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Unformatted text preview: 10 DILForientering / oktober 2004 / årgang 41 HOW GILLETTE CLEANED UP ITS SUPPLY CHAIN By Mike Duffy, vice president of the North American Value Chain for The Gilette Co. It was not a comfortable meeting. In fact, it started out more like a confessional. Gathered at the 2002 conference of the National Association of Chain Drug Stores, our senior managers were face to face with many of our most important customers. The executives were admitting that Gillette had failed to meet its goals for effective customer service. In personal care products – deodorants and shave pre- parations – our performance had been especially awful. Gillette managers conce- ded that customer service levels in perso- nal care lines were in the low 80-percent range despite earlier expectations that overall service would be at 98 percent by the Frst quarter of 2002. The big admis- sion: While Gillette’s products were con- stantly in demand, the company could not reliably ship to its customers’ require- ments. Our drug-store customers then heard that Gillette was applying plenty of effort to deal with their disappointments. They learned that our chairman, Jim Kilts, had named the issue as his “number-one fru- stration” and had insisted on urgent Fxes. Gillette’s president, Ed DeGraan, was now directly responsible for rapid improve- ments. Other management changes put more attention on customers’ concerns. And we’d hired a top-tier consultancy to help rebuild our processes and capabili- ties. We also told our customers that we had already launched an integrated im- provement initiative – called our “¡unc- tional Excellence” program – with major initiatives addressing planning, manufac- turing, order management, and deployment/delivery. This program had been created with signiFcant input from four of our largest customers in North America and Europe. The customer meeting ended with fa- miliar commitments to making progress throughout 2002; our managers pledged to provide regular communication on our progress. “We know you’ve heard this all before,” they said. “We know it’s time for deeds, not words.” But given our past per- formance, it’s unlikely that many custo- mers left the room convinced that Gil- lette was about to become a world-class supplier. However, that is exactly what happe- ned over the next 18 months. Our North America operations increased customer- service Fll rates by 10 percent, slashed in- ventory by 25 percent, and reduced cost by 3 percent. Equally important, we revi- talized our value-chain organization and further strengthened our relationships with retail partners. In fact, we have won plaudits from several leading customers – including the “vendor of the year” award from Wal-Mart – and found many of our new processes being emulated by re- tailers....
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