Kimberly-Clark Supply Chain Goes Green and Lean
As the manufacturer of well-known global household brands such as Kleenex, Huggies and Andrex, Kimberly-Clark (www.kimberly-clark.com) is committed to sustainability and is now starting to reap the benefits of its efforts. The company is reducing its environmental impact while running a lean and efficient supply chain, which in turn delivers real benefits to its biggest customers, grocery retailers and consumers.
Transportation Situation
Most of Kimberly-Clark's products, including toilet tissue, paper towels, diapers and tissues, have a large cube size but a relatively low price per unit. As a result, transportation costs comprise a significant proportion of the product costs.
"Transportation is 6 percent of our net sales value and quite a big number on the profit-and-loss sheet," says Peter Surtees, European supply chain director of Kimberly-Clark. In addition, transportation inflation is inevitable as oil prices, green taxation, road taxation, the Working Time Directive of the European Union and driver shortages all affect rates.
Surtees says that the company's existing transportation management system (TMS) didn't offer much-needed functionality. "It restricted our ability to do some more imaginative stuff, to operate strategically and to exploit opportunities to reduce costs," he says.
Driving Savings
Following a three-month design phase, the i2 Transportation Management (www.i2.com) solution was rolled out to cover all European operations within just one year and was also deployed at Kimberly-Clark in North America.
Kimberly-Clark uses the solution to operate a league table, which ranks available carriers according to the lowest cost per route. The company has no long-term, fixed commitments with its suppliers, so carriers can increase or decrease their prices flexibly, depending on different circumstances.
"More than 80 percent of our freight movements are handled by our first-, second- or third-choice carrier for price on every route, and this is a key performance indicator for our business," explains Surtees.
The software is tightly integrated with Kimberly-Clark's SAP (www.sap.com) order management system and an external messaging system for communicating with carriers.
The company estimates that it will save 1 million euros a year by allocating transportation contracts more cost efficiently, route by route. In addition, the company saves 1 million euros a year by not having to pay fees to its software provider for each truck movement scheduled.
Putting the Brakes on CO2
Because of the flexibility and automation of the new TMS solution, Kimberly-Clark has been able to increase its carrier base to 170 companies, while decreasing its administration costs. It now does business with more small and niche operators, who are often more competitive on certain routes and more likely to have return legs to fill.
"The more carriers you have, the less empty running you have and it's a virtuous cycle," explains Surtees. "When we reduce the number of miles traveled on the company's behalf, we directly contribute to a reduction in CO2 emissions."
As a result, the solution has enabled Kimberly-Clark to become greener. One gallon of diesel produces 12 kilograms (kg) of CO2, according to figures provided by the company. Therefore, if its trucks travel an average of 8.5 miles per gallon, every mile that Kimberly-Clark takes off the road leads to a reduction in CO2 of around 1.5 kg. The company estimates that its 1 million euros in savings corresponds to a reduction of 380,000 miles and a reduction of as much as 540,000 kg of CO2.
Through its use of new supply chain management tools, Kimberly-Clark has saved money, moved a step closer to being an indispensable partner to its retail customers and proven that it is indeed possible to be both lean and green.
HINTS OF GREEN
On the Road
A new transportation management solution has enabled Kimberly-Clark to become greener. An estimated 1 million euros in savings corresponds to a reduction of 380,000 miles and a reduction of as much as 540,000 kg in CO2.
Green Products
Kimberly-Clark launched Scott Naturals nationally in April 2009 -- a family of bath tissue, towels, napkins and flushable wipes products that contain a blend of recycled and virgin fiber.
Best of the Best
Kimberly-Clark ranked first in the personal products category of the Dow Jones Sustainability World Index for the fourth successive year in 2008.
Environmental Accolades
The U.S. Environmental Protection Agency named Kimberly-Clark as a 2009 Energy Star Partner of the Year for its ongoing efforts to increase energy efficiency and reduce greenhouse gas emissions across its operations.
Words of Wisdom
"Because sustainability is a core value at Kimberly-Clark, we know that making better choices for the environment and society can many times mean making better choices for our business." --Tom Falk, chairman and CEO, Kimberly-Clark
Eco-Friendly Facilities
In 2008, 29 Kimberly-Clark facilities were certified to the ISO 14001 international standard for environmental management.