Business case and business plan

business case for personal development plan and business case implementation plan
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Dr.KiaraSimpson,United States,Researcher
Published Date:05-07-2017
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The key lessons from the Plan A business caseIntroduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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 19 Lesson 7: Not all Money 21 Lesson 8: New Revenue 22 Conclusion Contents Plan A business case lessons ©Rankin PhotographyPlan A business case lessons Introduction Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue The key lessons from the Plan A business case Introduction We launched Plan A in January 2007, making 100 social and environmental We believe commitments to be delivered by March 2012. We called it Plan A because there is no Plan B when it comes to conserving the earth’s finite resources. “ that sustainability We updated Plan A in 2010, adding a further 80 commitments – and we will continue to challenge ourselves by setting more as we continue the long is both a moral 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 Unless we framework around sustainability will tighten in an unpredictable way that “ respond to the social, makes it difficult for businesses to plan for environmental and • new r evenue streams will emerge as economic pressures consumers search for options that help them become more of the future, not sustainable in an easy, engaging and rewarding way only will we struggle to compete, we may also struggle to survive. ” 03Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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: 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 1000+ 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 improvements across our operations employees, opened up new revenue (1000+ stores, offices and warehouses streams, drove innovation in 1000s 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 supply chain. It even encompasses and strengthened our brand. the use and disposal of the three billion 3 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 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 21 million 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. Cost £-40m neutral In 2007, we briefed our top ten 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 Introduction Plan A business case lessonsPlan A business case lessons Introduction Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue 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. and likely to remain so in the 1 Ownership & 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 Finance 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 Gr een 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 Cr oss 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 Value Chain: there are potentially much bigger benefits outside your organisation in your wider value chain. 7 Not all benefits ar e about money: not all benefits can or should be monetised. 8 New 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. ” 05Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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 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 1: Ownership & Management Plan A business case lessonsPlan A business case lessons Lesson 1: Ownership & Management Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue 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 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’ve seen lots of other areas least one Plan A attribute. Director We implemented where closed-loop recycling is objectives have built upon local “ a system in which possible and can deliver ownership of budgets by commercial benefits. encouraging local ownership of business units held delivery of Plan A. Each part of the business is now working to create their own annual its own ‘route map’ on implementing Plan A into its Plan A budgets at products and associated supply a local level. chains. Plan A has gone local. ” 07Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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 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 2: Finance Team Plan A business case lessonsPlan A business case lessons Lesson 2: Finance Team Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue 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 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) impact on our business. 28% specifically for Plan A/sustainability initiatives. The two key reasons for 7. Integrated Reporting saving us nearly this were: In the UK and internationally a lot 1) Ensuring that we always worked of work is being done to develop £22 million hard to drive the best deals and ‘Integrated Reporting’ and we’re a year innovate in ways that enabled us to taking part in the International 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. 09senstions GIRLS’ KNITWEAR Update your home Sally Bendelow, head of M&S home design, offers expert advice and tips on how to restyle your interiors  kntwear fro £7 Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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 CASE STUDY: ambitious – for example, those on waste and resource use that also Reducing waste: carbon neutrality, zero waste to landfill saved money. Many businesses have knowing the facts unlocked and obtaining key raw materials from seen this but the scale and visibility of new opportunities sustainable sources. Our ambition Plan A within the business has been signalled a different mindset – one a very powerful motivator to reach As part of our efforts to reduce about transformation and innovation further and faster to save resources waste (see page 14) we had to rather than incremental change. and money. improve our management Back in year one, our energy and information systems. packaging teams didn’t believe that Plan A has also helped us to challenge a 25% energy efficiency improvement some ‘sacred cows’ – including food These helped us understanding or a 25% reduction in packaging waste, packaging use and business how much of our waste was being could be achieved. Yet, both met travel. We would have struggled to recycling and