The ‘lean’ challenge - Kimberly Clark

by Case Studies on 2010-09-24

Case study: Kimberly Clark

The ‘lean’ challenge
‘Lean’ thinking is presenting many opportunities for consumer packaged goods manufacturer, Kimberly Clark. Outsourcing the management of its Barton Mill DC to Unipart Logistics has broadened the company’s perspective on operational efficiency – challenging many of the global manufacturer’s notions on labour management and productivity.

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Kimberly Clark is one of the world’s largest consumer packaged goods (CPG) companies, with sales totalling $19.1 billion in 2009. Every day, 1.3 billion people in 150 countries use the company’s highly respected health and hygiene, family care and personal care products – well-known, global brands such as Kleenex, Scott, Andrex, Huggies and Pull-Ups.

The company has manufacturing operations in 35 countries and a supply chain that is attuned to the needs of the world’s most demanding retail organisations.

Ensuring that the big European retail chains receive a timely and efficient supply of Kimberly Clark products, in a cost effective way, comes down to the strategic planning capabilities of Peter Surtees, European supply chain director, and his team. According to Surtees, the company is in the process of introducing ‘lean’ thinking across the whole of the value stream to enhance productivity. “We kicked off with the manufacturing operations and are now focusing on the supply chain,” he says.

‘Lean’ principles and methodologies were developed from the strict manufacturing disciplines of the automotive sector, where waste is systematically removed from processes. Those same ‘lean’ principles can also be applied to the supply chain to bring substantial productivity improvements. Kimberly Clark, keen to enhance its understanding of ‘lean’ thinking, recently chose to outsource the logistics operation at its Barton Mill, Barton-on-Humber, to leading exponents of ‘lean’ thinking within the supply chain, Unipart Logistics.

Although the company’s origins are deep-rooted in the automotive sector, Unipart Logistics has used its own brand of ‘lean’ thinking – the ‘Unipart Way’ – to expand into other sectors, such as retail, high tech, aerospace & defence, and now consumer goods. “They are identified as lean experts,” says Surtees. “By bringing them onboard to educate us on ‘lean’ it accelerates our learning curve and offers the potential for rolling out ‘lean’ thinking across the rest of our DCs.”

For the European market, Kimberly Clark has three manufacturing locations for the production of nappies, one in the Czech Republic, one in Spain and the other in Barton-on-Humber in the UK. These sites serve Europe’s largest retail organisations, providing a continuous flow of product for the likes of Tesco, Sainsburys, Asda, Boots, Carrefour, Metro and many others.

Unipart Logistics took over the running of the 370,000 sq ft Barton Mill distribution centre in November 2009 under an initial ‘labour only’ contract to manage the storage of finished goods - along with the loading and unloading of inbound and outbound transport. Since then, their role has grown by 20 per cent, to involve a broader portfolio of services from laboratory work to consultancy within the manufacturing plant.

Taking on a ‘labour only’ contract of this nature was no easy task, particularly as any logistics provider would have to derive any value from the contract from improvements they made to the operation. However, Unipart Logistics were confident they could use ‘lean’ methodology to take waste out of the operation, creating productivity gains that could be shared by both parties. But in addition to this, Kimberly Clark was looking for a relationship that went beyond the traditional ‘cost plus’ approach to logistics outsourcing. “We were looking for a third party logistics company that would come in and challenge us on what we were doing, advance ‘lean’ in our supply chain and drive improvements in our processes,” says Surtees.

In the short period of time that Unipart Logistics has been managing the Barton Mill DC, significant advances have been made to processes, productivity and people management. The first gain-share project has already been signed off and is delivering benefits.
Transferring by TUPE from the previous company operating the site were 80 staff, used to working twelve hour shifts, four days on – four days off, to provide a continuous 24/7 operation.

Keith Robson, director at Unipart Logistics, explains the importance of people engagement in the success of the transformation. “Absentee levels were up to 10 per cent prior to our taking over, which was a really big problem. So we looked carefully at why people were going absent. A great number didn’t like the shifts and the overtime,” he says. “There were big issues around the management culture and attitude to managing absence.

Employee engagement and individual development are core aspects of Unipart Logistics’ management principles. This is set in motion by a stepped approach to developing staff known as the ‘Gate to Great’ journey that  leads the individual through five levels of role development  – see, learn, do, teach, coach.

The Unipart Way encourages staff to work in teams and to constantly monitor and question the efficiency of the tasks they perform. In meeting areas known as ‘Communication Cells’ teams meet on a daily, weekly and monthly basis to review performance against key performance indicators (KPIs) set in accordance with customer goals. A series of tools are used to examine processes and drive performance, delivering greater value to the customer. Staff are encouraged to research solutions to problems using modules available on the company’s intranet, enabling best practice to be shared across the organisation.
Visual management techniques have been used to enhance operational performance, by speeding decision making and cutting errors. Display boards are also used to great effect to communicate with staff through simple visual methods, providing feedback on how they are performing with respect to productivity goals.

Mapping processes, creating work sequences and determining information flows for a particular task are all part of the ‘Unipart Way’ and ensure that waste is eliminated from each process. Once the most efficient way of performing a task has been determined, the same method can be adopted across the operation.

Along with Kimberly Clark’s own set of KPIs, Unipart Logistics has introduced a set of its own to measure the performance of the operation at Barton Mill DC. “We’re now looking at cost-per-lift and have already moved the cost-per-lift down by 44 per cent in the last three months,” says Robson. “By using our tools and techniques we focused on Standard work methodology and subsequently improved labour cost in a sustainable way by reducing the amount of agency labour used within the operation. Because it was a labour only contract, it was only through a focus on the effectiveness and efficiency  of people that we could reduce cost and derive sustainable  benefit.”

“We have not only used our tools and techniques to look at tack time to reduce operating hours in the warehouse, but we have also taken this approach to the back office and have subsequently removed 66 hours of inefficient activity,” he says. However, these savings have helped to pay for important additional support in functions that were needed, such as Human Resources and Finance.
 “It’s early days, but it’s been a very promising start,” says Surtees. “We understand that a lot of the improvements will take time, as it’s very much a people and cultural drive – ‘lean’ is a journey. What we hope to see is a continuous improvement over the life of the contract, to the point where Unipart Logistics makes itself an indispensable partner.”  He adds, “They bring a different way of thinking – a different perspective – which we are enjoying.”

For an operation that is labour only, Unipart Logistics has committed with confidence to delivering value to both parties on a continuous basis, proving that very competitive contracts, common in the consumer packaged goods sector, can be made to work to optimum efficiency when staff engagement and lean processes are successfully deployed.

Ends

Nick Allen
Arkill Matthews Allen
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