Clorox Rolls Out Smart Logistics
Since rolling out its Centennial Strategy in fiscal year 2008, The Clorox Company has delivered consistent and strong market share performance despite the recession, outperforming private label and all of its branded competitors. According to the company’s Chairman and Chief Executive Officer Don Knauss, “optimizing our logistics processes by investing in innovative technology is a key component to achieving our Centennial Strategy.”Thus, the Clorox Company recently migrated its advanced planning business processes from legacy systems to SAP and added ORTEC’s SAP Embedded Load Building optimization solution to help achieve savings goals.
Inside the Centennial Strategy
The Centennial Strategy is focused on strategic choices in four key areas: goals and aspirations, where to compete, how to win and how to configure. For fiscal year 2012, Clorox anticipates delivering more than 3 percentage points of incremental sales growth from innovation. This achievement would mark the 10th consecutive year the company has met or exceeded its annual innovation target of 2 percentage points of incremental sales growth from new products. To accelerate growth, the company recently raised this target to 3 percent, driven by a robust innovation pipeline across its portfolio.
The Logistics Component
According to The Clorox Company’s Planning Services Manager Christopher Winston, the company was using legacy logistics systems that were becoming obsolete — one even ran on a mainframe program.
“We needed to upgrade to ensure future sustainability of the systems,” he says.
The Clorox and ORTEC teams worked together to implement an innovative load building solution into the new SAP-centric platform. They took a very collaborative approach to ensure there was consistent communication, sharing of ideas, thorough understanding of the business requirements and commitment to Clorox success. The load building solution would address truckload building for vender managed inventory and deployment planning business processes.
Since ORTEC’s solution is embedded in SAP, it was widely accepted by consumer goods companies. The solution provided planners with the ability to improve truckload efficiency by building trucks from replenishment demands generated by SAP. ORTEC’s solution uses optimization to ensure the footprint of the truck is fully utilized to legal limit.
Today, Clorox is realizing significant improvement in cube and weight utilization for full truckloads. Deployment planning has reduced time required to build optimal truckloads. Transportation has reduced the percentage of overweight truck loads and improved the accuracy of SKU master information.
“I no longer have to focus on truckload utilization,” reports Winston. “Instead, I look at intermodal utilization to improve customer service and identify other cost-savings opportunities.”
FAST FACTS
Cost-Saving Savvy
Clorox has delivered $100 million on average in cost savings every fiscal year since 2003. The company anticipates fiscal year 2012 cost savings around the high end of the range of $90 million to $100 million.
A Focus on Freight
Clorox’s logistics optimization efforts also involved the launch of a Premium Freight report, which provides visibility to “above minimum” freight spend, such as expedited, sub-optimized, out of pattern, etc.
Words of Wisdom
“Network with as many companies that have undergone the change as possible, and learn from their mistakes. One common mistake is to think that your particular situation is ‘special’, which prevents you from following the advice of other companies.”
— Chris Winston, Planning Services Manager, Clorox