MBA PROGRAMME

SCHOOL OF BUSINESS AND MANAGEMENT

CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE

TITLE: LEAN OPERATIONS AT KIMBERLY-CLARK

Submission date 26th December 2020

Under the Guidance of

PROF. GIRISH KUMAR

Submitted By

RESHMA MENON

REGISTER NUMBER
2027153
INTRODUCTION
Kimberly Clark has grown many global household brands such as Kleenex, Huggies and
Andrex, Kimberly-Clark and was one of the early players who committed to a sustainable
model that allowed them to enjoy its benefits today. They maintained a lean and efficient
supply chain, which drove rewards to its customers, grocery retailers and consumers.

Industries today are always seeking a competitive edge, and among this chase to get ahead,
only a few thought leaders stopped to ponder on what is the next level beyond being giants in
their space. As seen in the past decade and a half, companies have been very conscious of
their costs and started exploring new ways to keep this at minimum. The birth of lean
manufacturing operations was a genius that edged easily on the side of common sense.
Fortunately, there were a few companies who took this seriously enough to be called a
success story.

Kimberly Clark is about 150 years old and has become a household name in many locations
worldwide as a personal care leader through brands like Huggies, Kleenex, Kotex and so on.
Their journey has been a result of constant evolution and innovation. The decade (2000-10)
was one such period when they invested a lot of time perfecting their operations. Lean supply
chain then was merely a concept at the time, but in just a few years, it was a concern that had
every manufacturer worried about missing out on the potential savings.

Lean Operations Implementation

In 2006, Kimberly-Clark Australia (KCA) approached Dexion to solve a storage and retrieval
problem – to create a flexible buffer between production and delivery that results in cost
efficiency. With Dexion's help, the existing distribution network was overhauled by
designing and implementing national distribution centres with an automated storage and
retrieval system (ASRS), which was controlled by Relational Database Systems (RDS), to
help reduce distribution costs and inventory carriage. This also helped in improving customer
service and minimising risks.
The new system integrated with KCA's other internal systems and redefined the regional
distribution centres' roles to build a network that included end-to-end processes, right from
production to customer delivery and be more proactive and add more value to the client
businesses.
Latest Trends

1. Smart Lean
Companies are preparing to adopt and implement smart lean, driven by Industry 4.0
for a significant competitive advantage in the market. Automation is now aimed at
overcoming key challenges such as connecting equipment and systems to enable
proactive improvements to achieve organisational objectives.
Organisations are increasingly using Artificial Intelligence (AI) and Augmented
Reality (AR) to drive improvements in operational efficiencies, remove defects,
reduce lead times and increased cost savings. (Manufacturer PR Service, 2019)
2. Enhancing Customer Experience
Lean manufacturing can help reduce product life cycles, improve reach to the market,
and quicken product development and faster responses to demand fluctuations.
Manufacturers internally track the status of orders (especially custom projects) on the
shop floor; however, it will become commonplace for customers to login to an online
portal and view the product's status in the product line.
This will help reduce the volume of customer queries and improve efficiency and
provide a smoother and more transparent customer experience
3. Strength-based Lean
This thinking approach focuses on identifying existing efficiencies and what generates
value in current processes and systems instead of focusing on inefficiencies. This is
also called as 'strength focus.'
The approach leverages existing and historical knowledge regarding internal
experiences and successes to drive initiatives for process improvements. Also,
focusing on the positive aspects
4. Lean Labour
Increasing productivity has become critical, now more than ever, due to meagre
margins, the pressure to reduce costs, increased competition from existing companies
and new entrants in the market.
Companies must aim at controlling the costs incurred, optimise the use of labour
resources and align them with the demand production of strategic goals and projects.
For example, several organisations use scheduling applications to manage larger
workforce by allowing shift supervisors to create shifts with the correct mix of
 employees and skillsets. This helps in improved production, the achievement of
revenue targets and reduced overtime costs for replacement workers.
5. 3-D Printing
3-D Printing helps to reduce the costs involved in the production and allows
organisations to provide customised products to their clients at affordable prices. It
allows for
• easier prototyping of products,
• shorter lead time,
• more creativity and efficiency,
• consistency in products,
• local manufacturing and
• results in an increase in new consumer demand
6. Internet-of-Things (IoT)
IoT helps support lean processes by providing superior metrics to drive increased
process efficiency and productivity, better integration with the major clients and
suppliers, improved coordination among divisions, enhanced manufacturing safety
and reduced downtime (Newcastle Systems, 2015).
IoT is increasingly used for
• access to real-time data for faster resource optimisation,
• better process control,
• deeper integration of suppliers and
• lean custom manufacturing
7. Green Manufacturing
Green manufacturing refers to the method of producing products with a focus on the
minimisation of waste and pollution. Lean manufacturing aims at reducing waste
resulting from
• overproduction,
• transportation of non-essential items
• Excess inventory
• Long waiting period for approvals or even use of office resources such as
printers
• Over-processing by including unnecessary steps
• Rework to correct errors or performing steps not completed previously
 • Movements or motions that do not add value
• Failure in identifying sub-optimal or poor utilisation of resources

Sustainability

Green practices are focused on reducing hazardous emissions, getting rid of the consumption
of wasteful resources, recycling, and minimising health risks throughout the entire
manufacturing process, by minimising the environmental footprint during the whole product
life cycle.

