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Transforming Businesses through Supply Chain Management.

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2015
How Kimberly-Clark
Keeps Client Costco in
Diapers
CASE STUDY SUPPLY CHAIN MANAGEMENT
ANDREW KANTONO MEW2014559025
ALBERT ANTHONIUS LIM MEW2014559009
HARVIANTO PRANOTO MEW2014559032
MICHAEL OZZIE MEW2014559008

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1 | P a g e
Case: Kimberly-Clark Keeps Client Costco in Diapers
1. Why are major retailers moving toward relationships in which the supplier manages
inventory levels at the retailer?
Traditionally, the retailer handles the replenishment process, and the supplier has no
clear information on the demand side or advance warning about out-of-stock situation.
As a result, the supplier tends to maintain a certain level of safety stocks as a "buffer"
in order to facilitate sales and the customer would keep some safety stocks in case of
none-supply. This results in long supply chain and lacks of flexibility.
Through supplier managed inventory programs, suppliers get to know the actual supply
and demand and thus can deploy better logistic plans to response the fluctuating market
situation. For example, suppliers now can make better decisions on how to deploy
goods across various customer locations based on different consumer preferences,
which not only helps to decrease transportation and storage costs but also leads to higher
customer service levels and flexibility.
2. When should a company handle its logistics needs in-house, and when should external
sources be used?
The adoption of supplier managed inventory program depends on the specific
conditions of the company and how much control over the distribution channel the
company has. For example, on a domestic supply chain, there is only very limited
uncertainty, supplier only need to focus on the POS data and local traffic situation to
plan their replenishment but for companies that operates on an multinational
environment with multiple origins and diverse concentration of suppliers, the
coordination work usually takes more than simply handle the logistical work in-house.
The ultimate goal of supplier managed inventory program still lies on the efficiency
issue. The cost to integrate the information flow between the supplier and retailer
should be measured against the potential benefit in order to make the wise decision.
3. What other types of business partnerships can be used to improve supply chain
performance?
Collaborative forecasting is also a good way to increase the supply chain efficiency. In
the traditional approach, retailers collect and analyze POS data to prepare their sales
plan while in collaborative forecasting, data are not only collected in the retailer's POS,
consumers and suppliers also play important roles in sharing their own opinion. The
collaborative forecasting is usually more accurate because the forecast is integrated
with the suppliers' feasibility,

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 Case: Kimberly-Clark Keeps Client Costco in Diapers 1. Why are major retailers moving toward relationships in which the supplier manages inventory levels at the retailer? Traditionally, the retailer handles the replenishment process, and the supplier has no clear information on the demand side or advance warning about out-of-stock situation. As a result, the supplier tends to maintain a certain level of safety stocks as a "buffer" in order to facilitate sales and the customer would keep some safety stocks in case of none-supply. This results in long supply chain and lacks of flexibility. Through supplier managed inventory programs, suppliers get to know the actual supply and demand and thus can deploy better logistic plans to response the fluctuating market situation. For example, suppliers now can make better decisions on how to deploy goods across various customer locations base ...
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