Situation

The Procter & Gamble Company (P&G) is oneof the world’s largest consumer productscompanies. For its paper brands, includingBounty®, Charmin®, and Pampers®, thecompany operates six distributionwarehouses throughout the U.S. A keyregional market for P&G is the Northeast,where a high volume of goods ships regularlyto both the distribution centers (DCs) andstore locations of P&G customers. Thecompany wanted to raise the bar on bothservice performance and cost control at itsNortheast DC in Pennsylvania. Specifically,P&G sought to:

• Increase “shipped on time” performance, a measure of whether a trailer is loaded by the warehouse and ready before the scheduled ship time

• Achieve operational synergies by going from two contracted providers for warehouse management and transportation/yard management to oneintegrated logistics provider

Strategy

P&G chose Kane Is Able to manage anintegrated logistics solution for its Northeastmanufacturing and distribution operation.Services include:

• Managing a 1.6-million-square-foot DC outside Scranton, PA

• Managing a 1000-trailer-capacity yard outside the DC

• Running a shuttle service between the P&G factory and the nearby DC

• Handling a portion of P&G’s direct-to-store deliveries in the Northeast

According to P&G Quality Leader Scott Pertl,a single operator for both warehousing andtransportation has improved communicationand enabled a smoother operation. “Thefacility’s proudest achievement has beenimprovement on the critical “shipped ontime” metric,” says Pertl. “Kane is nowexceeding P&G’s aggressive goals and ourcustomers are happier because they can relyon predictable inbound deliveries.”

Integrating functions cuts labor, cost Pertl says P&G has also seen the operationalsynergies expected from the integratedsolution. “Since Kane operates both the droplot and the warehouse, they can share staffacross functions,” he says, “For instance,during busy times warehouse workers withtruck driving experience move trailers to andfrom dock locations.”

P&G also benefits from the proximity of theoperation to Kane’s Northeast regionaldistribution hub in Scranton, where Kaneoperates 3 million square feet of distributionspace. “When our business peaks,” says Pertl, “Kane can quickly recruit trainedoperators to economically handle thedemand spike.”

Dramatic savings from merging packagingand distribution About three years into the relationship, Kaneand P&G discussed another opportunity tointegrate distinct supply chain functions todrive down costs. Product packaging washandled by an outside contract packagerthat operated its own section within theP&G DC. Packaging services included kitting,display building and final packaging. Kane

Case StudyPaper

Procter and Gamble Partners with Kane to Integrate Warehousing, Transportation and Packaging Functions

“P&G and Kane staff

get down and dirty and

resolve issues together.”

– Scott Pertl

Quality LeaderThe Procter & Gamble Company

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and P&G determined together that furtherintegrating warehousing, packaging andtransportation had the potential to drivedramatic cost savings.

“A 10% cost savings was realized oncepackaging was merged with the distributionoperation,” says Kane’s vice president ofoperations, Bill Jozefowicz. “The savingscame mostly from reduced labor on thewarehouse floor, combined with a reducedmanagement requirement. By raising thelevel of task interleaving within this verylarge facility, we eliminated the need forextra people to move product to and fromthe packaging area.”

Collaboration improves quality Continuous improvement is a dailycommitment at Kane’s P&G operation. Eachmorning there is a call involving managersfrom Kane, P&G’s local staff andrepresentatives of P&G’s corporate logisticsteam in Cincinatti. On the call, the teamaddresses issues and opportunities for theday. Weekly, a quality management team,with representatives from the twocompanies, meets for more detailed sessionson performance and efficiency improvements.

This close collaboration is paying off. P&Ghas its own quality management processcalled QAKE (Quality Assurance KeyElements). A recent QAKE audit of theNortheast DC resulted in a 100% score, thefirst perfect score for the facility. Kane andP&G have been able to sustain thisperformance.

Results

• Dramatic costs savings from integrating warehousing, transportation and packaging operations with a single provider

• P&G’s Northeast paper distribution center operates with the lowest cost-per-unit and the highest “shipped on time” performance of all P&G paper DCs

“Our success in improving cost and serviceperformance is linked directly to thecollaborative partnership between P&G andKane staff,” says P&G’s Pertl. “We get downand dirty and resolve issues together.Rather than a customer-vendor relationship,P&G and Kane have a ‘work with’ attitude.The values and principles of the twoorganizations are similar.”

Kane Is Able is a third-party logistics providerthat helps consumer packaged goods (CPG)companies warehouse and distribute goodsthroughout the U.S.

Kane Is Able, Inc. • T: 888-356-KANE (5263) • E: info@kaneisable.com • www.kaneisable.com

The company wanted to

raise the bar on both

service performance

and cost control at its

Northeast DC in

Pennsylvania.

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