Kimberly-Clark has been around for many years—135
to be exact. And while it may not be a household name,
roster of products and brands certainly are: Kleenex, Scott,
Huggies and Pull-Ups, just to name a few. According to the
company, 1.3 billion people use its products every day,
contributing to $16.7 billion in sales last year.
Behind the nurturing and homey images of those powerhouse
brands is a company with operations in 37 countries and a
global supply chain that enables Kimberly-Clark to sell its
wares in 150 countries.
As one of Wal-Mart’s top suppliers, Kimberly-Clark got
onboard the RFID revolution early and has been one of the
technology’s most ardent supporters. Mark Jamison, vice
president of customer supply chain management, talked with CIO
Senior Writer Thomas Wailgum about the company’s overall
supply chain strategy, how RFID fits into the mix and how to
make RFID work for the business.
CIO: What’s the overall supply chain
management strategy at Kimberly-Clark?
Jamison: Our goal is to evolve the
capabilities of our supply chain to a demand-driven supply
network. One of the keys to achieving that vision is to have a
highly integrated suite of supply chain systems that provide
end-to-end visibility and as close to real-time information as
About four years ago, we started redesigning our supply
chain business processes and integrating our systems to that
end. The first business process we redesigned was
forecast-to-stock. We chose to go with SAP’s APO [Advanced
Planner and Optimizer] product, and we finished putting that in
the fourth quarter of last year. Following that was the
redesign of our order-to-cash business processes, and we have
chosen an SAP solution for this system as well.
When we implement our new order-to-cash system, we will have
an integrated suite of systems, and all of our users will be
working with the same information as close to real time as
possible. In addition, we are developing strategies to better
leverage downstream data in our business processes for supply
chain, category management and consumer insights.
CIO: Supply chain integration with other
enterprise systems is the holy grail of making SCM systems pay
off. How big a part of your SCM strategy is focused purely on
Jamison: It was a key driver, but it
wasn’t the only driver. Historically, our business
processes were managed with what I described as a
“patch-quilt” of systems. There was a lot of
handing off of information up and down the supply chain. Not
everyone was working with the same information—and not
even close to real-time information. And what that tends to
drive in the supply chain is surprises, variability and waste.
We believe that getting to the end state of high-level
integration will allow us to have a more finite supply chain
and also helps to manage that variability down and helps to
take the waste out.
CIO: At Kimberly-Clark, how critical is the
management of the supply chain function for those executives
not on the inside? How much do they care to know about it?
Jamison: Obviously it’s critical in many
ways, but it is so critical to working collaboratively with
your customers on common objectives. Supply chains that have
the capability to provide high levels of service for in-stock
at retail and on-time delivery, in a cost-effective manner, can
be a competitive advantage that can be leveraged to help grow
CIO: You mentioned real-time data. There
are some potential downsides to real-time data—for
example, making too-quick decisions based on not fully flushed
out supply chain information. In addition, the term
“real-time data” can mean different things to
different companies. What does real-time data entail at
Jamison: [Real-time data]
improves your ability to see what’s going on in the
marketplace and to understand, in a very timely manner,
what’s happening with the promotions, what’s
happening with a product in production. And it enables you to
respond, from a supply chain perspective, in a more
cost-effective manner, and in a manner that helps you increase
your stock levels and keep things on the shelf.
Now that doesn’t mean to us that we that we need
real-time data at an hour level. But we certainly want to look
at it in eight- to 16-hour buckets so that we do get a very
timely read as to what’s happening in the marketplace.
(For more on the risks and rewards of real-time data in the
supply chain, see Managing the Flow of
CIO: Other supply chain executives that I
have spoken with have told me about the “aha” moment when their
supply chain users finally got the real-time or more up-to-date
data they had always wanted. Did this happen at
Jamison: It did, when we implemented APO.
Now, we won’t realize the full benefit of our integration until
our order-to-cash is fully implemented, which I mentioned
earlier. But when we implemented APO, our production planners
saw an immediate improvement to their ability to service
promotions because of improved visibility to real-time demand
CIO: Kimberly-Clark has been a major driver
on RFID adoption. What can you tell me about RFID in 2007 and
how you are currently using the technology?
Jamison: The first thing I would tell you
is our strategy around RFID has been to focus on business
processes and develop repeatable, scalable business processes
that are enabled by the technology. The reason I start out with
that is you read today a lot about whether companies are
getting value from RFID. When we dug deep into those examples,
it was because [those companies] really operated in a
“slap and ship” mode.
