The challenges faced by supply chains during and following the pandemic have been repeated so often as to be cliché. What’s less discussed is that whatever you may think of the economy, manufacturing and distribution are exceeding pre-COVID levels and operations are back to normal. Sure, there are occasional hiccups from a late shipment, staffing issues, or an extreme weather event, but now those events are minor blips and not seizures.
At Kimberly-Clark, “it’s a reset moment.” That’s the way Scott DeGroot, the CPG giant’s vice president of global logistics, puts it.
As a maker of paper-based personal products like Cottonelle toilet paper, Scott paper towels and Kleenex, Kimberly-Clark was caught like everyone else by the extraordinary unpredictable spikes in consumer demand when the economy shut down. That was then, this is now. “The consumer is acting within normal demand, and while physical constraints aren’t gone forever, aside from the occasional issue, we’ve normalized the flow of goods,” says DeGroot.
Normalization is setting the stage for Kimberly-Clark to look across its supply chain processes for new opportunities to excel. “We want high levels of availability, and we want to understand where our costs are so that we can take steps to improve our margins,” DeGroot says.
One of the continuous improvement projects is a new logistics tool known as Early AM Release and Leveling, or EARL. It is designed to address “order bunching,” which impacts transportation planning. Order bunching is the phenomenon that happens when there is an unexpected spike in shipments from Kimberly-Clark manufacturing plants to Kimberly-Clark distribution centers (DCs). Plants ship thousands of orders from Sunday through Friday, but those shipments are not evenly distributed throughout the week. For instance, historically Sunday is a light day, things begin to pick up on Monday, and Tuesday is often the heaviest day. That’s a normal profile, “but now, we’re seeing bunching, where orders are piling up unexpectedly.”
Moving freight during order bunching requires extraordinary efforts on the part of the transportation team, often leading to increased freight costs. It also creates downstream issues, such as whether there will enough labor in the DCs to handle the extra shipments.
On its face, the fix seems simple enough: Just take some of those Tuesday orders and move them to another lighter day. Reality isn’t so simple, says DeGroot. “There are so many shipments that the impact of moving them becomes complex very quickly. We needed a tool that had the capability to analyze and make recommendations about thousands of orders a day across hundreds of lanes and from a large combination of origins and destinations.”
Enter EARL, the tool developed with ProvisionAI, a technology provider that uses artificial intelligence to optimize truckloads. The tool does two things:
First, a function known as LevelLoad analyzes Kimberly-Clark’s shipment volume along with available capacity in each shipping lane. The tool then determines the number of trucks needed each day. It also submits a placeholder stock transfer order to secure early tendering, reserving needed carrier capacity. That analysis takes place every day.
According to DeGroot, EARL pulls data from three primary sources. One is Kimberly-Clark’s central transportation management system (TMS) for North America. The second is the company’s warehouse management system and the third is the supply chain planning system.
Outputs from the analysis go to the planning system and the TMS. “We compare orders against committed capacity,” DeGroot explains. “It then looks at stock availability and windows before and after the original shipment date.” With that information, plus stock availability, EARL makes recommendations on where Kimberly-Clark can move shipments without impacting service.
Once a transportation plan has been accepted and created, an optimizing load building and 3-D load design function automatically fills trucks at the last possible moment based on real-time customer orders, efficiently managing volatility. “One of the things we discovered is that the tool can maximize stock better than our planning system,” DeGroot says. “We might be configuring 8 different items on a truck from the manufacturing point, and with EARL, we can increase load fill by up to 3%.” Over time, a 3% improvement is significant.
Developing the solution was about a 10-month project from design to rollout. The design stage took roughly 6 months, part of which was driven by Kimberly-Clark’s internal availability to work on the project. Then, from pilot to rollout was another 4 months, including conference room pilots with ProvisionAI and a 6-week live pilot on one small volume lane. “One of the learnings from the live pilot was that master data such as transit times and carrier capacity settings had to be right,” DeGroot says.
Today, the tool is fully deployed across the North American network. It is being applied to about 80% of the shipments that Kimberly-Clark sends to its own facilities. Within that universe of shipments, the tool’s recommendations are accepted about 60% of the time. The impact has been savings in North American freight costs of “several million dollars annually,” DeGroot says. He adds that Kimberly-Clark is exploring whether the leveling technology can be applied to inbound shipments to its manufacturing plants or to manufacturing processes.
As to that reset moment, EARL is bringing efficiency and cost improvements to one of Kimberly-Clark’s biggest supply chain expenses. What’s more, the supply chain team is much more comfortable with the idea of applying tools like artificial intelligence to its processes. “It’s not the future,” DeGroot says. “It’s today.”
Editor’s note: Based on its results with EARL, Kimberly-Clark was named a finalist in the 2022 Council of Supply Chain Management Professionals-sponsored Supply Chain Innovator of the Year Award competition, which recognizes companies that demonstrate innovative solutions and transformative results.
You can also click here to read more from Scott DeGroot on SCMR.com.