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