Diaper Manufacturer Gets a Handle on Materials Sourcing with Automated Data Collection Software

Michael Clark
Thu, Oct 30, 2014

The disposable diaper industry is extremely competitive. It's also relatively young in terms of manufacturing. The Atlantic explained that the U.S. market is largely in favor of disposable diapers, seeing as 95 percent of babies wear them. In fact, each child goes through roughly 8,000 disposable diapers on an annual basis. But the invention only goes back to the 1940s and first "Boater" was offered for sale in 1949. Marion Donovan not only invented the product but was also manufacturing them before the trend eventually took off.

However, today's disposable diaper manufacturing landscape is much different. Currently, there are a large number of brands vying for the largest market share, whether it's Huggies or Pampers. Both have diverse product offerings aimed at unique markets and consumers. They each also have an international reach, which makes manufacturing and distribution a challenge. Diaper brands often have complicated supply chains because there are various materials that go into making each product.

Major Player in the Diaper Industry Feels the Competitive Pinch
Kimberly-Clark is the parent company for Huggies, and it's North American consumer market has undergone a rapid change. The brand has traditionally served the middle-of-the-road shopper segment, in between high-end products and super-value merchandise, The Wall Street Journal reported. As a result, Huggies Snug & Dry, which falls somewhere in the middle in terms of price, have become less popular. That means there's more inventory sitting on the shelves and the supply chain must be adjusted. This isn't a dog-and-pony show either. The Snug & Dry line generates nearly two-thirds of the Huggies's $2 billion in annual income.

Meanwhile, foreign markets, including China, Russia and Brazil have helped Kimberly-Clark recuperate some of the losses in North America. Still, there's competition with P&G and a Japanese brand for market share in both Asia and South America. This kind of volatility can be difficult for many manufacturers and suppliers to handle.

Remove Risk with More Robust Supply Chain Management
With disposable diapers, manufacturers have to work with multiple vendors to complete production. Arquest, a spin-off of Johnson & Johnson, is a supplier that has first-hand knowledge of the issues associated with diaper manufacturing.

Arquest is one of the largest suppliers of private-label disposable diapers in the North American market and faced a difficult task in trying to differentiate its offerings from others. In 2005, the global market for infant diapers was worth more than $21 billion, with over 450 billion diapers sold annually. But there wasn't much space for competition. Those in the strongest positions, with the most dependable processes, would continue to flourish while others would likely fail. Arquest wished to set itself apart using a service called Vendor Managed Inventory. This would give retailers clear visibility and control over inventory in their various locations.

The company understood this would only work with a data collection solution that provided the structures needed to create a nearly perfect supply chain. However, there was a caveat: Raw materials ownership in the supply chain wasn't very straightforward. Arquest didn't technically own any of the raw materials coming from multiple vendors until they were put into production. For the sake of creating an accurate VMI service, the company had to pay strict attention to the precise location and corresponding ownership of raw materials in its supply chain.

Arquest chose RFgen for its data collection solution because it seamless integrated with its JD Edwards ERP software. This allowed the supplier to keep accurate records of shipment information from various vendors and identify consignment of work-in-progress materials. Because RFgen's solutions provide real-time data and automatically verifies the accuracy of the information, Arquest was able to improve its supply chain's productivity. The company was also able to customize transactions to fit its needs, and the software is intuitive enough so that personnel needs minimal training to get up to speed.

Demand for disposable diapers isn't likely to wane. As long as people continue having children, there will be a need for diapers to help keep them comfortable and clean. Manufacturers, however, will still have to deal with inventory fluctuations, and data collection software is a resource that can't be overlooked.

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