Kimberly-Clark's Supply Chain Overhaul Accelerates Robotics
Kimberly-Clark’s restructure continues to progress with its supply chain overhaul accelerating adoption of robotics and increasing network optimizations.
The company has been ramping up investments in technologies to not only address unmet consumer needs but also bring greater focus to a new organizational model. Initially announced this summer and launched on Oct. 1, the model seeks to create new efficiencies and “rewire Kimberly-Clark for growth."
As part of this, Kimberly-Clark has been investing in driving global supply chain cost efficiencies and increasing speed to market since July under the leadership of Tamera Fenske. The three core areas of focus include value stream simplification (streamlining product platform, sourcing, and manufacturing processes); network optimization within manufacturing; and digitalizing the supply chain through automation.
Read More: Kimberly-Clark Announces Major Restructure
“This is about rolling out state-of-the-art software in both procurement and supply and demand planning, which we're already doing, as well as accelerating the adoption of robotics across the entire network,” said Kimberly-Clark CFO Nelson Urdaneta during the recent Morgan Stanley Global Consumer & Retail Conference.
Benefits of Transformation
The company expects to see end-to-end visibility, discipline, and accountability as a result of upcoming changes, especially as it transitions to a culture of holistic, integrated margin management instead of taking a siloed approach.
“It starts with revenue growth management strategies. It follows on to risk management strategies on commodities and costs, as well as maintaining very strong discipline on costs across the enterprise — all at the service of driving higher gross productivity and higher margins," said Urdaneta.
"Integrated margin management is not new for the world, but it is new to us."
The Tariff Conversation
CPGs are especially zeroed in on preparing supply chains for potential upcoming disruptions as a result of promised tariffs from the incoming administration. Kimberly-Clark reports it feels secure in its U.S. efforts, noting that the majority of the products sold in the U.S. are also manufactured on U.S. soil.
“Our exposure to Canada, Mexico, and China, in particular, in terms of raw materials and finished goods, represents less than 10% of the U.S. cost of goods sold,” said Urdaneta, citing metrics from the previous fiscal year. “And as a global company, we continuously look at our inter-country sourcing and supply chain, but this is just to give you a perspective of our exposure on that end for tariffs.”
As part of the company’s overhaul, Kimberly-Clark has also invested in three key pillars in R&D: materials invention, product design and process, and manufacturing process innovation. These efforts are being led by Craig Slavtcheff, who joined the company this summer from The Campbell’s Company. Additionally, Patricia Corsi was hired to lead growth efforts, helping to develop commercial and go-to-market capabilities.
Kimberly-Clark expects its supply chain modernization to generate more than $3 billion in gross productivity and $500 million in capital savings. The entire restructure will cost about $1.5 billion, expected to generate $200 million in cost savings.
