 “At the time, SAP didn’t offer the functionality that we needed and we weren’t prepared to wait. i2 was the most functionally rich solution available and enabled us to run the transportation model that precisely suited our business.” —Peter Surtees |
Kimberly-Clark has implemented i2 Transportation Management solutions in its European and North American operations to reduce its carbon dioxide (CO2) output while also reducing costs.
Previously, Kimberly-Clark used a hosted transportation management system (TMS) to help it contract out its shipments to third-party haulers. Every time that it booked a truck movement using the software, it paid a fee to the software owner. While this solution met Kimberly-Clark’s day-to-day needs, it did not enable the company to implement more flexible contract allocation processes to minimize costs. “Our existing TMS didn’t offer us the functionality we wanted,” says Surtees. “It restricted our ability to do some more imaginative stuff, to operate strategically and to exploit opportunities to reduce costs.”
“When we reduce the number of miles traveled on the company’s behalf, we directly contribute to a reduction in CO2 emissions," says Surtees.
Savings of £2 million…
Following a three-month design phase, the i2 Transportation Management solution was rolled out to cover all European operations within just one year. In a parallel project, the i2 solution was also deployed at Kimberly-Clark in North America. “Compared to other software implementation projects that the company has undertaken, the i2 implementation was a relatively easy process,” says Surtees.
Kimberly-Clark uses the i2 Transportation Management solution to operate a league table, which ranks available carriers according to the lowest cost per route. The company has no long-term, fixed commitments with its suppliers, so carriers can increase or decrease their prices flexibly, depending on different circumstances. For example, if a hauler has a partially empty truck that is already scheduled to travel between two cities, it may want to offer very competitive rates to Kimberly-Clark to enable it to fill the remaining space and create a more cost-effective route. Equally, if a carrier knows that it has trucks due to return empty from regular deliveries to a specific location, it can offer lower rates to Kimberly-Clark to fill this capacity on the return trip.
The i2 Transportation Management solution keeps an up-to-date record of all prices offered by all carriers per route at any one time, and then as orders come in, it automatically offers the contract to the lowest-price carrier. If this carrier is unable to fulfill the job, the software automatically forwards the order to successive carriers until the best available price for the route is obtained. To enable this process, the i2 software is tightly integrated with Kimberly-Clark’s SAP order management system and an external messaging system for communicating with carriers. “More than 80 percent of our freight movements are handled by our first-, second- or third-choice carrier for price on every route, and this is a key performance indicator for our business,” says Surtees.
The system has been extremely successful in enabling Kimberly-Clark to find the most cost-effective operators by route and consequently reduce its costs. The company estimates that it will save £1 million a year by allocating transportation contracts more cost efficiently, route by route. In addition, the company saves £1 million a year by not having to pay fees to its software provider for each truck movement scheduled.
…and half a million kilograms of CO2
Because of the flexibility and automation of the i2 solution, Kimberly-Clark has been able to increase its carrier base to 170 companies, while decreasing its administration costs. It now does business with more small and niche operators, who are often more competitive on certain routes and more likely to have return legs to fill. “The more carriers you have, the less empty running you have and it’s a virtuous cycle,” says Surtees. “When we reduce the number of miles traveled on the company’s behalf, we directly contribute to a reduction in CO2 emissions.”
As a result, the i2 solution has enabled Kimberly-Clark to become greener. One gallon of diesel produces 12 kilograms (kg) of CO2, according to figures provided by the company. [Editor’s note: 1 kilogram equals 2.2 pounds]. Therefore, if its trucks travel an average of 8.5 miles per gallon, every mile that Kimberly-Clark takes off the road leads to a reduction in CO2 of around 1.5 kg. The company estimates that its £1 million savings corresponds to a reduction in mileage of 380,000 miles and a reduction in CO2 of as much as 540,000 kg.
Some organizations still see environmental responsibility as a cost. But Kimberly-Clark is among those companies that successfully demonstrate that a focus on sustainable business practices goes hand-in-hand with cost reduction and efficiency. Through its use of advanced supply chain management tools, it has saved money, moved a step closer to being an indispensible partner to its retail customers and proven that it is indeed possible to be both lean and green.
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