the southeast, the two partners assemble and move full
truckloads to small retailers in that region.
Getting the program started with Kellogg in England
was somewhat easier than establishing the shared supply chain in the Netherlands because both companies
were already working with the same third-party logistics
company, TDG. That meant that both manufacturers
already had the necessary capabilities for electronically
sharing information with the 3PL. “Setting this up was
relatively straightforward with both of us being [TDG]
customers,” Surtees says.
EXPANSION INTO FRANCE
The successful arrangement between Kimberly-Clark
and Kellogg led to another shared supply chain initia-
tive, this time in France. The partners launched a pro-
gram in 2009 to serve the large French retailer
Carrefour, which was looking for opportunities to
improve operations and reduce costs. “Carrefour is
going down a similar journey of reducing cycle time
and inventory,” says Surtees. “Carrefour does not want
to hold inventory at all.”
There are two major differences between the shared
supply chain operation in England and the one in
France. First, Kimberly-Clark and Kellogg use different
third-party logistics companies in France—Kellogg uses
DHL while Kimberly-Clark uses the French company
FM Logistic to run their respective distribution centers.
However, because both 3PLs operate facilities near one
another in the city of Orleans, a single truck can stop at
both facilities. Now trucks operated by the French 3PL
Norbert Dentressangle stop at Kimberly-Clark’s ware-
house to pick up half a truckload and then move on to
Kellogg’s facility to pick up goods destined for
Carrefour. (In late March 2011, Norbert Dentressangle
completed its acquisition of TDG, the 3PL both manu-
facturers use in England.)
The second difference is that in France Kimberly-Clark is responsible for maintaining inventory levels
for both its own and Kellogg’s products at Carrefour’s
distribution center. To handle the task of assembling
full truckload shipments and running its vendor-managed inventory (VMI) program, Kimberly-Clark
brought in a vendor-managed inventory company. “We
use a vendor-managed inventory system that allows us
to look into the customer’s DCs and generate replenishment orders,” Surtees says. “The VMI [company]
does the ordering piece on behalf of Kellogg’s and
Kimberly-Clark.”
CHOOSE PARTNERS WISELY
In the near future Kimberly-Clark hopes to expand its
use of collaborative supply chains into other countries,
including Belgium, Italy, and Germany. But the manu-
facturer is no longer alone in these efforts. Driven by
retailers’ needs, other CPG companies in Europe are
starting to set up shared supply chains. “The word is
catching on quickly,” says Surtees. “Our customers want
to drive stock from their supply chain and want to short-
en the replenishment cycle.” Moreover, he continues,
“CPGs are signing on to the concept because they are
trying to find ways of servicing the customer better while
trying to reduce costs, particularly transportation.”
There is so much interest, in fact, that several hundred
manufacturers, retailers, and logistics service companies
now belong to the organization European Logistics
Users, Providers and Enablers Group (ELUPEG)
( www.elupeg.com), which was formed to champion
collaborative supply chains.
Although collaborative distribution is a hot trend right
now, supply chain managers should think carefully before
they get involved. What advice would Surtees give a com-
pany that wants to set up a collaborative supply chain?
The most important thing, he believes, is to select the
right partner. “You have to be cautious about who you get
into a relationship with,” he says, “because getting out of
it once you have set it all up could be quite difficult.”
In Surtees’ view, it’s also important for all parties in the
shared supply chain, including the third-party logistics
company, to have a “pragmatic way” of sharing the gains
and benefits. For example, the deal Kimberly-Clark
struck with Kuehne & Nagel in the Netherlands lets both
companies share financial benefits. “The rate we are
charged per case picked by Kuehne & Nagel is adjusted
based on the volume picked on our behalf,” he explains.
“The savings flow through as a rate reduction.” Kimberly-
Clark also receives about one-third of the 16-percent cost
reduction from the automated handling system men-
tioned earlier, also in the form of a rate reduction.
Finally, Surtees recommends using contract logistics
service providers to facilitate the shared supply chain
because they have experience dealing with multiple customers. Even though retailers are driving the move
toward collaborative distribution in Europe today, he
believes that 3PLs will play a greater role in fostering
adoption of this practice in the future. “The logistics
companies have access to the customer bases,” he says.
“They should be taking the lead in finding the right
partners for the right operation.” ●
