Kimberly-Clark helped to pioneer the concept of collaborative supply chains. The benefits have been so great that the practice is now sweeping through Europe.
Eight years ago, when Kimberly-Clark Corporation launched a collaborative distribution trial with Lever Fabergé (now Unilever's Home and Personal Care unit) in the Netherlands, company managers had no idea that they were trailblazing what would become a supply chain best practice in Europe. In that first experiment, the two companies made joint deliveries to customers, with each company filling half of each truck.
With that early effort, Kimberly-Clark pioneered the concept of collaborative distribution, also known as shared or collaborative supply chains, a practice that is now sweeping Europe. In a shared supply chain, two or more companies use the same distribution facility and transportation services to serve mutual customers. This practice reduces costs for manufacturers and provides more frequent replenishment for retailers.
Kimberly-Clark's venture with Lever Fabergé in the Netherlands encouraged other companies to take the plunge into shared distribution. "It was the starting point for what is now known as collaborative supply chains in Europe," says Peter Surtees, KimberlyClark's director of supply chain for Europe. "Collaboration now is a big thing in Europe, especially for CPGs (consumer packaged goods companies)." The concept of shared supply chains has proved so attractive, in fact, that a nonprofit organization has been formed in Europe to foster such collaboration among other CPG companies, retailers, and thirdparty logistics companies.
For Kimberly-Clark, its positive experience with collaborative distribution in the Netherlands prompted the consumer goods giant to extend that program to additional countries and business partners. Here is a 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, USA, makes an assortment of personal care products, including such well-known items as Kleenex facial tissues, Huggies diapers, and Scott's paper towels. In 2010 it reported worldwide revenue of US $19.7 billion from sales in more than 150 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 trying to restock store inventory based on pointof- sale data, which would allow them to make replenishment decisions based on actual customer transactions. As part of that initiative, 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 practice 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 30percent reduction in the value of the products that they were storing," Surtees says. "We also got an outof- stock reduction of 30 percent."
After the trial, Kimberly-Clark and Lever Fabergé agreed that if they wanted to expand their collaboration, then 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 manufacturers 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 retailers, 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, KimberlyClark's products sometimes comprise 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 the distribution center. That reduction came about in large part because Hays invested in material handling automation to expedite handling and save on labor.
Both Kimberly-Clark's and Unilever's customers want to receive mixed-case pallets, but assembling them is time-consuming, labor-intensive, and costly. To speed up that process at the Raamsdonksveer distribution center, Hays invested in layer-picker equipment, which was furnished by Univeyor, according to Anthonissen. This type of equipment uses vacuum suction to lift a layer of cases from a pallet and transfer those boxes to another pallet. Switching from a manual process to an automated one produced notable savings. "By combining the two [companies'] volumes, we were able to automate to take out 16 percent of the handling costs," Surtees says.
Trust and rapport
After the Netherlands operation had validated the concept of a shared supply chain, it was a few years before Kimberly-Clark replicated its success elsewhere in Europe. The main reason the company waited so long was that it wanted to be careful about choosing another manufacturer to partner with. "We talked to other companies in the United Kingdom, Spain, and Italy ... and it took us a long time to find the right partner," Surtees says. "The right partner is not just somebody with the right volumes. It's also [a matter of] finding a company with the right culture—somebody you can work with, somebody you actually trust. This is a bit like getting married in some respects."
Finally, in 2006, Kimberly-Clark began collaborating with the cereal manufacturer Kellogg Company in some parts of England and Scotland. Kimberly-Clark believed that Kellogg was a good match, and that the two had the right "trust and rapport," Surtees says.
Kimberly-Clark operates distribution centers in the north and south of England, while Kellogg manufactures in the north. In a test run, Kellogg started shipping to a Kimberly-Clark distribution facility located in Northfleet, which is east of London. There, Kellogg's products were cross-docked and mixed in with Kimberly-Clark's goods, and both company's products were then loaded onto a truck for delivery to small customers in London and southeastern England.
That trial worked so well that it has become a permanent arrangement, and Kellogg now reciprocates for Kimberly-Clark's deliveries north of the city of Birmingham, located in the center of the country. Kimberly-Clark stores its products in Kellogg's distribution center in Trafford Park, near Manchester. Just as in 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 thirdparty 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 initiative, this time in France. The partners launched a program 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 KimberlyClark's warehouse 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 manufacturers 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."
Shared supply chains spread across Europe
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 manufacturer 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 shorten 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 (ELU- PEG), 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 company 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 mentioned 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."
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
The practice consists of 5,000 professionals from Accenture and from Avanade—the consulting firm’s joint venture with Microsoft. They will be supported by Microsoft product specialists who will work closely with the Accenture Center for Advanced AI. Together, that group will collaborate on AI and Copilot agent templates, extensions, plugins, and connectors to help organizations leverage their data and gen AI to reduce costs, improve efficiencies and drive growth, they said on Thursday.
Accenture and Avanade say they have already developed some AI tools for these applications. For example, a supplier discovery and risk agent can deliver real-time market insights, agile supply chain responses, and better vendor selection, which could result in up to 15% cost savings. And a procure-to-pay agent could improve efficiency by up to 40% and enhance vendor relations and satisfaction by addressing urgent payment requirements and avoiding disruptions of key services
Likewise, they have also built solutions for clients using Microsoft 365 Copilot technology. For example, they have created Copilots for a variety of industries and functions including finance, manufacturing, supply chain, retail, and consumer goods and healthcare.
Another part of the new practice will be educating clients how to use the technology, using an “Azure Generative AI Engineer Nanodegree program” to teach users how to design, build, and operationalize AI-driven applications on Azure, Microsoft’s cloud computing platform. The online classes will teach learners how to use AI models to solve real-world problems through automation, data insights, and generative AI solutions, the firms said.
“We are pleased to deepen our collaboration with Accenture to help our mutual customers develop AI-first business processes responsibly and securely, while helping them drive market differentiation,” Judson Althoff, executive vice president and chief commercial officer at Microsoft, said in a release. “By bringing together Copilots and human ambition, paired with the autonomous capabilities of an agent, we can accelerate AI transformation for organizations across industries and help them realize successful business outcomes through pragmatic innovation.”
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use artificial intelligence-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next one to three years. Retailers also said they plan to invest in self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) within the next three years to help with loss prevention.
Those strategies could help improve the brick-and-mortar shopping experience, as 78% of shoppers say it’s annoying when products are locked up or secured within cases. Part of that frustration, according to consumers, is fueled by the extra time it takes to find an associate to them unlock those cases. Seventy percent of consumers say they have trouble finding sales associates to help them during in-store shopping. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
Additional areas of frustrations identified by retailers and associates include:
The difficulty of implementing "click and collect" or in-story returns, despite high shopper demand for them;
The struggle to confirm current inventory and pricing;
Lingering labor shortages; and
Increasing loss incidents.
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.