From lean to agile: Harrods’ supply chain director on how the pandemic sparked a revolution

The icon­ic doors of Har­rods’ Knights­bridge store closed for the first time in its 172-year his­to­ry in March 2020, when prime min­is­ter Boris John­son enforced an ini­tial lock­down to stem the spread of coro­n­avirus. But what did this mean for the sup­ply chain of arguably the world’s lead­ing lux­u­ry depart­ment store?

Incred­i­bly, the Lon­don stal­wart remained open through­out the Blitz and only shut for half a day fol­low­ing a 1983 ter­ror­ist attack. Con­sid­er the joy, for staff and cus­tomers alike, when the doors were unlocked on April 12. 

Speak­ing on the eve of the reopen­ing, Har­rods’ sup­ply chain direc­tor Simon Finch reveals a “back-to-school feel­ing” and is opti­mistic that foot­fall will be impres­sive, despite the lack, for the moment, of wealthy tourists. “Peo­ple are very keen to come back in and Har­rods has the ben­e­fit of being 1.1 mil­lion square feet, so there’s plen­ty of space for social dis­tanc­ing,” he says.

Finch began his career at Har­rods 25 years ago as a grad­u­ate trainee. The ama­teur high-alti­tude moun­taineer, who has scaled Himalayan peaks as well as the high­est reach­es of Africa and Europe, has climbed the cor­po­rate ranks and was appoint­ed to his cur­rent role in Octo­ber 2019, less than six months before the first lock­down.

While both his employer’s online oper­a­tions and ware­house remained open for the dura­tion of the pan­dem­ic, the 46-year-old con­cedes, with admirable hon­esty, that like so many oth­er sup­ply chain pro­fes­sion­als, he was forced to grap­ple with unfore­seen oper­a­tional chal­lenges and strug­gled ini­tial­ly. 

“We were prob­a­bly all a bit too over­con­fi­dent in the sys­tem, a bit like those in finan­cial ser­vices when the eco­nom­ic crash hap­pened in 2008, and when some­thing unex­pect­ed hit, there was a lot of scram­bling around to make things work,” he says.

Championing the technology-driven supply chain revolution

Like oth­er UK retail­ers, Har­rods has been buf­fet­ed by the coro­n­avirus cri­sis and, more recent­ly, Brex­it fall­out. It is the pan­dem­ic, though, that exposed oper­a­tional weak­ness­es. 

“The pan­dem­ic has trig­gered a sup­ply chain rev­o­lu­tion,” says Finch. He argues, con­vinc­ing­ly, that busi­ness­es were “obsessed with mak­ing sup­ply chains as lean as pos­si­ble” before COVID, mov­ing items around quick­ly, with min­i­mal stock and expense.

“Coro­n­avirus com­plete­ly screwed up that approach,” Finch con­tin­ues, “as the organ­i­sa­tions hold­ing them­selves up as hav­ing the lean­est sup­ply chains were the ones that had the most sig­nif­i­cant chal­lenges as soon as there were glob­al dis­rup­tions.

“From now on, the sup­ply chain must be more about agili­ty, to cope with volatil­i­ty and uncer­tain­ty, and less about being lean. How­ev­er, that agili­ty has to be ful­ly sup­port­ed by tech­nol­o­gy and data insights. Where­as pre­vi­ous­ly we have used tech­nol­o­gy to cre­ate a lean­er sup­ply chain, now the tech needs to pro­vide the knowl­edge to make bet­ter deci­sions to dri­ve agili­ty and vis­i­bil­i­ty.”

Giv­en that Har­rods was estab­lished in 1849 with the rather ambi­tious mot­to of omnia omnibus ubique (all things for all peo­ple, every­where), the con­sumer behav­iour trends accel­er­at­ed by the pan­dem­ic forced the busi­ness to keep pace with change and embrace the dig­i­tal age. Lit­tle sur­prise, then, that Har­rods has recent­ly employed more data sci­en­tists. 

“Under­stand­ing our cus­tomers, and how we can serve them bet­ter, and start­ing to use arti­fi­cial intel­li­gence, whether for our replen­ish­ment oper­a­tions, to make sure we have the right amount of stock, or to man­age out­bound ful­fil­ment vol­umes, is para­mount,” says Finch. “Data can’t get stuck in the Suez Canal, nor does it get held up at the bor­ders with Europe. And the shar­ing of data with our part­ners deliv­ers a bet­ter oper­at­ing mod­el for the end-to-end sup­ply chain.”

Data insights and deeper relationships driving sustainability

Tech­nol­o­gy alone, though, is not enough to dri­ve the sup­ply chain rev­o­lu­tion, accord­ing to Finch. He con­tends that it is crit­i­cal for those oper­at­ing in the indus­try to “go retro” and forge or nur­ture deep­er rela­tion­ships with sup­pli­ers, ser­vice providers and brand part­ners. 

“Because the pan­dem­ic messed every­thing up, and we didn’t know what was hap­pen­ing, we picked up the phone and spoke to trust­ed part­ners and sup­pli­ers to all pull things togeth­er,” he says. “It was a return to the sup­ply chain of the 1900s.”

More­over, the com­bi­na­tion of embold­ened trust­ed rela­tion­ships and data insights, plus greater diver­si­ty in terms of dis­tri­b­u­tion nodes, inside and out­side the UK, enables Har­rods to devel­op a more sus­tain­able sup­ply chain. 

“As a father to two eco-con­scious girls, I’m incred­i­bly pas­sion­ate about sus­tain­abil­i­ty and build­ing a brighter future,” says Finch. “I believe it’s the respon­si­bil­i­ty of all sup­ply chain pro­fes­sion­als and busi­ness­es to ensure we are doing the right thing for our cus­tomers. There­fore, putting the prod­uct clos­er to the con­sumer, through a decen­tralised sup­ply chain and more localised dis­tri­b­u­tion, is a win-win sce­nario. 

“Also, from a pure­ly com­mer­cial per­spec­tive, this is the direc­tion in which our cus­tomers want us to go; the sus­tain­abil­i­ty agen­da is crit­i­cal to the lux­u­ry indus­try and we will lose sales if we don’t do this right.”

To illus­trate his vision, Finch uses an exam­ple of how inef­fi­cient and harm­ful to the plan­et the sup­ply chain and ful­fil­ment process­es can be from an ecom­merce per­spec­tive. Goods might be man­u­fac­tured and shipped from the Unit­ed States to the UK only to be then sold online and shipped back to an Amer­i­can-based cus­tomer. 

“We are doing every­thing wrong if we cre­ate that unnec­es­sary move­ment from a sus­tain­abil­i­ty per­spec­tive, and also it increas­es costs and length of deliv­ery time,” he says.

The COVID cri­sis may have sparked a sup­ply chain rev­o­lu­tion, but it is a work in progress for many retail­ers, includ­ing Har­rods. Stress­ing the impor­tance of diver­si­ty, data insights and devel­op­ing trust­ed rela­tion­ships for sup­ply chains of the near future, Finch adds: “By hav­ing prod­ucts that are local to cus­tomers, we can serve them more quick­ly, more cost effec­tive­ly and more sus­tain­ably, while reduc­ing risk, because the goods aren’t mov­ing as far.” 

Through shift­ing its busi­ness mod­el and with this smarter, tech-pow­ered approach to the sup­ply chain, Har­rods will stand a good chance of keep­ing its doors, both phys­i­cal and vir­tu­al, open for many years to come.