Kimberly-Clark Becomes the Indispensable Partner for Retailers
When it comes to working with its retailer customers, Kimberly-Clark Corporation has a simple philosophy, "We want to be the indispensable partner," says Greg Pike, who leads customer development for Delhaize USA, covering both Food Lion and Hannaford in the Eastern United States.
Kimberly-Clark, the personal product company with famous brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend, prides itself on being one of the best suppliers in the industry. With a market position of No. 1 or No. 2 in more than 80 countries, being the lead supplier in a number of categories at their customers is almost a standard position which creates both tremendous opportunities and great challenges.
"This is not only about driving sales," adds Pike. "Of course, growing our business and the category is one of our major objectives, but as leaders, we have to do more than this. We continually work with Delhaize USA to define what success means to both of us, and to establish joint objectives for all the different areas of our business: shelf availability, warehouse inventory, promotional effectiveness, shrink, reclaim... We take pride in truly understanding our retailer customers, and in being an extended set of resources for them so that we both can be more successful."
This is no simple task. Pike's organization covers many different areas of the business. Some of them -- like sales -- report directly to him. However, for many others -- such as the category development, marketing, logistics, supply chain and customer service or finance departments -- there is only a dotted line, in a matrix organization.
"Orchestrating all these resources and focusing them on the right priorities for Delhaize USA can be a challenge," confesses Pike, "but it is mandatory. Being the indispensable partner requires harmonizing the energy of all these resources onto one single goal; our success with our customers."
Leveraging Retailer Data
When Food Lion, the largest retailer within the Delhaize USA umbrella, started sharing point-of-sale data in December 2006, Kimberly-Clark jumped on the opportunity. The Food Lion initiative, dubbed Vendor Pulse, enabled suppliers to receive sales, inventory level, shrink and reclaim information for each product, every day, in each store, providing an unmatched ability to perform detailed analyses on what was working and what was not.
"When we first heard of Vendor Pulse, we were thrilled. We always knew that POS data had the potential to add a lot to the tools we were using in the past," says Gary Hall, a business analyst at Kimberly-Clark in the personal care category. "We had been using syndicated data for a number of years, but it has nowhere near the same level of granularity. It only gave us our total sales at the chain level every week, and it was not real-time. Suddenly, with the addition of Vendor Pulse, we really were having a dual, complementary view; both the overall market and our share with syndicated data as well as the detailed, real-time Food Lion data with Vendor Pulse."
However, the initial enthusiasm quickly turned into a major headache. Kimberly-Clark sells more than 250 products at 1,300 Food Lion stores, which meant that every day it had to handle well over 300,000 data points; the sales and stock of each product in every store, every day.
"It very quickly became overwhelming -- we felt we were trying to drink from a fire hose," explains Hall. "We tried to build an internal solution using a standard database tool, but it simply did not work. Not only did we struggle with scalability issues, but we also needed to cleanse and load the data ourselves, and we discovered it certainly was not trivial."
Upon trying to reconcile this data with the syndicated data, Kimberly-Clark identified major discrepancies, and several reports which were run on their internal database did not provide the expected results.
"After a few errors, we quickly lost confidence in the data," adds Hall. "We simply did not want to use it anymore."
Switching to Retail Solutions
In July 2008, Kimberly-Clark turned to Retail Solutions Demand Signal Management (DSM) to help solve its issues. Retail Solutions DSM is a web-based set of management reports enabling the user to intuitively start with its retail performance scorecard and drill down from there to mine opportunities from the data at its lowest level of granularity.
"Going with Retail Solutions was the logical decision," explains Hall, referring to the decision made by Food Lion in June 2008 to select Retail Solutions to power its Vendor Pulse program. "Food Lion saw the value in this solution, as did we."
"It is their data, so they believe it," adds Lisa Smith, an account executive for Food Lion at Kimberly-Clark, who is a regular user of the solution and uses it as the foundation of her discussions with her counterparts at the retailer.
Retail Solutions DSM is a fully managed service which resolves the issue of data cleansing, harmonization, loading and storage for the suppliers participating to the Vendor Pulse program, while providing business-focused reports that enable every type of user to intuitively navigate the data.
"Retail Solutions enabled itself," says Pike. "While I definitely encouraged all people in the team to start using it, it was not necessary to push very hard before it became the tool of choice across the team. The combination of its ease of use, a few early sizeable wins and the positive feedback from Food Lion about our results created the perfect environment for an easy roll out."