The technology in and of itself is not going to bring value
to the supply chain. The value to the supply chain comes from
reengineering your business processes and enabling that new
business processes to work with the technology.
CIO: Can you give an example of where
it’s working now?
Jamison: Our focus is on redesigning
business process and finding a way for the technology to
support that process. A perfect example of that is in what
we’ve done in the area of promotional execution. We found
that only 55 percent of the time our promotional displays were
moving to the floor in time to meet our promotion, or
advertising, dates. And that was missing a real opportunity to
get that product out to our customers along with our retail
So we redesigned the business process that tracks execution
of our retail displays on sales floors. We developed daily
reports, based on real-time data, and we included our retail
operations people in the process so that on a daily basis we
can identify those stores which have not executed the
promotions. The retail operations people can then be dispatched
to go into the stores of our retail partners, and we can get
that display and product immediately on the floor.
Shortly after we implemented the new process that was
enabled by the technology, we saw our execution of promotional
displays improve from 55 percent to over 75 percent. We also
saw a corresponding increase in point of sale. So while we saw
the execution improve, we also saw sales increase at a
corresponding rate. And I just think that’s an excellent
example of how RFID, in combination with redesigning a business
process, can have big effect on the supply chain.
CIO: Is this working for specific products,
and what are those?
Jamison: This specific process we have
focused on is with the Depend [adult incontinence] healthcare
product. The reason why this is very critical for us is that we
have a first-of-the-month promotion for that product because
that’s when many of our consumers receive their Social
Security checks, and we want that product available when they
CIO: Do you think these kinds of
examples—that show real RFID-enabled results—is
just what the industry needs to keep the RFID momentum going?
Jamison: I think it is, and that’s one of the reasons why
Kimberly-Clark is willing to show examples [of RFID successes].
Because we really believe that for RFID to work there has to be
CIO: Over the years there has been
dissatisfaction with the RFID tags and read rates of the RFID
readers—some products, such as those that contained
liquids or had metal, didn’t work so well. Do you feel
now, in 2007, you’re getting good returns on
Kimberly-Clark’s investment, and are satisfied with the
Jamison: Our products are pretty
RFID–friendly—lots of bulk paper products. Our read
rates are well over 95 percent, so we are very comfortable with
the accuracy of [our technology]. There are some products in
the marketplace that still are challenging and are not
RFID-friendly—metals and glass and products with liquids.
But I’m not a good expert in that area.
CIO: Another challenge been integrating the
new RFID data into enterprises’ back-end systems. Are you
finding that there are enough software products available to
make this work?
Jamison: Yes. In the example of the
promotional execution, we were working with a software provider
called Oat Systems. What
they have given us is that supply of information that is
actionable. We don’t have to do a lot of data mining
ourselves. We’re also working with another company called
replenishment, so we don’t have out–of-stock on the
CIO: The last of the RFID challenges that I
have been hearing about is ensuring that one person—or
one group—takes ownership of the overall RFID
implementation, especially because an RFID program can span so
many different functions—from supply chain, to IT, to
marketing, to accounting. How have you dealt with that?
Jamison: We have created two teams at
Kimberly-Clark to develop RFID capabilities. The first is
focused on technological capability such as tag performance and
readers. This team is part of our Process and Technology
Development organization. The second team is focused on
utilizing RFID to develop insights and enhance business
processes. This team is part of the Customer Supply Chain
organization and works directly with our customers to develop
CIO: Has there been any pushback on RFID
funding over the years?
Jamison: Obviously we have to bring a solid
business case forward, but so far we’ve been successful.
And that’s because we are focused on solving business
problems and finding real-world business results—and that
enables us to get money for the program.
CIO: Are there any other applications of
RFID that Kimberly-Clark is looking at for the future?
Jamison: Another area where we’re
starting to pilot is trailer management. In our large
distribution center, we have some 500 to 700 trailers parked in
the yard. We’re looking at a process where we can track
the location and the identity of those trailers. When a trailer
comes in the yard, we’ll apply an RFID tag. We believe
we’ll be able to improve the accuracy of information and
cut down on the amount of time it takes to track trailers in
In the supply chain, potentially, we could bring RFIDs back
into the manufacturing environments, and trace raw materials.
We’ve found that the bigger payback in the short term for
us has been reducing out-of-stocks on the shelf. But we believe
there are a lot more opportunities with RFID.