Transportation Situation

Most of the products on the Kimberly Clark portfolio have a low price per unit. Hence,
transportation costs comprise a significant proportion of the product costs. With
Transportation cost of about 6 per cent of their net revenue and transportation inflation being
unavoidable as the oil prices, the lean advantage was becoming imperative to ensure success
in the long run.
A Kimberly Clark official commented that the high costs restricted their ability to do more
creative activities and tasks, operate strategically, and exploit opportunities to reduce costs.

After the design phase, a Transportation Management Solution (TMS) was implemented to
cover all European operations within a year, and the same was also replicated at Kimberly-
Clark in North America. Soon they used the solution to operate a league table, which ranked
available carriers based on the lowest cost per route. Since they had no long-term fixed
commitments with its suppliers, the carriers could flexibly change their prices.

"More than 80 per cent of our freight movements are handled by our first-, second- or third-
choice carrier for a price on every route, and this is a key performance indicator for our
business," as mentioned by a key executive in Supply chain at KC.

They also estimated that they would have about a million euros a year in savings by
allocating transportation contracts more efficiently as per the route. In addition, they also
saved 1 million euros a year by not having to pay fees to its software capabilities.
Putting the Brakes on CO2

By virtue of the flexibility and automation of the new TMS, Kimberly-Clark was able to
increase its carrier base to 170 companies and reduce its administration costs, thus, allowing
it to do business with more small and niche players, who are often competitive on specific
routes and are likely to have return business or orders to complete.
"The more carriers you have, the less empty running you have, and it's a virtuous cycle.
When we reduce the number of miles travelled on the company's behalf, we directly
contribute to a reduction in CO2 emissions." as per a key Supply Chain leader at KC.

This allowed Kimberly-Clark to become greener, and the company was able to reduce
approximately 1.5kg of CO2 for every gallon of diesel. According to the company estimation,
it saved 1 million euros which corresponds to a drop of 380,000 miles and a decline of as
much as 540,000 kg of CO2.

Water Footprint

By the year 2030, the company plans on reducing its water footprint or usage by 50% in
water-scarce areas by creating strategic improvements in the supply chain and the
surrounding communities. The impact of water scarcity and insecurity is realised and felt
across the supply and value chain, from the fibre's sourcing to the company's manufacturing
facilities.

HINTS OF GREEN
Green Products
In April 2009, Kimberly-Clark nationally launched Scott Naturals - a product line of towels,
bath tissue, flushable wipes and napkins products that contain a unique and sustainable blend
of recycled and virgin fibre (Ackerman & Padilla, 2009).

Environmental Accolades
Kimberly-Clark has been ranked first in the Dow Jones Sustainability World Index's personal
products category for four successive years.
The U.S. Environmental Protection Agency recognised Kimberly-Clark as an Energy Star
Partner of the Year in 2019 for its ongoing efforts to improve energy efficiency and reduce
greenhouse gas emissions across the organisation's operations.
The organisation culture fosters and promotes environment preservation resulting in the
employees and other stakeholders displaying motivation and creating innovative strategies to
implement the goal.

Eco-Friendly Operational Facilities - 29 Kimberly-Clark facilities have been certified to the

ISO 14001 international standard for environmental management.

Ethical Aspects

1. Reduce wastage: The goal of lean manufacturing is to minimise waste in labour

resource, inventory, time taken to market and manufacturing space to become highly
responsive to customer demand while producing world-class products of the most
efficient and economic model. The approach helps the company to reach the
imperative goal of optimal utilisation of resources.
2. Autonomy and Empowerment: The improvement process must be recognised as
benefiting both the company and the employees. The responsibility of success or
failure in achieving the desired goals lies with the management. The employees can
accept the concept of cooperation, teamwork and empowerment if management
provides leadership, the security of employment and reasonable compensation.
3. Proper Training: The role of correct training and ethics is critical in the effective
functioning of an organisation's functional departments and overall improvements in
the results by providing accurate information and development. Therefore, it is
required to spread awareness and follow-up in training programmes by officials to
assess if the information provided to the employees is accurate and sufficient to
implement tasks assigned to them as necessary to achieve the desired results. This
helps the employee's to identify the root causes of a problem that could help them
solve it without delaying and stopping production
4. Ethical Instructions and Commands: Successful implementation of lean
manufacturing in organisations involves ethical instructions and commands. At times
employees maybe subject to the pressures of work, including pressure from some
 managers in the organisation, that can be represented in the control of the managers
on the behaviour and performance of the employees, which would have a negative
effect on the efficiency of the implementing lean manufacturing systems (Kumar,
Kumar Soni, & Agnihotri, 2014).
5. Managerial Commitment: It is essential to implement lean manufacturing in
organisations, including management commitment and resource allocation. It is well-
known that managerial commitment is the most critical success factor irrespective of
the differences in plant size, type of corporation, location and other factors (Bayat &
Dadashzadeh, 2017).

