Kimberly-Clark Gets an Early Win

By Mark Roberti

Product promotions are a big deal for most consumer packaged goods companies, especially in the United States. In many cases, the money spent on securing premium floor or shelf space for special displays in a retail store, advertising the products, paying merchandising agents to check that the displays are out and other costs can equal or exceed the cost of manufacturing the product. But all too often, the displays aren't out in time, and both the manufacturer and the retailer lose out on potential sales. Thanks to RFID technology, this might soon change.

Kimberly-Clark, the global health and hygiene company based in Irving, Texas, has been testing radio frequency identification's ability to improve the execution of its in-store promotions. The company worked with OATSystems to conduct a pilot program with Wal-Mart to track and manage promotional displays of its Depend and Poise incontinence products in hundreds of stores. The result: improved execution of in-store promotions by more than 20 percent at RFID-enabled stores.

Left to right: Phil Therrien, Mike O'Shea, Rick Polzin and Daniel Bowman

Several years ago, K-C assembled a brain trust to figure out how the company could take advantage of RFID technologies in the short, medium and long term. Mike O'Shea, director of auto-ID sensing technologies, leads the RFID technology team responsible for developing solutions, evaluating hardware and software, and testing it before it is deployed. Phil Therrien, RFID implementation manager, is in charge of the business team representing the business managers who will use the technology in

K-C's facilities. Rick Polzin, senior RFID specialist, manages the operational teams to make sure the data captured by RFID systems can be used to improve the way K-C does business. Together, they found potential solutions to some of the challenging issues related to tagging in-store promotional displays either at K-C manufacturing facilities or third-party packaging locations without any RFID infrastructure. This is the story of how they did it.

The RFID brain trust saw an opportunity to increase retail sales by improving the store execution of promotional displays and reducing shelf-level out-of-stocks. "We recognized that we were increasing our spending on trade promotion activity with our key retailers," says Therrien. "The expenditure for these promotions was becoming a larger line item on our profit and loss statement, and there was a sense that we weren't experiencing the level of ROI on our in-store promotions we required because there were gaps in execution. It really was a shared opportunity for us and our retail partners, because when execution is less than perfect, we both lose those sales dollars."

K-C's sales teams negotiate the details of each promotion with the retailers' buying teams. Together, they determine which stores will participate in a promotion, where the promotional displays will be in the stores, and the dates on which the displays will be brought out and removed. But tracking whether the displays have been delivered and brought to the sales floors on time has been a challenge for both K-C and its retail partners.

Displays take many forms—from pallet units to clip-strips attached to store shelving. The displays can promote a single stock-keeping unit or several SKUs. RFID provides new information on the movement of the display from the back room of the store to the sales floor. Previous methods relied on physical inspections or point-of-sale data to detect promotional display execution. Both options are inadequate: It's expensive to do physical inspections at every store in a national chain, and POS data doesn't distinguish between a product picked from a display and the same SKU picked from a shelf.