: Gary Critchley, Marks & Spencer
SSON: There is a lot of interest about the Marks & Spencer center operating as a profit center rather than a cost center. Gary, can you tell us about that journey and what advice would you give to other organizations that are looking to transfer their centers from operating as pure cost centers.
Gary Critchley: I guess one of the key successes we have is tracking the benefits that we drive – so looking at incremental activities or improvements. So where we have introduced a lean program to squeeze out benefits, making sure that the tracking of those benefits is really clear. And the way we really drove our center to become a profit center was driven by cash and then interest off the back of that cash.
So, by leveraging our P2P cycle and going beyond the process. In particular looking at some of the technical solutions we have got; so we just implemented SAP.
And there is a little tick box on SAP around base-line date. Which means that is the date from when you start calculating when creditors are due. So if I am going to pay you in thirty days, I used to pay from the date on the invoice and if that invoice was backdated you might get paid immediately, whereas now, we don’t pay you until we actually receive the invoice in our office.
Now that is a small tweak that drove cash flow and interest. So very quickly you are able to compare that to the cost base. And start to articulate to the key stakeholders that actually, for every pound you put into the center, you got ( in our case ) £1.30 back. Invoices aren’t costing anything to be processed. We are actually earning money and generating income.
SSON: You mentioned in your session that it was connected to a mindset – can you explain what you mean by that?
GC: I can give you some specific examples, but more broadly, if I was to make this transferrable, people need to look beyond the process and be more progressive, have an appetite to do things differently and ask questions. So when we got a call from a major rail company in the UK wanting to buy 500 suits, they were told we couldn’t do this via the store and that we wouldn’t be able to honour the order. But, we were able to find a way for them to pay and we actually opened up a new channel to market around corporate ordering out of the center, so that is actually driving revenue and is a core sales piece and its just about being outcome focused. The outcome is I want to sell these guys 500 suits because we are a retailer and that then leads the action. So there is something about looking beyond the process and being outcome focused. Asking yourself what it is you want to achieve and then you will work out the bit in between about how to get there after setting the destination.