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How Kimberly-Clark Keeps Costco in Diapers

How Kimberly-Clark Keeps Costco in Diapers. What is the arrangement between Kimberly-Clark and Costco concerning replenishment of diapers? Kimberly-Clark has responsibility for replenishing stock. This is a Vendor Managed Inventory (VMI) relationship. VMI Relationship. What does VMI require?

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How Kimberly-Clark Keeps Costco in Diapers

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  1. How Kimberly-Clark Keeps Costco in Diapers • What is the arrangement between Kimberly-Clark and Costco concerning replenishment of diapers? • Kimberly-Clark has responsibility for replenishing stock. • This is a Vendor Managed Inventory (VMI) relationship

  2. VMI Relationship • What does VMI require? • Sharing of individual Costco store sales data with Kimberly-Clark • What additional costs does Kimberly-Clark bear? • All costs related to managing Costco’s inventory except the actual shelf-stockers • IN some cases VMI can lead to changing product or package sizes

  3. VMI Relationship • Better cooperation between retailers and suppliers has resulted from: • Improved computer technology for transmitting information • Greater strength of retailers

  4. VMI Relationship Benefits for Kimberly-Clark: • Lower supply chain costs, including reducing warehouse inventory by 50% • Competitive advantage – leads to increased sales of its products • Costco-Kimberly Clark arrangement is not unique: Wal-Mart and P&G also share some data to better manage inventory

  5. VMI Relationship • Besides a reduction in inventory management costs another important benefit of VMI for Costco is: • Less chance of stockout • Reduced inventory: went from a month to two weeks of supply

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