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How Kimberly - Clark Keeps Costco in Diapers

How Kimberly - Clark Keeps Costco in Diapers. Hüsnü Dalgıç Süleyman Onay. Outline. 1. Background 2. How to success with Vendor Managed Inventory (VMI) & Advantages 3. Results & Additional Facts. Background. FMCG( Fast Moving Consumer Goods ) World Has Been Changed.

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How Kimberly - Clark Keeps Costco in Diapers

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  1. HowKimberly-ClarkKeepsCostcoin Diapers

    Hüsnü DalgıçSüleyman Onay
  2. Outline 1. Background 2. HowtosuccesswithVendorManagedInventory(VMI) & Advantages 3. Results & AdditionalFacts

  3. Background

  4. FMCG(FastMovingConsumerGoods) World Has BeenChanged Retailersconsolidation & globalization Increasingpower of retailers Shiftingbalance of powerfromsupplierstoretailers Increasingpressure on profits Moreneed of efforttokeepretailers as thecustomersforsuppliers
  5. An Overview of Kimberly-Clark Company Agiant FMCG Company headquarted in Dallas, Texas 56,000 employees in 35 countries worldwide 2009 Annual Sales of $19,1 billion Kimberly-Clark’s Global Brands are sold in more than 150 countries Well-known family care and personal care products No. 1 or No. 2 share position globally in more than 80 countries
  6. Kimberly-Clark Brands
  7. An Overview of Costco A Retail Company headquarted in Issaquah, Washington The largest warehouse club 68,000 US Workers $61 Billion Company with 500 stores most of which located in the US
  8. DiapersCategory - “Pull “ product Shoppersgospecificallyto buy Ifcouldn’tfindgoanotherstore! Pressuretokeep in inventoryforretailers Price-conciouscustomerwants as cheap as possible ConsumerConfidence: Must always be on the shelf in order to keeployal No stock-out or excess inventory
  9. WhyCostco is importantforKimberly-Clark Costco is a giantcustomerforKimberlyClark Onlynationaldiapersbrand in Costcostores HarshCompetitionamongsuppliers NeedtokeepCostco Need a ValueAddition Focus: CostReduction + Spot & fixInefficiencies (AvoidStock-out) Businessmodelsarechanging…

  10. HowtoSuccesswithVendorManagedInventory (VMI) & Advantages

  11. Coscto & Kimberly-Clark Partnership Businessmodelsarechanging StrategicAlliancesbecomemore popular & powerful Multi-faced Goal-oriented Long-term Commitment of manysources Types of StrategicAlliances QuickResponseStrategy ContinuousReplenishmentStrategy VendorManagedInventorySystem
  12. Coscto & Kimberly-Clark Partnership (Vendor Managed Inventory) VendorManagedInventory (VMI) Inventory policy responsibility to the supplier Advanceinformationsharingwithhighlevel of technology Became famous with the partnership between P&G and Wal-Mart 1985 Wal-Mart sales increased at 20-25% Inventoryturnover improved 30%.
  13. Coscto & Kimberly-Clark Partnership (Vendor Managed Inventory) Assumption: Suppliers have better position to find and solve the inefficiencies in the supply chain Responsibility on Kimberly-Clark thrudiapersinventory on shelves Works on past data, analysis on stock levels Verydetailedsalesinformationsharing Forecasts & shipped Improvedtechnology - computer link
  14. Advantages Focus on CoreStrengths CoreStrength = CompetitiveAdvantage Managing the supply chain for diapers is not Costco’s core strength – UNNECESSARY Reduced staffin supplychain inventory holding cost CostReduction
  15. Advantages TechnologyFlexibility Betteralliancerequiresadvancedtechnology Technologychangeseveryday Expensive Need of continuousinvestment Leave it toKimberly-Clark CostReduction
  16. Advantages Lesslevels of out-of-stock Out-of-stock = Not available on theshelf Loss on potentialsales Costco: Category management is based on 2 brands: 1 PL, 1 National Brand Out of Stock = Out of Category According to P&G, an average retailerloss is 11% of its annual sales

  17. Results & AdditionalFacts

  18. Results -Kimberly-Clark - Enlarges the program and manages another 44 retailers One company explained that they saved $200 M, another one $75 M -51% increase in net income -Lessvarietyeasiertracking: Stoppedseperateproductsforboys & girls -Sameprinciplestoitssuppliers – 50% reductionover 2 years in storage -Costco -Out-of-Stock ratio is drastically decreased -Efficientcost-reduction Decreasedinventory holding cost Reducedstaff in supplychainmanagement -Shifting from one-month supply to 2-weeks supply
  19. Results -Consumer -Fewer sizes and less varieties (Unisex Diapers) -Lower Prices - Smaller package sizes: Adaptation according to consumer behavior -Moreavailability on the shelf
  20. AdditionalFacts Importantpoints on accuracy Point-of-sale Inventorylevel Shipment Delivery Customerfillrates RespecttoConfidentiality BetterCommunication BetterCooperation
  21. THANK YOU!
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