Supply Chain by the Numbers

- Oct. 25, 2013

  Supply Chain by the Numbers for Week of Oct. 25, 2013

Procter & Gamble Improves Rather than Builds; Kohler Flushes Losing SKUs Down the Drain; Home Depot Finds 3PL Sweet Spot; Private Investors See Little Return from Roads and Bridges



Number of global factories that Procter & Gamble currently has on an index score basis versus the baseline year of 2000, according to the consumer packaged goods giant's Tom Hughes during a presentation at the CSCMP conference this week. That means P&G has 15% fewer factories now than then - despite sales rising from some $20 billion to $84 billion over that period. How? P&G's relentless approach to continuous improvement, including a somewhat recent initiative around "reliability engineering" to reduce variability and the definition of "global platforms" that prescribe practices and equipment for various product lines.




Number of its nearly 30,000 SKU Kohler's kitchen and bath division was able to reduce in the last couple of years, according to the company's Brian Childs, head of supply chain for the group, during a presentation at the CSCMP conference. How was Kohler able to pull this off?  It sorted all its SKUs below the top 20% by their net income (which was often a loss), but Childs' said that was only part of the exercise. More powerful was using this data to help marketers to really define what they wanted their assortments to be, beyond just focusing on pure SKU profitability.



That's the right number of 3PLs Home Depot likes to have in a specific service area (drayage, brokerage, container management, etc.). That according Reade Kidd, director of international logistics for the retail giant, during a CSCMP panel discussion. The number in practice is sometimes just two, Kidd said, but three offers a nice balance between manageability and keeping the 3PLs competitive. Kidd said that having much more than that adds greatly to integration and communication challenges.



Average return on investment for logistics infrastructure projects, according to Brad Jacobs, CEO of XPO Logistics, during a panel discussion on the impact of mergers and acquisitions on the transportation market. Why is that significant? Because that rate of return, with a lot of risks for these kinds of projects, is simply not very attractive to private equity and others with big money, Jacobs said, meaning the opportunities for use of private money to improve US logistics infrastructure - which many politicians and others have promoted - is really not very likely, Jacobs says.