Running More Effective Promotions
One of the first major wins was for a promotion run for multiple bath tissue products in October 2007. Kimberly-Clark and Food Lion had run a similar promotion the month prior, only to discover that the out-of-stock rate had run as high as 18 percent.
"We dived down into the promotion sales data," explains Hall. "We used Retail Solutions reports to identify each store which had run out of stock, and based on the sales rate at stores without out of stocks, we quantified the amount of under-allocation for each item in the promotion at the most granular level. We then went to Food Lion category management team with the result of our analysis."
A virtually identical promotion was scheduled to run the following month so Food Lion and Kimberly-Clark decided together to increase store allocation (force-out) quantities according to the detailed recommendations of Kimberly-Clark's analysis. As a result, the sales for the October promotion were 167 percent higher than the sales for the September promotion, with the out-of-stock rate dropping down to just above 10 percent, eight points below the prior event rate.
"This was only possible because we were able to analyze the data immediately and at the most detailed level," says Smith. "The promotion ended on a Tuesday, and we had our analysis in front of Food Lion on Friday, enabling us to start planning for our next promotion right away."
Solving Out of Stocks, One-by-One, Systematically
"We are also looking at out of stocks of all our products, category by category," says Hall. "We are running reports to see which products are not selling for abnormal periods of times in stores where they are authorized."
By matching this analysis with shipment data, Kimberly-Clark then can address the distribution voids occurring when items are not shipped to authorized stores. On one particular item, for instance, they found 70 stores which should have had the product in stock but did not.
When the out of stock seems to have its root cause in the store, Kimberly-Clark could now instruct a merchandiser to check a list of items during their visits. "Instead of doing this randomly, we now are very systematic and perform this analysis on a recurring basis," declares Hall.
Building More and More Experience
"This is only the beginning," says Pike. "We are developing a foundation of learnings, and we are deploying these learnings across the organization. The most important thing though, is that the Retail Solutions tool is pervasive. It crosses boundaries, and is used by all the functions we leverage to serve Food Lion more effectively. I look at it at the top level, but supply chain analyzes availability in each store and service levels in each warehouse, marketing optimizes promotion design for each event, sales drive better execution from every resource, merchandising determines which planogram drives the highest sales in each store, all of this without asking for any more resources from Food Lion."
Call this, becoming the indispensable partner.
Kimberly-Clark, the personal product company with famous brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend, prides itself on being one of the best suppliers in the industry. With a market position of No. 1 or No. 2 in more than 80 countries, being the lead supplier in a number of categories at their customers is almost a standard position which creates both tremendous opportunities and great challenges.
"This is not only about driving sales," adds Pike. "Of course, growing our business and the category is one of our major objectives, but as leaders, we have to do more than this. We continually work with Delhaize USA to define what success means to both of us, and to establish joint objectives for all the different areas of our business: shelf availability, warehouse inventory, promotional effectiveness, shrink, reclaim... We take pride in truly understanding our retailer customers, and in being an extended set of resources for them so that we both can be more successful."
This is no simple task. Pike's organization covers many different areas of the business. Some of them -- like sales -- report directly to him. However, for many others -- such as the category development, marketing, logistics, supply chain and customer service or finance departments -- there is only a dotted line, in a matrix organization.
"Orchestrating all these resources and focusing them on the right priorities for Delhaize USA can be a challenge," confesses Pike, "but it is mandatory. Being the indispensable partner requires harmonizing the energy of all these resources onto one single goal; our success with our customers."
Leveraging Retailer Data
When Food Lion, the largest retailer within the Delhaize USA umbrella, started sharing point-of-sale data in December 2006, Kimberly-Clark jumped on the opportunity. The Food Lion initiative, dubbed Vendor Pulse, enabled suppliers to receive sales, inventory level, shrink and reclaim information for each product, every day, in each store, providing an unmatched ability to perform detailed analyses on what was working and what was not.
"When we first heard of Vendor Pulse, we were thrilled. We always knew that POS data had the potential to add a lot to the tools we were using in the past," says Gary Hall, a business analyst at Kimberly-Clark in the personal care category. "We had been using syndicated data for a number of years, but it has nowhere near the same level of granularity. It only gave us our total sales at the chain level every week, and it was not real-time. Suddenly, with the addition of Vendor Pulse, we really were having a dual, complementary view; both the overall market and our share with syndicated data as well as the detailed, real-time Food Lion data with Vendor Pulse."
