Course 3 Case Work – How Kimberly-Clark Keeps Client Costco in Diapers Essay Example

on-line, accurate, and integrated to take advantage of the additional information available as an essential to cut down on data transfer time and entry mistakes. The vendor can further decrease total cost by coordinating production and distribution for several retailers, as long to optimize the entire system by coordinating production and distribution. Now, some VMI are moving to consignment relationships (i. e. supplier owns goods until they are sold), not as ownership of goods transferred to the retailer when goods were received. The benefit of this to retailer—lower inventory costs. (Consignment arrangements are beneficial to the supplier because it allows the supplier to coordinate distribution and production, thus reducing total cost) In addition to the transfer of customer demand information to suppliers, but also the supplier makes ordering decisions, this partnership completely controlling the variability in order quantities, and by this knowledge can reduce overall system costs and improve overall system service levels.

The benefits to the supplier in terms of better service levels, decreased managerial expenses, and decreased inventory costs. The vendor should be able to reduce forecast uncertainties and thus better coordinate production and distribution. Reduced forecast uncertainties leads to reduced safety stocks, reduced storage and delivery costs, and increased service levels. In this case, Costco now just needs to keep only a 2-week supply from previous situation a-month’s supply of Kimberly-Clark products in its warehouses after Kimberly-Clark has proven it can replenish supplies more efficiently in managing Costco’s inventory.

• And, fulfillment of customer requirements reflected on Kimberly-Clark’s 51% rise in net income to $1. 67 billion on $13 billion in sales, capping three years of improving results.
• There are ways for Costco and
  

Kimberly-Clark to improve this situation that can be done individually or together in the future.

Jointly Managed Information (JMI) is a derivation of VMI to use when and where VMI is not operationally or commercially practicable. Jointly-Managed Information is the automated collection, management, and integration of POS and inventory data into supplier inventory/materials management algorithms, independent of physical movements into the retail channel. This achieves many of the same benefits as VMI when there exists a free flow of information among retail channel partners, without introducing what can be sensitive financial relations between the parties.

Retail partners often cannot or will not allow a vendor to automatically replenish them.

The advantages of supply chain management identified within this case.

• A huge advantage of Supply Chain Management is the knowledge the suppliers has about order quantities, implying an ability to control the bullwhip effect. oNo extra hidden cost (cost avoidance of system failing)
• Completely controlling the variability in order quantities oEqual to maintain customer demand
• This knowledge can reduce overall
  

system costs and improve overall system service levels oWithin lower inventory to replenish, means lower cost Customer need served with excellent order fulfillment brings improvement on overall system service levels

Remarkable Canceled Order efficiency oDown nearly 50% of stock keeping in Kimberly-Clark warehouses. 4. Handling logistics using in-house versus external sources known as 3PL advantages and disadvantages:

Important disadvantages of 3PL:

The loss of control in outsourcing a particular function oAll control in 3PL side •This might interact with a firm’s customers oThe Loss of the moment of TRUTH If logistics is one of the core competencies of a firm oNo such firm to leave his Logistics core competencies to a 3PL company

It makes NO sense to outsource these activities to a supplier who may not be as capable as the firm’s in-house expertise oExample, Wal-Mart, Amazon, and Caterpillar Advantages of 3PL:

• We can focus on our core strengths oIt’s often difficult to be an expert in every facet of business ? Limited corporate resources oSo we can leave the logistics expertise to logistic companies
• Provides technological flexibility The better 3PL providers constantly update their information technology and equipment, making
  

sense not doing in-house oCompanies don’t have the time, resources, or expertise to constantly update their technology, so leave it to 3PL oDifferent retailers may have different, and changing, delivery and information technology requirements

If we do in-house, need more capital expenses ?By using 3PL providers for warehousing a company can meet customer requirements without committing capital and limiting flexibility by constructing new facilities or committing to long-term leases •Means lower cost ?3PLs may be able to provide a larger variety of services than the hiring firm

• Because this is their core competencies Flexibility in resources and workforce size can be achieved through outsourcing
• No doubt and worries ?Managers can change what would be fixed costs into variable costs
• More flexible in budget of capex

Other Types of Business Partnerships that Can Be Used to Improve Supply Chain Performance: Adding value to products. A partnership with proper firm can help add value to existing products. Eg. Partnership to improve distribution times, time to market, complimentary products etc. Improving market access To improve market access and lead to better advertising channel. Eg. Complementary consumer product manufacturers can cooperate to achieve the needs of major retailers, to increase the sales. Strengthening operations

Lowering system cost and cycle times between alliances

of appropriate firms in operations. Eg. Warehouse and trucks usage year-round in companies with complementary seasonal products. Collaboration In a collaborative relationship, the members use networked communications tools to share data and coordinate planning throughout the supply chain. Eg. Reduce costs by eliminating waste and improving efficiencies. Strategic Partnership Partnership between supply chain members creates a more formal, long-term relationship covered by a contractual agreement. Within the partnership members may undertake joint development projects to improve products and services or reduce costs.

Partnership builds greater stability into the relationship, ensuring continuity of supply and giving the partners access to specialist skills and resources. Ventures These are strategic relationships covered by formal financial and contractual agreements. They allow partners to share risks and costs and give both parties the opportunity to enter new markets, increase capacity or access specialist skills or technology. Partners can undertake joint ventures for a specific project or agree to cooperate on a long-term basis. Integration Partnership in the supply chain reaches its highest levels when vertical integration takes place. Here a lead company takes ownership of strategic suppliers to secure continuity of supply.

That can improve costs and efficiency further. It can also act as a barrier to entry for potential competitors, particularly if the arrangement covers scarce resources or skills. Ecosystem Business ecosystems, a concept introduced by Harvard Business School author James F. Moore, relate supply chain partnership to a natural ecosystem where success and survival is dependent on cooperation between all members. A typical ecosystem would include suppliers, logistics providers, technology companies, as well as customers. The ecosystem is led by keystone companies who may provide resources to support collaboration between

members. Cooperation with NGO Why do corporations need NGOs?

Senge, the founder of the Society for Organizational Learning, a faculty member at MIT Sloan School of Management, and the author of The Fifth Discipline and The Necessary Revolution, saying why we need NGO, for credibility, especially in Europe. People don’t trust the business-as-usual mind-set—for good reason. He doesn’t think it’s so different in the U. S. If a credible NGO certifies your product, your brand can gain hugely if you are willing to change your practices. NGOs can also provide knowledge. No business knows what Oxfam knows about the plight of farmers or what WWF knows about biodiversity and watersheds. The best businesses don’t just hire the sharpest people; they also keep expanding their expertise by partnering with NGOs that have deeper and broader knowledge.