Too Many SKUs? How Clorox Avoids Supply-Chain Chaos
Author: Anthony Joh

Once upon a time, there was Clorox bleach: one product, one universally recognized brand. Now there's Clorox Germicidal, Concentrated, Splash-less, Stain Remover, Outdoor, not to mention a raft of other products manufactured by The Clorox Co.: Pine-Sol, Tilex, Liquid Plumr, Glad, 409 "¦ you get the idea. We're in that modern-day zone of retailing chaos known as SKU proliferation.

About 98 percent of supply-chain leaders conduct some level of segmentation, although the word can mean many different things, said Dave Powell, a partner in the Consumer Goods Practice of A.T. Kearney, Inc. He was joined by Mark Hersh, director of supply chain strategy with Clorox, at a recent meeting of the San Francisco Roundtable of the Council of Supply Chain Management Professionals.

Segmentation can be based on product family, region or customer, said Powell. But its ultimate intent is to foster efficiency across the organization - pursuing the goal of a true end-to-end supply chain.

In the CPG world, he said, studies show that proper segmentation can achieve reductions of more than 20 percent in commercialization lead time, up to 5 percent improvement in unit-fill rate, and better than a 5-percent increase in aggregate net contribution across the portfolio.

You can debate the reasons for the trend: the emergence of big-box stores, with acres of shelf space begging to be filled; the pressure on consumer packaged goods makers to differentiate their brands in a crowded marketplace, the desire of consumers for products that cater to their unique tastes. Whatever the drivers might be, CPG companies are in a bind: they need a coherent way to plan, make and track the performance of an ever-growing number of items.

In essence, Clorox was creating four separate supply chains to handle the complexity of its product portfolio. To decide which was the appropriate one for a given item, it applied four criteria: the product's lifecycle, promotional activity, gross margin and demand predictability.


The following article has been published by Supply Chain Brain on Nov. 04, 2013 
    Author - Robert J. Bowman 

For the full article, please click on this link

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