Transportation and supply chain solutions for the bottom line
Outsourcing Transportation Helps a Leader in Cleaning and Personal Care Products Shine.
Although Reckitt Benckiser Group may not be a household name, its products certainly are. Look in the kitchen, laundry or medicine cabinet of almost any household in the Americas and you’ll see Lysol, Woolite, French’s mustard, Electrosol dishwasher detergent, Mucinex and, for teenagers, Clearasil acne medicine. The United Kingdom-based company, is in fact a world leader in household cleaning products, and has dominant positions in selected health and personal care categories. With annual sales of over $7.5 billion, operations in over 60 countries and sales in 180, Reckitt Benckiser has experienced sustained net revenue growth of nearly 10 percent over the last seven years. Like many industries, the consumer packaged goods (CPG) sector is challenged by the current difficult business environment – skyrocketing fuel prices, wavering consumer spending and ever more demanding customer requirements. But leading companies “are using creative strategies to manage costs while delivering value to consumers,” according to Stephen Sibert, senior vice president for industry affairs at the Grocery Manufacturers of America. “We see this difficult environment as likely to continue, which means that consumer goods manufacturers... will need to stay nimble and initiate more collaboration in order to continue their growth.” Good advice – and exactly the strategy that Reckitt Benckiser embraced when it outsourced management of most of
its North American transportation to a third party logistics provider (3PL), Ryder. Ryder manages over $100 million in transportation spend for the CPG company. The 3PL orchestrates the movement of raw materials into seven manufacturing plants, and manages the transportation of finished goods from these plants to Reckitt Benckiser’s five logistics centers, and then on to customers. Reckitt Benckiser’s customers include major national retailers and grocery chains the likes of Wal-Mart, Target, Safeway, Costco, Dollar General, Kroger, Publix and Family Dollar. Within two years, the Reckitt Benckiser-Ryder collaboration produced a significant amount in savings for the company. But more importantly for the long term, Reckitt Benckiser has significantly improved its service to customers, some of which are the most exacting in the business. In fact, Reckitt Benckiser’s on-time delivery performance has jumped from 88 percent to 98 percent since outsourcing its transportation
management to Ryder. This is a critical customer service improvement that not only means more satisfied customers, but also considerable savings for Reckitt Benckiser in the form of significantly improved vendor compliance performance. Virtually every major U.S. retailer contractually requires vendors such as Reckitt Benckiser to meet stringent service requirements – for such parameters as on-time delivery and order accuracy, and assesses fees – or chargebacks – if they fail to do so. Reckitt Benckiser’s improved delivery performance translates into fewer fees with the savings going straight to the company’s bottom line. In addition, customers have noticed the difference in performance. Wal-Mart, for one, recognized Reckitt Benckiser’s service improvement by awarding the company multiple Vendor of the Quarter awards during 2007 and 2008, according to Joe Rosiek, senior manager of North American transportation operations for the manufacturer.
At A Gl ance
Ch all enge
How to consolidate independent manufacturing and logistics functions to drive improvement in customer service and cost structure.
A holistic transportation management solution that provides strategic insight, by aligning freight movements with customer demand and production levels. On-site management, optimization and visibility tools, automated shipment execution and...