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Kimberly-Clark South Africa

Cleaning up in Africa

Written by John O'Hanlon & Produced by Trevor Gretsinger

The manufacturer of Kleenex®, Huggies®, Kotex® and Baby Soft® needs little introduction. But growing business in Africa is a task for a specialist.
Cleaning up in Africa
The manufacturer of Kleenex®, Huggies®, Kotex® and Baby Soft® needs little introduction. But growing business in Africa is a task for a specialist. As Managing Director of Kimberly-Clark South Africa, Garth Towell points out that while this CPG business and portfolio accounts for 65 percent of the company’s $250 million annual revenues, their other businesses — “Kimberly-Clark Healthcare and Kimberly-Clark Professional – service key business and healthcare sectors of the economy and support the corporate vision of ‘leading the world in essentials for a better life.’

BUCKING THE GLOBAL TRENDS
The recession might have been expected to hit CPG sectors hardest; however in South Africa the K-C portfolio has continued to grow both in volume and value share terms in most categories: “We haven’t seen consumers leaving the categories, but there have been signs of down-trading from premium to value particularly in our personal care portfolio.”

The biggest single change to the business has been the 2008 acquisition of overall share-holding by KCC. Long-time minority shareholder — The Lion Match Company, Kimberly-Clark’s local BEE (black economic empowerment) partner – decided to change strategic course and offered KCC their shares in a win-win deal that led to K-C South Africa becoming a wholly owned subsidiary. This did not dilute the company’s BBBEE standing, but reinforced the need to transform in areas other than ownership such as “preferential procurement, skills development and employee equity”. The company has recently retained its Level 5 rating on the BBBEE score-card.

The change signals Kimberly-Clark’s intent to invest more significantly on the African continent, says Garth Towell. “Kimberly-Clark International is required to double its business over the next five years as part of the Kimberly-Clark Corporation’s five-year Global Business Plan and sub-Saharan Africa needs to deliver its part in achieving these goals. Over the past couple of years we have started to put forward attractive business plans, delivered on short-term commitments and thereby earned international credibility and investment funding from our shareholders.”

THE CHALLENGE IN AFRICA
While South Africa will always form the biggest part of a sub-Saharan African growth plan, future growth opportunities are going to be in the emerging African economies of the 21st century, where Kimberly-Clark currently operates through a network of distributors. “We have a presence in 23 other markets: countries like Ghana and Angola are leveraging their natural resources and we have seen a far bigger amount of disposable income become available to consumers. It may not be like Asia or Latin America but we have seen disposable income double in the last five years.” And there has been a greater degree of political stability, he adds. Ghana, Kenya and even Nigeria are shedding the inefficiency and corruption that used to restrict investment and, once the remaining hurdles are overcome, Towell expects Nigeria to become a primary engine of growth on the continent.

Recent multi-million dollar investments in both the Johannesburg and Cape Town facilities have proved KCC’s appetite for emerging market growth opportunities. “We have been striving to establish this business as an investable proposition to our shareholders and that is being recognised. When operating in an inflationary and unstable macroeconomic environment you should be focusing on how to run a business more efficiently, more effectively, whilst continuing to attract and develop talent through growth strategies.”

LEAN AND SUSTAINABLE
This mindset has led to the adoption of LEAN principles within the business: “I put my hand up for South Africa to be a pilot for the Middle East, Eastern Europe and Africa region.” The programme has been developed with management consultants McKinsey and he has been impressed as much by the cultural change as by production metrics which are expected to be impressive. “This year we selected a couple of assets in our Johannesburg facility that we wanted to work on. In the 16 week roll-out of this program we have seen a fundamental shift in how people behave, their problem solving capabilities and how they are approaching day to day activities. I do a Gemba walk every two weeks in those areas. You can really feel it in their housekeeping, the charts and boards that have been developed on the line showing what is expected against what is being achieved!”

At the same time as introducing the lean business philosophy Kimberly-Clark introduced end to end planning processes, which uses real time data to improve ways of doing business. The result? “Significant improvements in forecasting accuracy, production performance against the plan, service levels and speed-to-market.

His vision for Kimberly-Clark Sub-Saharan Africa is ambitious – nothing less than turning the $250 million business into a $1 billion business by 2015. Talent management will be the key to achieving that goal, he says: “People want to be working for a great employer. We participated in the local Best-Company-To-Work-For survey for the first time this year and were ranked in the top 35 of medium-large size companies in South Africa which provides a solid foundation, as we strive to achieve top 10 statuses by 2015.”
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