look at how the program works and what the company has
accomplished to date.
MORE DELIVERIES, SAME COST
Kimberly-Clark, a 140-year-old company headquartered in
Irving, Texas, makes an assortment of personal care products, including such well-known items as Kleenex facial tissues, Huggies diapers, and Scott’s paper towels. In 2011, it
reported worldwide revenue of $20.8 billion from sales in
more than 175 countries.
In Europe, Kimberly-Clark sells its products in 45 countries and operates 15 factories. Finished goods are stored in
32 distribution centers, all of which are operated by third-party logistics (3PL) companies.
Back in 2003, some retailers in the Netherlands were try-
ing to restock store inventory based on point-of-sale data,
which would allow them to make replenishment decisions
based on actual customer transactions. As part of that ini-
tiative, the retailers wanted to increase the frequency of
deliveries and resupply stores by replenishing only what had
been sold. But this did not jibe with Kimberly-Clark’s prac-
tice of delivering in full truckloads. “Our Dutch customers
did not want full truckloads,” Surtees says. “They really
wanted us to deliver more frequently to align to point-of-
sale data, so we would be replenishing more in real time.”
The question facing Kimberly-Clark, Surtees says, was
this: How can we shorten the replenishment cycle and stop
delivering full truckloads without incurring additional
transportation costs?
The solution, Surtees and his team decided, would be to
team up with another company that was making shipments
to those same retail stores. If Kimberly-Clark and its partner split a truckload, with each filling half a trailer, both
companies could increase delivery frequency without
increasing transportation costs.
Kimberly-Clark approached the cosmetics manufacturer
Lever Fabergé about the idea. The two companies conducted a successful trial with Makro, which operates a chain of
warehouse club stores in the Netherlands. The experiment
produced other benefits besides transportation savings: It
also demonstrated that by shortening cycle time for deliveries, collaborative distribution could reduce store inventories
while increasing on-shelf availability of products. “When we
did the trial with Makro, there was a 30-percent reduction in
the value of the products that they were storing,” Surtees
says. “We also got an out-of-stock reduction of 30 percent.”
After the trial, Kimberly-Clark and Lever Fabergé agreed
that if they wanted to expand their collaboration, they
would need to engage a third-party logistics company to
operate a shared distribution center and handle transportation on their behalf. In 2003, they entered into an agreement with Hays Logistics (now part of Kuehne & Nagel) to
build a shared distribution center in Raamsdonksveer, the
Netherlands.
While Hays was constructing the 46,000-square-meter
(495,000-square-foot) facility, Kimberly-Clark and Lever
Fabergé went to their mutual customers and asked for their
support. “If [our Dutch customers] wanted us to do this,
they had to make sure to work with us, and they had to
order Unilever and Kimberly-Clark on the same day on the
same truck,” Surtees says.
Consultant Patrick Anthonissen, who at the time was the
project leader for Lever Fabergé, says that the two manufac-
turers showed the warehouse to their retailer customers to
help persuade them of the venture’s value. “We invited
many of our customers to the warehouse and explained the
advantages,” he recalls. “This was received well by the retail-
ers and in my opinion, was a very good example of how the
supply chain can contribute to sales.”
With the backing of their customers, the two companies
began their joint distribution initiative later that year. Both
Kimberly-Clark and Lever Fabergé processed their own
customer orders and then relayed that information to Hays
Logistics. The third-party logistics company then used that
information to pull both companies’ products from the
warehouse and ship full truckloads.
LAYER PICKING BRINGS LABOR SAVINGS
Today, the original partners continue to collaborate in the
Netherlands, where they have 127 shared customers.
Kimberly-Clark and Unilever make 80 percent of their
deliveries in the Netherlands through this shared supply
chain, and shared deliveries account for 93 percent of
Kimberly-Clark’s sales volume in that country.
When the program got under way, each truckload would
be split fairly evenly between Kimberly-Clark’s and Unilever’s
goods. Today, because other manufacturers are also using the
distribution center, Kimberly-Clark’s products sometimes
constitute only one-third of the truckload. “Kuehne & Nagel
have other customers in the same distribution network, so we
can be a little more flexible,” says Surtees.
In addition to the benefits Kimberly-Clark and its customers realized from the beginning—more frequent replenishment without increased transportation costs, lower store
inventory costs, and fewer out-of-stocks—the manufacturer
has also achieved a significant reduction in handling costs in
