To supply its more than 1,330 stores in 17 countries, British retailer Marks & Spencer relies on a supply chain of factories spread around the world. Increasingly, the retailer is looking to newer, cheaper sourcing markets like Cambodia and Bangladesh where Damco’s expertise is paying off for both companies.
“It is such an enormous company with so many products that it can’t just rely on a few factories in a few countries. It’s expanding its sourcing to find lower costs and spread out its risks,” says Nishant Sharma, Damco’s Global Account Director for Marks & Spencer.
He says airfreight is one need that is growing fast as a result, rising from 5-7% of total freight volume in 2014 to 15% this year, amounting to more than 20,000 tonnes of cargo.
“It used to be simple, they used the same air freighter all over the world, but the new locations and focus on cost has changed that. The market is very fragmented in these places with lots of local vendors and these companies don’t have the systems and visibility M&S needs; so we offered to set it up and provide them with that visibility.”
Before this implementation, Damco had zero airfreight business with M&S. Today, they are the retailer’s leading provider of airfreight, providing 15% of the total.
Close to the customer
To stay as close to their operations as possible, Sharma spends two or three days a week at M&S headquarters in London when he’s not in Heathrow or Felixstowe.
He says the airfreight project began as “just two people talking.” Today it is M&S’ global model.
“We look after a lot of things as one of M&S’ two supply chain management partners. We also sit on a lot of data and visibility on their behalf, so we can see where they may need help and can step in with a solution and earn some additional revenue,” says Sharma.
Proactive solutions for customers
Sometimes Damco needs to step outside its expertise and pick up a new one to save a customer money.
With two big warehouses in Asia, Marks & Spencer was routinely transporting thousands of tonnes of cargo across borders. However, M&S was missing out on duty-free benefits from existing free trade agreements due to imprecise cargo declaration.
“There is no expertise in handling these kinds of customs declaration quirks so we had to research it ourselves in order to develop it for M&S. Now it’s a new product in Malaysia,” says Sharma. “It’s certainly not a typical Damco product, but because it was a customer demand we looked into it and now we save them a chunk of money every month, which we get a piece of.”
Truck from Cambodia to Bangkok
In Cambodia, one of M&S most important new sourcing markets, Damco needed to find alternatives to using the country’s one small airport where only one air freighter operated regularly.
The solution they came up with was to truck the cargo to Bangkok, Thailand, and fly it out from there. To reduce the transit time and potential delays, they trained the trucking supplier on how to handle the necessary documentation and consulted Thai customs on how to streamline the process.
“In these places, infrastructure of every kind can’t keep up with the demand from companies coming in to set up operations,” says Sharma. “With the visibility and data we have, we can create logistic solutions that fit their needs and also deliver a profit to us.”