Costs Delta blow

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Kimberly-Clark is responsible for some of the UK’s most famous brands – Andrex, Kleenex, Kotex and Huggies – but its distribution strategy must cater for products with a relatively low value per cubic metre but standard costs.

Vehicle, handling and other logistics costs are the same as for manufacturers of say televisions or VCRs, but potential revenue per cubic metre is considerably less. As a result, logistics cost as a percentage of net sales value is higher than for almost anyone else. So it is critical – a one per cent saving in the physical supply chain is very significant.

Kimberly-Clark recognised the need to review the dynamics of its supply chain and brought TDG in to help. This has led to cost savings for the company estimated at £1.5 million a year.

Before a warehouse system was implemented for Kimberly-Clark, stocktaking was unusually accurate, with an error rate of just 0.04 per cent. For example, five million cases in and out would result in 89 cases unaccounted for at the end of the stock-take. One visiting US executive described the standard as “awesome”. However, the process was slow, taking up to four days.

The challenge for Kimberly-Clark was to introduce new technology – including a new warehouse management system – that would allow the company to maintain its high standards, but cut the time it took to do so. It chose the DeltaWMS:Third Party Logistics system.

TDG says the system cut the stocktaking time to one day and “in many cases now, we can get it down to four hours”.

TDG moves some 2.4 million cases of Kimberly-Clark product a month. To transmit ordering and other distribution data SAP’s R/3 system interfaces with the DeltaWMS:Third Party Logistics warehouse management system. TDG uses DeltaWMS at one TDG site with radio data terminals to provide full stock traceability of a primary, perishable and picking-intensive Kimberly-Clark product, with picking done by scanner. It is planning to extend this.

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