Challenges

1. Change Implementation: With the organisation's decision to initiate the lean process
comes the challenge of bringing about and implementing the change in the thought
processes of the employees and environmental culture (Poksinska, 2010). This is
because lean is a way of working towards eliminating waste; thus, a transition of
behaviour and methodology that is deeply rooted within an organisation is required.
When an organisation chooses to go lean, it also stirs the entire system (Pandey,
2015).
2. Employee Involvement: Researchers highlight that the major roadblock in the
successful implementation of lean manufacturing that leads to improved production
effectiveness is the reluctance of management to empower employees. Ahuja and
Khamba (2008) are of the opinion that the rigid bureaucratic structures of the
organisations are impeding empowerment of the employees.
3. Employee Training: The lack of follow up in the training programs is the ethical
dilemma many organisations face. Furthermore, Hayes and Pisano (1994) note that
low awareness and follow-up in ethical training programs lead to negative
consequences for the organisation. Many studies have also concluded that partial or
unsuccessful implementation of techniques of lean manufacturing is caused by
employee resistance, lack of training and ethical education and lack of follow up by
the supervisors in the organisation
4. Employer Instructions and Commands: The immoral positions in the organisation,
when few of the employees are subjected to the pressures of the so-called ethical
 instructions and commands at work can lead employees to work under the laws,
regulations and instructions issued by some of the supervisors according to that
commensurate with their interests in the organisation, which in turn makes the
employee carry a load he/she cannot avoid or escape. Consequently, employee
performance for tasks would be unseemly and unethical, thus reflecting negatively on
organisations' success to achieve the desired goals (Kumar et al., 2014).
5. Resource Allocation and Managerial Commitment: It is not enough to "lead from
the office;" the managers must also personally participate on the shop floor. This
involves continuous communication, listening to suggestions and questions from
employees, and explaining why lean means change for the better. Reward and
recognition schemes can be effective in the early stages, however managers should be
careful when designing reward and recognition schemes because the effects of such
schemes are particularly sensitive to differences in cultural traits (Bayat &
Dadashzadeh, 2017).
Allocating the necessary resources to assist the implementation of lean manufacturing
is also critical for success. It is difficult for organisations to turn lean without
coaching and supporting local "lean teams," or a distributed task force in the
organisation. It is also imperative that the company dedicates a budget for the
transformation.

Implications

1. Apart from the dollar savings clearly visible on the company P&L, the ease of
inventory management also aids in better understanding the consumer demand and
reactively manufacturing products to service the need. This also helps avoid any
wastage of the end product.

2. On the other end, we have other players who are also adopting similar practices. After
a point, the scope of improvement in lean operations is no longer possible. Also, the
supply vendors would want to safeguard their volume commitment from the
manufacturer to keep up their business.
 3. Not to mention it is a lot of investment in terms of R&D/Innovations, building robust
supply chain channels and incurring actual cost till the new leaner model has begun
yielding fruits.

Conclusion

Kimberly-Clark Corporation has always been a strong advocate of stepping up with the
market's changing times and scenarios. The company has made considerable savings due to
the rollout of lean manufacturing and supply chain practices.

The company implements lean practices in its business processes to ensure that the increase
in overhead costs is lesser than sales growth. KC aims at building a leaner, stronger and faster
company for its clients and stakeholders.

References
Ackerman, A., & Padilla, A. (2009, August 17). Kimberly-Clark Supply Chain Goes Green
and Lean. Retrieved from Consumer Goods: https://consumergoods.com/kimberly-
clark-supply-chain-goes-green-and-lean
Ahuja, I., & Khamba, J. (2008). Strategies and success factors for overcoming challenges in
TPM implementation in Indian manufacturing industry. Journal of Quality in
Maintenance Engineering, 14(2), 123-147.
Bayat, H. D. (2017). The impact of organisational factors on implementation outcomes of
lean manufacturing. Journal of Business & Economics Research (JBER), 15(2), 33-
44.
Hayes, R. H. (1994). Beyond world-class: the new manufacturing strategy. Harvard Business
Review, 72(1), 77–86.
Kumar, J. K. (2014). Impact of TPM implementation on Indian manufacturing industry.
International Journal of Productivity and Performance, 63(1), 44-56.
Manufacturer PR Service. (2019, January 30). 2019 trends to watch in manufacturing:
growth in R&D, lean and CX. Retrieved from The Manufacturer:
https://www.themanufacturer.com/articles/2019-trends-watch-manufacturing-growth-
rd-lean-cx/
Newcastle Systems. (2015, December 4). Five New Trends in Lean Manufacturing You Will
Want to Know About. Retrieved from Newcastle Systems:
https://www.newcastlesys.com/blog/five-new-trends-in-lean-manufacturing-you-will-
want-to-know-about
Pandey, S. (2015). Awareness of lean in the Indian garment. NIFT.
Poksinska, B. (2010). The current state of Lean implementation in health care: Literature
review. Quality Management in Healthcare, 19(4), 319-329.