for the first time these targets on or ahead of time. confront such well established ways provided insights about what types If we’d set more ‘realistic’ reduction of working without the high profile of and volumes of waste we produce. targets we believe we would have Plan A. Today our people have greater Armed with this information we limited our capacity to innovate more confidence to challenge long were able to identify many and add business value. established ways of working. opportunities to reduce waste (-31% by year 5 of Plan A), to Our ambitious targets forced us to We’ve also realised that Plan A is a make our recycling operations measure underlying activities more powerful tool in tackling small, local more cost efficient and to lower precisely than ever before and in costs that collectively add up to a big our initial manufacturing costs. doing so we acquired new knowledge, potential saving. In any one store or insights and ideas around reducing business unit these small cost savings We’ve achieved particularly good costs. For example, we initially tried to were often previously overlooked, but results when it comes to M&S reduce business travel costs by now they’re aligned with a powerful decor and publications (including traditional means – for example, central motivator, (for example, a leaflets and magazines) – cutting securing better procurement deals. corporate aim to send zero waste the volumes printed without This approach saved us money but to landfill), people do something to impacting on customer messaging didn’t confront the fundamental reduce them – cumulatively delivering and delivering a saving of motivations for travel. Once we multi-million pound benefits. £935,000 in 2011/12. introduced a new Plan A requirement 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 business meeting (e.g. approval of assurance of our achievements all i m C garment fit) that could be held using helped ‘keep our feet to the fire’. videoconferencing technology. B A D STAYNEW Putting clear, well publicised commitments in place whilst also Gi rLs’ de-centralising budgets delivered knitwear another benefit: better day-to-day our soft wool and cotton blends are gentle to wear and easy to care for B. WOOL BLEND CABLE D. COTTON-RICh CABLE CARDIGAN NEW CARDIGAN cost control and more people actively 50% wool, 50% acrylic. 88% cotton, 12% polyamide. Age 3-6 yrs £11; 7-10 yrs £12; Age 3-6 yrs £8; 7-10 yrs £9; 11-14 yrs £14; 15-16 yrs £17; 11-14 yrs £11; 15-16 yrs £14; 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) A. CARDIGAN With Fairtrade cotton and stretch. Stay New. 82% engaged in spotting Plan A and cotton, 18% polyamide. C. SLIM-FIT TANK TOP Age 3-6 yrs £8; 7-10 yrs £9; 50% wool, 50% acrylic. E. WOOL BLEND Age 3-6 yrs £7; 7-10 yrs £8; CARDIGAN 11-14 yrs £14; chest 97-109cm (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; T76 1336 Grey (only up to 11-14 yrs £14; 15-16 yrs £17; royal blue, bottle green, red, burgundy, brown age 12), black, navy (only up chest 97-109cm (38-43in) £17 E to age 12) T76 1326 Grey, navy associated cost saving opportunities. † free delivery to over 450 stores including 150 Simply Food stores • check online for latest schoolwear offers 45 a A new attitude emerged: colleagues began to see Plan A as an opportunity to tackle costs that had proved immune to conventional cost-saving programmes. By looking through a ‘green lens’ people found a different motivation – an emotional 10 look out for extra colours for foodies 3 4 136-137 FOOD_A_GG11.indd 137 9/1/11 9:34:53 PM Lesson 3: Green Lens Plan A business case lessons †See page 66 or online for more details. All our biscuits, cakes and confectionery may contain traces of nuts. Plan A business case lessons Lesson 3: Green Lens Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue CASE STUDY: If we’d set more ‘realistic’ Printing “ reduction targets we believe we The true cost of printing isn’t always understood – and many 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 business value. toner, but also the electricity and 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 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 CASE STUDY: and social challenges ahead, we pushing the agenda. Packaging improvements know that we need to innovate and do things very differently right across To avoid these negative consequences The move to vacuum packing fresh our business. we’ve piloted sustainability solutions meat cuts led to a 75% reduction at a local level – trialling them in a in packaging and delivered fresher, By driving ownership of Plan A across small number of stores, factories or better quality products for our the business we’ve started to integrate dye-houses to help us establish what customers. It also boosted sales, sustainability into all of our business works and what doesn’t. We side-line cut store waste and reduced units’ core product development and our failures, nurture our partial customer complaints. innovation programmes. successes and roll out aspects that work at scale. In many instances, Not all packaging reduction In addition, we’ve developed a central initiatives judged unsuitable for wider initiatives deliver multiple benefits, Plan A Innovation Fund to support rollout became viable as circumstances but almost every time we’ve innovative initiatives that are too risky changed – and our pilot studies meant reduced packaging we’ve saved or too long term for business unit we were ready to take roll them out at on cost – in food as well as expenditure; ideas that cut across pace at the appropriate time. clothing. By tracking what our the business or reside in areas of the costs would have been without business that have not traditionally Running pilot studies has underpinned packaging reductions, we know run innovation programmes before. the careful management of Plan A that in 2011/12 packaging costs, allowing us to take controlled reductions delivered savings Our central innovation fund has risks and model what wider roll out of £16.3m. helped us overcome these costs are likely to be. But pilots must 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 “ supported over 70 projects so far. Some sustainability ideas and technologies that are initially very enticing, but of these projects have and will fail (the which – for unforeseen operational or cultural reasons – ultimately fail. inevitable quid pro quo of innovation) but These failures not only waste money 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. 