Feedback continues to pour in each week – but we want more and, with this in mind, are pleased to announce our new
“Fuel for Thought” program. If your response is selected as our Feedback of the Week, we’ll send you a $20 gas card. Must have complete name and company, and you can only win once every three months. Send in your Feedback regularly! Make it thoughtful if you would like to win.
We received a fair number of responses from our First Thoughts piece on Kimberly-Clark’s Supply Chain Network of the Future. That includes our Feedback of the Week from Sandip Sharma of i2, who says the decision around “dynamic sourcing” is a complex one.
Dave Mollenauer questioned the numbers around mileage savings from the network change, which Mark Jamison, VP of NA Supply Chain for KCC, was kind enough to clarify.
Len DeWeerdt of LW Consulting thinks KCC should look at some automation for its facilities, while Larry Stoner of ConMed Electrosurgery thinks KCC is late to the Lean SCM ball game, and Gary Lynch of Marsh wonders how risk was factored into the network design.
Feedback of the Week - On Kimberly-Clark’s Supply Chain Network Redesign:
As rightly said by Jamison, “variability is the virus of the supply chain” and consolidation always brings in cost savings. When KCC consolidated their distribution network from 70 DCs to just 9 large mixing-centers, it was bound to give them enormous financial advantage. However, I still think they could have gone ahead with dynamic sourcing after this kind of consolidation.
As defined in your article, dynamic sourcing is the ability to assign production to a facility which offers lowest supply chain costs. Given the revised network, the factories would need to ship from their production facilities to a small number of mixing-centers. Since KCC was already using dynamic sourcing (albeit at a much higher cost), the consolidation in its distribution network would have surely decreased the cost of dynamic sourcing. However, the real cost-benefit tradeoff depends on complexity of the network.
More On Kimberly-Clark’s Supply Chain Network Redesign:
I am somewhat confused by the statistics at the end of the article. Does this mean that the vehicles KCC uses to move product only get 1.125 miles per gallon?
Response from Mark Jamison
Our numbers are correct.
The disconnect in the readers question is the assumption that the Customer miles are solely responsible for the total gallons saved. That is not accurate. The article states, '...2.4 million gallons of fuel because we increased efficiency in our network..' (this includes both Customer and Intermill).
We save 2.7 million miles on Customer deliveries, we also saved more than 10 million miles on Intermill moves, or more than 13 million miles altogether. That corresponds to the fuel savings of 2.4 Million gallons (rough math of 13.2 Million miles divides by about 5.5 Miles Per Gallon).
We pointed out the Customer mileage reduction as a demonstration thatthe Network of the Futurewas in fact getting us closer to Customer in the market place.
When I was at Retrotech Inc., many of our clients who went to mechanized warehousing (ACTIV Systems in this case), were using the technology for meeting demand driven applications in order fulfillmentthat came right out of supply chain re-engineering.
I can't help but think that the demand driven 'mechanized warehouse' model is the place for manufacturers with high volume and high turn to look at when they decide to go from push to pull. While there are many processes and practices to evaluate and new KPIs to consider, a well defined mechanically driven warehouse (ASRS of some kind) is frequently, but not always,the right approach.
With growing interest in DSD and clients like KCC who have the 'ship in full unit load' kind of business, mechanized warehouse technology seems like a shoe-in to me.From what I saw of the returns and service metrics, I have to believe it remains true.
LW Consulting, LLC
What's so special about what KC has done? it sounds like they've gone to Lean.......only about 10 years after most other companies has instituted these type of changes!
Larry G. Stoner
Excellent article, was wondering if you could shed some light on how they designed and integrated their resiliency/continuity strategy in this new operating model? Simplification sounds great but interested to find out how they thought about reducing risk brought about aggregation and concentration.
Gary S. Lynch, CISSP
Global Practice Leader
Supply Chain Risk Management