Kimberly-Clark Using RFID Analytics Service to Trim Out-of-Stocks

By Claire Swedberg

The hygiene products maker is already utilizing the system at 500 stores, and plans to add 3,500 stores by the end of the year.

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Kimberly-Clark (K-C) has begun using TrueDemand‘s RFID-powered inventory-forecasting service, with a goal of reducing out-of-stocks of merchandise on store shelves. K-C markets health and hygiene products under such brands as Kleenex, Huggies, Scott and Cottonelle. The company began piloting TrueDemand’s Forecast and Replenishment Manager (FRM) in 2006, says Larry Roth, a senior supply chain consultant at K-C, and quickly discovered that out-of-stocks on store shelves were twice as great as the firm had previously believed’.

The system has been newly deployed for 500 stores. By the end of this year, Roth says, the company hopes to implement the system at all of the approximately 4,000 U.S. retail stores to which the company provides products, whether those stores are RFID-enabled or not. K-C’s intention, Roth says, is to have the capability to use the system in every store, as soon as each store installs RFID interrogators.


Kimberly-Clark’s Larry Roth

K-C has already been using OATSystems‘ software to track promotional product displays set up in retail stores (see OATSystems Launches Solutions for Tracking In-Store Product Promotions). However, it has now added TrueDemand’s FRM system to manage the stocking of items on store shelves.

“Our business case is driving additional retail sales by eliminating out-of-stocks,” says Roth. “TrueDemand gives us a deep understanding of the supply chain for regular product that goes on the shelf.”

Kimberly-Clark chose the FRM system to better analyze RFID data coming from Wal-Mart, one of its major customers. The system allows K-C’s analysts to narrow data regarding thousands of store items to about five priorities that need to be resolved. It then provides suggestions for addressing those priorities.

In the past, Roth states, suppliers may have discovered an empty shelf by simply walking through the store, then ordered more of that product. “Depending on the problem, that could be exactly the wrong thing to do,” he says. For example, if a product is not making it to the floor because of an excess volume of that item in the back room—making it difficult for store staff to determine where specific products belong on the shelf—then ordering more could exacerbate the situation. With the FRM system, those kinds of mistakes won’t happen, asserts Eric Peters, TrueDemand’s CEO.

As EPC data becomes available from either the retailer or Kimberly-Clark, TrueDemand downloads it into its system via AS2 communication in XML format. “This data is typically being downloaded as soon as it is available,” Peters says. “This allows us—on at least a daily basis—to run through the new RFID reads, along with the POS data and other data sources, and update our predictions on future out-of-stocks.”

RFID data is combined with store inventory, POS data and other types of information to determine when an out-of-stock occurs at the shelf level, as well as to make predictions and suggest corrective actions. FRM’s analyzed data is integrated directly into the Kimberly-Clark data management system behind a firewall. “We can run in either a hosted environment or behind the firewall model,” Peters says. “Most major CPG manufacturers are not comfortable with their key retailer data residing outside their firewall.”


Eric Peters, TrueDemand

Roth says he hopes to see the most dramatic benefit come at the time of product rollovers, when products are replaced by newer, enhanced versions. “Product rollovers can often cause disruptions of the supply chain,” Roth notes. New products need to replace old ones on the shelf, often in different configurations, and this can lead to confusion in shelf restocking.

TrueDemand was launched three years ago as a forecasting company, Peters recalls, then began working to determine how RFID could change the way forecasting is performed. All too often, he explains, suppliers chase the wrong RFID data rather than forecast and resolve the costliest issues. “If we can supply better forecasting, we can fix problems before they occur.”

This week, at RFID Journal LIVE! 2007, TrueDemand announced the release of a free service for those seeking to utilize RFID analytics in their business. The free software represents part of what TrueDemand has designed to assist RFID technology users, and will be available as a hosted service over the Internet. Users will be able to identify areas requiring improvement in their supply chain, Peters says, and take appropriate action utilizing the free software’s trend analysis on RFID read rates, transit times, inventory levels, lost sales due to supply chain failures and root causes for out-of-stock by SKU, store and day.

Those interested in the free analysis system can visit www.tdemand.com/FreeRFIDAnalytics.html for more information.