Reckitt Benckiser Supply Chain in Practice free essay sample

Company Background Benckiser was founded by Johann A. Benckiser in 1823. It is a business derived from industrial chemicals. Over years of development through innovations and various acquisitions, Reckitt Benckiser (RB) is now a world leader in household, health and personal care. Today it is the global No. 1 or No. 2 in the majority of its fast-growing categories, driven by an exceptional rate of innovation typically about one third of net revenue comes from innovations launched in the prior 3 years. It has a strong portfolio led by 19 global powerbrands which are: Finish, Lysol, Dettol, Vanish, Woolite, Durex, Calgon, Airwick, Harpic, Bang, Mortein, Veet, Nurofen, Clearasil, Strepsils Gaviscon, Mucinex, Scholl and Frenchs, and they account for 69% of net revenue. The company operates through eight business segments: fabric care, surface care, health and personal care, home care, dishwashing, pharmaceutical, food, and other household. More than 75% of net revenues in 2007 were generated by brands that are either leading in the market or ranked second in their markets. In the fabric treatment section, Vanish leads the fabric segment globally so does Calgon in the water softeners segment and Lysol and Harpic brands in lavatory care egment. Furthermore, Dettol, Veet and Strepsils are the number one brand in antiseptic personal care products, depilatory products and throat tablet segment respectively while Nurofen, an analgesic, ranks second in Europe. Also, Clearasil is ranked as the number two anti-acne treatment worldwide. The companys Air Wick is ranked second in the air care segment worldwide. This strong portfolio of brands significantly fuels the revenues and profitability of the company. In terms of management structure, it is organized in such a way that there are three areas in the world: Europe, which includes Eastern Europe and Turkey; the Americas†North America plus Australia and New Zealand, which are very similar markets; and are called the developing markets, the rest of Asia (excluding Australia and New Zealand), Africa and Latin America. Each of these areas has a head of business, and below them are regional directors who run the specific regions. They, in turn, work alongside a category development organization, which is responsible for making sure that brand strategies are developed and implemented, as well as for developing a pipeline of new products for these brands. They work with the marketing and RD departments to make sure the right communications strategies in place . Supply Chain Management at RB 2. 1. Overview Rds supply chain and logistics is a global perspective and has about 41 production facilities worldwide including countries from Europe to North America, Africa to New Zealand. The company has a wide range of wide-range policies and procedures to protect their supply chain, Code of Business Conduct, reputation and Manufacturing standard. 3. Supply Chain Improvement Initiatives of Reckitt Benckiser (RB) Management According to the Rds Annual Report and Financial Statements 2011, RB believes its culture and passion for its people (RB employees) are its greatest competitive dvantage. The people are entrepreneurial, innovative, internationally diverse, dynamic and driven by a strong sense of ownership. RB continues to attract best management talents; retaining them by investing on the performance oriented remuneration policy which paid managers for excellent performance. RB has 25 formal training modules for middle management and Top 400 international managers (T400). During 2011, the Group ran over 80 courses on these modules, training over 652 people. At RB, Management is international and is trained through rotation in international postings both in countries and in the Groups central unctions. Succession planning is a critical management discipline and is reviewed annually (at least) by the full Board and the Executive Committee. RB closely monitors the Top 400 international managers (T400). The T400 being a multi-national management team reduced the added complexity of managing work in different languages, currencies and different political and legal systems thus giving a competitive edge over other companies. Technology Technology plays a major role in improving the efficiency of Supply Chain Systems. It helps organisations to better manage their supply chains, as supply chain anagement applications built on technology platforms enhances the ability of organisations to integrate their processes through collaborative information sharing and planning (Charles et al. 2001; Kalakota and Robinson, 2001). Some of the technologies RB used to improve their supply chain in recent years include: 1 . Implementation of Microsoft Windows Server TM 2003 Enterprise Edition with Active Directory This was done to simplify the complex IT infrastructure and introduce a centralized management system. RB nas operations in 60 co untries, sales in 1 countries and annual net revenue in excess of E3billion (US. $5. 8billion). RB was formerly using a Microsoft Windows NT Server 4. 0 Operating System through 96 domains and 720 servers. Approximately 9000 clients were spread throughout the domains and each one was managed with its own unique set of common rules and procedure. Through the investment in Microsoft windows server 2003 enterprise edition, they were able to reduce the number of domain to 3 and servers to 627. This helped in creating a central network system and provided a good and robust environment for managing Rds operations this because many of its application drive critical processes such as placing orders and providing real-time in response for roduction and shipment of goods. 2. Xtrim Xtrim optimization system is software which offers solutions for advanced planning and scheduling. This helped RB in cost saving. Another such cost saving program called the Squeeze 50 was also used by them. These programs helped push Rds operating margins up 0. 8 percent to 13. 4 percent in the year 2003. 3. The Xpress-MP Operational data of procurement, manufacturing, warehousing and distribution were collected and an optimization model was created using Xpress-MP software. The model basically demonstrated how costs could be reduced for a given supply chain configuration. This software helped the senior management at RB to analyse the potential impact of changes in risk free environment save up to ten percent annually 4. Reverse Engineering For the past few years, RB has been using a method of re-engineering in making, packaging and distributing their products. The company has been working with its partners across the supply chain finding way of consuming less energy, both directly and in the materials and packaging used to make its products. It has been reported that 25% of Rds manufacturing energy use already comes from more sustainable sources such as highly efficient or renewable energy (http://www. . com/carbon20/ how-we-will-achieve-it) Outsourcing To improve its on-time delivery performance, RB outsourced its transportation to Ryder in North America. Ryder transports raw materials into the manufacturing plants and finished goods from these plants to the logistics centre and then to the customer (Edge, a Ryder system Inc, publication). Investmen ts RB and other worlds largest the worlds largest food, beverage and consumer product manufacturers came together and created an open, standards-based industry-led marketplace (transora. com) that delivers breakthrough value to all participants in the consumer value chain. This business arena helped improved areas like procurement in the supply chain by providing services such as auction/ reverse auction capabilities, vendor catalogs, strategic sourcing and of course e- procurement for both direct and indirect materials. Shared Transportation To reduce the environmental impact and cost of product transport RB decided to combine truck Journeys with other companies, so that there were no empty running of truck on both inward and outward leg of the Journey. They even contracted third- parties to combine less than a truck load shipments together. Recommendations Focus on sustainability In relation to SCM, sustainability according to UN Global Impact, 2010 is the management of environmental, social and economic impacts and the encouragement of good governance practices, throughout the lifecycles of goods and services. A major approach to this challenge is collaboration with companies in terms of physical logistics such as shared transportation and physical infrastructures. Even though RB has started practicing this especially in the aspect of transportation, it is strongly recommended that, more effort should be put into this approach so to be able to operate a sustainable supply chain. Increase in logistics cost