However, the initial enthusiasm quickly turned into a major headache. Kimberly-Clark sells more than 250 products at 1,300 Food Lion stores, which meant that every day it had to handle well over 300,000 data points; the sales and stock of each product in every store, every day.
"It very quickly became overwhelming -- we felt we were trying to drink from a fire hose," explains Hall. "We tried to build an internal solution using a standard database tool, but it simply did not work. Not only did we struggle with scalability issues, but we also needed to cleanse and load the data ourselves, and we discovered it certainly was not trivial."
Upon trying to reconcile this data with the syndicated data, Kimberly-Clark identified major discrepancies, and several reports which were run on their internal database did not provide the expected results.
"After a few errors, we quickly lost confidence in the data," adds Hall. "We simply did not want to use it anymore."
Switching to Retail Solutions
In July 2008, Kimberly-Clark turned to Retail Solutions Demand Signal Management (DSM) to help solve its issues. Retail Solutions DSM is a web-based set of management reports enabling the user to intuitively start with its retail performance scorecard and drill down from there to mine opportunities from the data at its lowest level of granularity.
"Going with Retail Solutions was the logical decision," explains Hall, referring to the decision made by Food Lion in June 2008 to select Retail Solutions to power its Vendor Pulse program. "Food Lion saw the value in this solution, as did we."
"It is their data, so they believe it," adds Lisa Smith, an account executive for Food Lion at Kimberly-Clark, who is a regular user of the solution and uses it as the foundation of her discussions with her counterparts at the retailer.
Retail Solutions DSM is a fully managed service which resolves the issue of data cleansing, harmonization, loading and storage for the suppliers participating to the Vendor Pulse program, while providing business-focused reports that enable every type of user to intuitively navigate the data.
"Retail Solutions enabled itself," says Pike. "While I definitely encouraged all people in the team to start using it, it was not necessary to push very hard before it became the tool of choice across the team. The combination of its ease of use, a few early sizeable wins and the positive feedback from Food Lion about our results created the perfect environment for an easy roll out."
Running More Effective Promotions
One of the first major wins was for a promotion run for multiple bath tissue products in October 2007. Kimberly-Clark and Food Lion had run a similar promotion the month prior, only to discover that the out-of-stock rate had run as high as 18 percent.
"We dived down into the promotion sales data," explains Hall. "We used Retail Solutions reports to identify each store which had run out of stock, and based on the sales rate at stores without out of stocks, we quantified the amount of under-allocation for each item in the promotion at the most granular level. We then went to Food Lion category management team with the result of our analysis."
A virtually identical promotion was scheduled to run the following month so Food Lion and Kimberly-Clark decided together to increase store allocation (force-out) quantities according to the detailed recommendations of Kimberly-Clark's analysis. As a result, the sales for the October promotion were 167 percent higher than the sales for the September promotion, with the out-of-stock rate dropping down to just above 10 percent, eight points below the prior event rate.
"This was only possible because we were able to analyze the data immediately and at the most detailed level," says Smith. "The promotion ended on a Tuesday, and we had our analysis in front of Food Lion on Friday, enabling us to start planning for our next promotion right away."
Solving Out of Stocks, One-by-One, Systematically
"We are also looking at out of stocks of all our products, category by category," says Hall. "We are running reports to see which products are not selling for abnormal periods of times in stores where they are authorized."
By matching this analysis with shipment data, Kimberly-Clark then can address the distribution voids occurring when items are not shipped to authorized stores. On one particular item, for instance, they found 70 stores which should have had the product in stock but did not.
When the out of stock seems to have its root cause in the store, Kimberly-Clark could now instruct a merchandiser to check a list of items during their visits. "Instead of doing this randomly, we now are very systematic and perform this analysis on a recurring basis," declares Hall.
Building More and More Experience
"This is only the beginning," says Pike. "We are developing a foundation of learnings, and we are deploying these learnings across the organization. The most important thing though, is that the Retail Solutions tool is pervasive. It crosses boundaries, and is used by all the functions we leverage to serve Food Lion more effectively. I look at it at the top level, but supply chain analyzes availability in each store and service levels in each warehouse, marketing optimizes promotion design for each event, sales drive better execution from every resource, merchandising determines which planogram drives the highest sales in each store, all of this without asking for any more resources from Food Lion."
Call this, becoming the indispensable partner.