12 ” Lesson 4: Innovation Plan A business case lessonsPlan A business case lessons Lesson 4: Innovation Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue CASE STUDY: CASE STUDY: CASE STUDY: 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 Lesson 5: Cross Business The business case needs to be addressed across the entire organisation Sustainability demands a joined up CASE STUDY: solution across our entire business. Achieving zero waste to landfill Plan A forced us to leave our silos and work together – thinking and In February 2012, we achieved our recycling issues. For example, some running the business in the round. zero waste to landfill commitment – packaging materials and substrates This in turn has brought wider cultural ensuring that all of our operational could not be recycled and had to benefits to the business. and construction waste (from every be sent to landfill. The team worked one of our stores, offices and with our supply base to change the We know that some parts of the warehouses) is recycled. materials being used, helping us business will probably save more in meet our goal of sending zero waste the near term from Plan A activity This is one of our most complex to landfill which in turn had benefits whilst others will have to invest for a Plan A commitments, touching on for our customers, making it easier longer period. Without the unifying every single part of our business and for them to recycle our packaging nature of Plan A, there’s a danger that all of our colleagues. We spent over at home. we would focus only on quick wins 18 months developing the strategy and lose out on benefits that take to ensure it was feasible, robust, The revenue we derive from longer to achieve. and commercially viable, whilst also recycling, coupled with the ensuring that we didn’t increase avoidance of landfill cost and a We’ve found out that many costs and carbon emissions by adding reduction in staff time associated benefits are cross-business; achieving significant transportation to achieve specifically with processing food them requires many different teams to zero waste to landfill. waste, delivered an annual benefit work together in ways they’ve never of £6.3m in 2011/12. done before. In many cases, this has Waste had previously been required teams or units to take on managed directly by different parts additional cost or give up financial of the business; so the processes in benefits in order to deliver a better place for our clothing warehouses outcome overall for the business. were different to those for our stores and different again for our offices. Our willingness to do this has We realised that this was inefficient improved over time, and there’s no and would prevent us delivering doubt that it has improved team our target, so we agreed that working across the business and responsibility for waste should helped us to identify further be centralised. opportunities and financial savings. The formation of a governance However, some areas of our structure centred on our How we do business, such as logistics, already Business (HWDB) Committee, which derived revenue from recycling and comprises senior managers from right this was factored into their operating across the business, has enabled us plans – something they didn’t want to resolve these cross company issues. to lose. Other parts of the business needed additional investment to Our five-year time horizon for Plan A enable 100% landfill diversion to be has given us the space to resolve put in place. Working with Finance complex cross business issues. and senior managers from across Plan A has also created a unifying the business, over three years we reference point against which different restructured our operating plans and business needs could be assessed moved funding between areas to and prioritised. enable us to put in place a new recycling solution. We’ve also had to work more collaboratively to resolve waste 14 Lesson 5: Cross Business Plan A business case lessonsPlan A business case lessons Lesson 5: Cross Business Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue CASE STUDY: 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 25% “ of the business will probably save 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. 15 ”Introduction Lesson 1 Lesson 2 Lesson 3 Lesson 4 Ownership & Management Finance Team Green Lens Innovation 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 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. 16 Lesson 6: Value Chain Plan A business case lessonsPlan A business case lessons Lesson 6: Value Chain Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue CASE STUDY: CASE STUDY: 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 In 2011/12 packaging reductions “ chain will increasingly be the focus 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 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. 18 Lesson 6: Value Chain Plan A business case lessonsPlan A business case lessons Lesson 7: Not all Money Lesson 5 Lesson 6 Lesson 7 Lesson 8 Conclusion Cross Business Value Chain Not all Money New Revenue 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 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 Motivation place – including healthy food options The and an occupational health team. In business 2011, together with several partners, we launched a dedicated website to case help employees with specific issues ranging from stress to fitness. This proved so successful that staff asked if family members could also use the Staff Partnerships service. The end result has been a fall Wellbeing in absenteeism levels – with M&S now reporting one of the lowest rates in retail. Brand Planning Brand Enhancement Enhancement Permission 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 • 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 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 T op 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. 20 Lesson 7: Not all Money Plan A business case lessons

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