bution all under one roof. The “
service-in-the-DC” model, as someone dubbed it, ideally would result in lean packaging with
savings throughout the packaging stream.
That’s exactly what happened, according
to Mike Marlowe, customer solutions vice
president of Kane Is Able, a 3PL that manages
three such facilities for Kimberly-Clark.
Combining the operations has resulted
in shared labor resources. All managers and
skilled labor are employed by Kane Is Able,
he says; otherwise, unskilled workers are
hired on a temporary basis.
Other benefits to flow from the relation-
ship: The capital cost of the equipment has
been transferred from the manufacturer to
Kane. The volume of product leaving the
DCs is expected to grow possibly as much
as 25 percent by the seventh year of the
project. And, Marlowe says, product orders
are delivered 85 percent of the time in one
day or less, compared to 60 percent under
the former method.
duces an estimated 210,000 pallets a year,
filling approximately 7,000 trucks.
Calculating that it would cost about
$300 per truck to send 7,000 trucks to a co-packing facility and back, Marlowe figures
Kane saves K-C about $2.1m a year at the
Illinois operation alone. Kane Is Able also
manages K-C warehouses in Pittston, Pa.,
and in New Century, Kan.
Altogether, he says, the three operations
account for a savings of approximately $3m.
That does not include the environmental
benefit from reduction in CO2 emissions.
Lower inventory carrying costs is clearly
one of the major benefits to flow from the
new model, according to Todd Armstrong,
director of distribution operations at Kimberly-Clark. In addition to taking a lot of
miles out of the process, his company has
saved anywhere from four to seven days as
well, Armstrong says. Not only is the distribution cycle lengthened when you use an
outside packager but visibility is lessened or
lost completely. That negatively impacts
production and sales forecasting accuracy.
Obviously, that uncertainty has to be dealt
with, so manufacturers often make more
product, which leads to the need for more
space and more hands to fill it.
“The more points you can remove from
your network, the more control you get,
the more money you can save, and there’s
less likelihood of damage to product,”
Armstrong says.
Display packaging is another service
that Kane Is Able provides. Few, if any, displays are built at stores anymore. Service
providers like Kane build and ship them, so
store employees essentially remove a
sleeve once the item is placed on the floor.
Getting involved with the design phase
is the logical next step for 3PLs that provide
contract packaging, Marlowe says. “They
need to be much more deeply integrated
into CPG companies, meaning at the design
level, where corrugate displays are being
designed, and where packaging of the final
product is being designed as well. I think
3PLs and their engineers need to be embed-
ded in that process. That would ultimately
reduce even more costs in labor and materi-
als in the process.”
To access this article online, visit
www.SupplyChainBrain.com.
Kane Is Able,
www.KaneIsAble.com
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