Company Background: Sundial Brands is a personal care product manufacturer that operates three key brands – SheaMoisture, Nubian Heritage, and Madame CJ Walker. SheaMoisture is the bulk of sales and is the largest independent brand in the United States operating across personal care categories.
Overview of Sundial’s Supply Chain: Sundial manufacturers in Long Island, USA sourcing natural ingredients from around the globe. Manufactured goods are warehoused and distributed using a 3PL. Orders from major retail partners (e.g., Walmart, Target, Walgreens, Ulta) are submitted electronically and managed by Sundial while a portion of order submissions are managed by distributors.
Key Problems Sundial’s Supply Chain Faces:
- Lack of information from retailers and distributors
- To secure consumer and point-of-sale (POS) data from retail partners requires significant capital that is difficult to justify compared to spend on R&D and marketing – both critical engines for driving consumer demand. While Sundial secures data from major retailer partners, data is missing for ~30% of consumer sales, which, when combined with Sundial’s rapid innovation and SKU complexity (500+ SKUs) makes managing manufacturing to match consumer demand difficult without carrying significant inventory or having out-of-stock issues. In addition, for the retailers and distributors that provide limited information on inventory it is difficult to understand inventory levels at the SKU level which can create significant surprises in demand. For example if a surprise order comes through for a SKU with limited distribution, it requires the correct raw materials, and the ability to switch manufacturing lines to create the smaller batch if inventory is not available. For both of these to happen without warning can create downstream effects impacting sales of the most popular SKUs.
- Lack of information from online customers
- Similar to all consumer-product companies, it is difficult to understand the usage habits of the end consumer. Even if a consumer purchases a product, do they use the entire product? How often do they use the product? Do they purchase from the same outlet? The more information that can be obtained, the easier it is to advertise to the consumer in a cost effective way and to predict demand to ensure availability.
- Understanding where things have gone wrong in the supply chain
- Issues related to supply chain disconnects cost Sundial millions of dollars annually between damages, rush shipping fees, and mis-ships. It is difficult to understand where in the supply chain an issue occurred and who is to blame. Better information in the supply chain regarding individual products can help detect when things have gone wrong and better identify issues to help with problem-solving and future improvements.
Sundial’s Exploration of a Digitization
- Sensors Everywhere!
- Radio-frequency identification (RFID) is gaining traction in consumer products as the technology becomes cheaper. Sundial should be exploring this technology over the next ten years to identify when a product’s level reaches a certain point for the consumer, and when packaging changes (e.g., location, damages) occur1,. These enhancements to the supply chain would be significant for two reasons. First, they would enable visibility into the journey of products from manufacturing to consumer, which in partnership with retailers can better provide info regarding consumer purchasing patterns. Second, they will better enable understanding of consumer usage. As consumers feel more comfortable with connectivity in the home, there exists the opportunity to have RFIDs connect to existing infrastructure and relay information to the manufacturer. This one-to-one connectivity can enhance understanding of how many products exist in a consumer’s household, how often they are utilized as well as purchased to better enable demand planning as well as efficient marketing to encourage refresh as well as extra purchases. However, this all hinges on consumers continuing to embrace additional connectivity in the home.
- Information Transparency
- Over the next three years, as 3PLs and retailers improve their IT, availability of information should improve. Current costs of information remain high, but as more accurate information becomes available the cost of information may be worthwhile for Sundial. Similar to consumer demand applications from RFID, more accurate information from supply chain partners enhances the ability to understand demand changes quickly as well as understand where things go wrong. Both of these have the ability to reduce costs due to inventory mismanagement, and product damages better enabling funds to be distributed across R&D and marketing to help generate consumer demand enabling long-term success. Key to this will be the willingness of retailers to share information at reasonable costs.
Final Say: Sundial’s exploration of a digitization should be through smart packaging and focused on lowering costs due to errors throughout the process and on improving visibility into consumer behavior for Sundial and its retail partners to better anticipate demand as well as allocate marketing spend.
 Bhattacharyya, Rahul, Christian Floerkemeier, and Sanjay Sarma. “Low-Cost, Ubiquitous RFID-Tag-Antenna-Based Sensing.” (2010)
 “Smart Packaging Market Analysis By Product (Active Packaging, Intelligent Packaging) By Application (Food & Beverage, Healthcare, Personal Care, Automotive) And Segment Forecasts To 2024,” Grandview Research
 Alicke, K., D. Rexhausen, and A. Seyfert, “Supply Chain 4.0 in consumer goods,” McKinsey & Company
 Porter, M. and J. Heppelmann, “How smart, connected products are transforming competition,” Harvard Business Review (Nov. 2014)
 Schrauf, S. and P. Berttram, Industry 4.0: How Digitization Makes the Supply Chain More Efficient, Agile, and Customer Focused, PWC Strategy& (2016)