how kimberly-clark keeps costco in diapers hüsnü dalgıçsüleyman onay
TRANSCRIPT
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How Kimberly-Clark Keeps Costco in Diapers
Hüsnü Dalgıç Süleyman Onay
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Outline
1. Background
2. How to success with Vendor Managed Inventory(VMI) & Advantages
3. Results & Additional Facts
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Background
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FMCG(Fast Moving Consumer Goods) World Has Been Changed
Retailers consolidation & globalization
Increasing power of retailers
Shifting balance of power from suppliers to retailers
Increasing pressure on profits
More need of effort to keep retailers as the customers for suppliers
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An Overview of Kimberly-Clark Company
- A giant 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
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Kimberly-Clark Brands
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- 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
An Overview of Costco
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Diapers Category- “Pull “ product
Shoppers go specifically to buy If couldn’t find go another store!
- Pressure to keep in inventory for retailers
- Price-concious customer wants as cheap as possible
- Consumer Confidence: Must always be on the shelf in order to keep loyal
- No stock-out or excess inventory
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Why Costco is important for Kimberly-Clark Costco is a giant customer for Kimberly Clark
Only national diapers brand in Costco stores
Harsh Competition among suppliers Need to keep Costco
Need a Value Addition Focus: Cost Reduction + Spot & fix Inefficiencies (Avoid Stock-out)
Business models are changing…
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How to Success with Vendor Managed Inventory (VMI) & Advantages
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Coscto & Kimberly-Clark Partnership
Business models are changing Strategic Alliances become
more popular & powerful Multi-faced Goal-oriented Long-term Commitment of many sources
Types of Strategic Alliances Quick Response Strategy Continuous Replenishment Strategy Vendor Managed Inventory System
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Coscto & Kimberly-Clark Partnership (Vendor Managed Inventory)
- Vendor Managed Inventory (VMI)
- Inventory policy responsibility to the supplier
- Advance information sharing with high level of technology
- Became famous with the partnership between P&G and Wal-Mart 1985- Wal-Mart sales increased at 20-25% - Inventory turnover improved 30%.
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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 thru diapers inventory on shelves- Works on past data, analysis on stock levels- Very detailed sales information sharing- Forecasts & shipped- Improved technology - computer link
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Advantages Focus on Core Strengths
Core Strength = Competitive Advantage
Managing the supply chain for diapers is not Costco’s core strength – UNNECESSARY
Reduced staff in supply chain inventory holding cost
Cost Reduction
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Advantages Technology Flexibility
Better alliance requires advanced technology
Technology changes everyday Expensive Need of continuous investment
Leave it to Kimberly-Clark
Cost Reduction
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Advantages Less levels of out-of-stock
Out-of-stock = Not available on the shelf Loss on potential sales
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 retailer loss is 11% of its annual sales
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Results & Additional Facts
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Results-Kimberly-Clark
- Enlarges the program and manages another 44 retailersOne company explained that they saved $200 M,
another one $75 M
-51% increase in net income
-Less variety easier tracking: Stopped seperate products for boys & girls
-Same principles to its suppliers – 50% reduction over 2 years in storage
-Costco-Out-of-Stock ratio is drastically decreased
-Efficient cost-reduction- Decreased inventory holding cost- Reduced staff in supply chain management
-Shifting from one-month supply to 2-weeks supply
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-Consumer-Fewer sizes and less varieties (Unisex Diapers)
-Lower Prices
- Smaller package sizes: Adaptation according to consumer behavior
-More availability on the shelf
Results
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Additional Facts Important points on accuracy
Point-of-sale Inventory level Shipment Delivery Customer fill rates
Respect to Confidentiality
Better CommunicationBetter Cooperation
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THANK YOU!
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