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It's one of the world's most recognizable trademarks, the arm and hammer, and just about everyone associates it with the number-one maker of baking soda. But Church & Dwight Co. Inc. makes many other well-known consumer products, including toothpaste, household cleaners, air fresheners and antiperspirants. And that mix of brands presents the company with a number of supply chain challenges.
For most of its 160 years, Princeton, N.J.-based Church & Dwight has focused on selling within the U.S. and Canada. Gradually, however, it has reached out to foreign markets, including Latin America, Eastern Europe, Asia and the Middle East. Sourcing, too, is increasingly global, making for a complex planning and distribution task.
Distribution accounts for a relatively high percentage of sales, when compared with mega-competitors like Unilever and Procter & Gamble, says Chad Whyte, senior manager of corporate transportation. Typically, Church & Dwight's products carry lower margins than premium-priced items like Procter & Gamble's Tide. So transportation expense became a major focus in the company's efforts to overhaul its supply chain.
Retailer demands can be intense. Often product must be individualized, by size or packaging, for each major customer. To meet those demands while optimizing inventory, the company had to do a better job of planning and forecasting its wide array of SKUs.
Church & Dwight's relationship with Manugistics Group Inc., the Rockville, Md.-based vendor of supply chain planning and transportation software, dates back to the late 1990s. An initial implementation helped to convert the company from a reliance on Lotus and Excel spreadsheets. The purchase was a critical element in Church & Dwight's plans to increase sales over the half-billion dollars it was generating at the time, says Sam Dragotta, senior director of supply chain. (Sales today are around $1.5bn).
In retrospect, it was a "brilliant move," says Dragotta, because it also helped Church & Dwight to absorb several subsequent acquisitions, including the consumer products business of Carter-Wallace, Brillo sourcing pads from the Dial Corp., and the SpinBrush unit of Procter & Gamble. The goal was to get the company's planning efforts on a single platform and integrate them into the enterprise resource planning system acquired from SAP AG. "With the system and processes in place, we could easily bring in information from other companies," says supply chain manager Steve Barrow.
Beyond the Borders
The SpinBrush deal brought an additional global dimension to Church & Dwight's operations, since the product was sourced in the Far East and had to be combined with an organization that had previously done relatively little importing, says Lori Mitchell-Keller, Manugistics' senior vice president of global marketing and solution management. Moreover, Carter-Wallace's line of Nair depilatories came from Spain.
The Manugistics forecasting tool helped Church & Dwight to look at key customers throughout the world on an individual level, not just by region. That made it possible to maintain high levels of service while keeping a lid on inventories, says Mitchell-Keller.
Church & Dwight draws on several years' worth of sales history to generate accurate forecasts through the Manugistics software. The task is made more difficult, says Dragotta, by the company's heavy reliance on promotions. Even a mundane product like baking soda is subject to spikes of demand that must be accommodated all the way up the supply chain.
Transportation was the first Manugistics module to be implemented by Church & Dwight, and it remains a crucial part of the company's supply chain management effort. Initially, the system provided a means of planning both inbound and outbound moves. Wherever possible, it looks to combine inbound shipments from raw-materials suppliers with outbound loads. In addition, because its four plants don't all make the same product, the company must manage a certain amount of volume moving between plants.
Later, Church & Dwight acquired alerting capability, to signal when forecasts and shipment schedules were out of tolerance. A more recent enhancement automated the carrier-selection process, which was previously done manually through paper routing guides. The company issues requests for quotations, connects with a select number of carriers via the internet and conducts bidding on a lane-by-lane basis. The Manugistics software helps to determine the best carriers according to service levels, capacity and cost.
In lanes with a sudden need for more capacity, the system can engage in spot bidding. Carriers may bid on full or partial volumes, or make an offer that ranges across multiple lanes. The system can also handle consolidations, dynamic routing and continuous moves.
Church & Dwight is now implementing yet another feature of the software to manage semi-fixed trips. That will allow it to consolidate shipments even after they have left the warehouse, Whyte says.
Carrier Capacity Tightens
The Manugistics transportation tool has proved to be especially valuable in the face of a tightening of carrier capacity over the past two years, he adds. Church & Dwight managed to reduce its transportation spend in certain areas, even as carrier rates were rising. It has gained negotiating leverage through a more coherent, centralized approach to its carrier base.
Along with its software purchases, Church & Dwight has been streamlining its supply chain. Six years ago, it kept product in approximately 18 public warehouses. Today, it has just four plant warehouses in the U.S. Ninety percent of product used to be shipped out of the public warehouses; now 100 percent comes directly from the plants.
The shift has allowed Church & Dwight to gain better control of inventory and improve customer service. "It's one less touch," says Dragotta. "As a result, we've seen an improvement in our quality." Church & Dwight leads the consumer goods industry in inventory turns, he says, with around 12 per year.
The company will be upgrading to the latest version of Manugistics' software this year. It is considering an additional module that will add retailers' point-of-sale data to the forecasting model, in addition to the historical information that already resides within the system. The move would engender a two-way flow of information and greatly enhance Church & Dwight's ability to collaborate with key retailers, Mitchell-Keller says.
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