June 25, 2012
Organizations in today’s economy often include cost control or reduction in their overall strategies. Logistics is an area of increasing focus where internal and external costs affect the margins and customer demands require excellence of service. In distribution, selective, exclusive and intensive are three primary channels in which an organization must determine the best option in relation to products and customers. The Kimberly Clark Company provides an excellent example for today’s organizations with “a customer-oriented supply chain reorganization begun more than four years ago, K-C is improving distribution efficiencies, reducing transportation costs and shrinking its carbon footprint, while becoming an indispensable partner to retail customers” (Jamison, 2008, para.3). Technology and the Supply Chain
Continuous advancements in technology offer new solutions to old problems in supply chain management as well as placing focus on the current needs of distribution in global markets. Real-time locations systems (RTLS) are among emerging technologies where “RFID is no longer considered an emerging technology. It is a proven solution with high value add and an increasingly attractive ROI, said Michael Liard, Director, AutoID for VDC Research Group.” (Zebra Technologies, 2012). Technology plays an important role in distribution where retail customers focus on inventory reduction while maintaining adequate supply to meet consumer demands. Real time information provides organizations such as Kimberly Clark with the necessary data to develop the most effective channels for distribution based on individual products and customers. Kimberly Clark’s EDI Solution
Kimberly Clark’s efforts in supply chain improvement are validated through receipt of the Dick Clark Supply Chain Award in 2011which “honors the consumer goods company that best demonstrates excellence in executing improvements in supply and demand planning, execution or network design” (PR Newswire, 2011). When Kimberly Clark decided to transform its distribution channels through direct management of logistics, it “turned to OmPrompt to integrate the processes and data from its in-house logistics software system with the systems (electronic and paper-based) of more than 100 small and medium-sized carriers throughout Europe” (InterSystems, 1996-2012). As a leading producer and distributor of health and hygiene products in North America, Kimberly Clark’s supply chain reaches out to a variety of customers including mass retailers, major warehouse clubs, supermarkets, convenience and drug stores. (Jamison, 2008, para.4). In order to design the most effective supply chain system with EDI integration, K-C considers customers’ goals in conjunction with their own. In their research, K-C identified a common goal to maximize efficiency of their supply chains among retail customers. K-C’s integrated EDI system provides real-time data to identify sales trends “to ensure that stores are promptly supplied with products during promotional periods and peak times of year, such as the winter cold and flu season” (Jamison, para. 5). Distribution Channels
Prior to technology advancements, that allow distributors to view real-time transactions and inventory status within their own warehouse as well as customer data, a great deal of time was involved in manual review to determine the best method of distribution for each retail customer. The process for selection of distribution channels “can be logically viewed as a five-stage process, with a sixth stage added for review and evaluation purposes. The six stages are the: (1) decision areas - five big questions; (2) guidelines - four major objectives; (3) determinants - four influencing factors; (4) figures - quantifying the options; (5) decision;(6) channel review and evaluation” (Mallen, 1996, para.1). In the...