Case Study of Reckitt Benckiser in France

Reckitt Benckiser is the number one supplier of household cleaning products in the world. With over 5.6 billion Euro in revenue and production sites in sixty countries Reckitt Benckiser is truly a global firm. It origins are purely European with Reckitt's founding in England in 1840 and Benckiser's in Holland in 1823. The two firms merged in 1999 and own a range of products in the areas of surface care ( Lysol, Harpic, St Marc, Old English), fabric care ( Woolite, Spray 'n Wash ), dishwashing (Calgonit, Jet Dry ), home care (Air Wick), and health/personal care (Dettol, Veet).

Reckitt Benckiser came to France in 1912 when Reckitt setup business in Levallois. In 1961 a new factory was built in Chartres, which continues to be one of the firm's most efficient operations. The French headquarters is located in Massy, a Parisian suburb. Reckitt Benckiser employs about 650 people in France, 400 of whom work in production factory of Chartres. A local R&D center, founded in 1961 was located in the plant where highly qualified engineers, chemists, and biologists worked on improving and designing new products. This laboratory was relocated in other units of Reckitt Benckiser as a result of the 1999 merger, but the French unit still has considerable product customization responsibilities because cultural preferences in fragrance, colour, and products.

The Chartres factory is divided into 3 areas dedicated to air care, surface care and shaving creams and waxes. Each assemble line produces the entire commercial unit of the product. This means that it executes the operations to produce the final commodity (washing liquid for example) and further down the line the conditioning of the product (putting the liquid into bottles and closing them). Raw materials and commodities needed for the production come from around the world.

Production is organised on a 24 hours a day basis and the plant is opened 7 days a week. Teams work in shifts on the 3-8 system (i.e., there 3 teams working 8 hours each every day). However to cope with surge or temporary decrease in demand, this work organisation is flexible. Reckitt and Benckiser adjusts the size of its workforce by using temporary workers coming from commercial agencies.

About 20 trucks leave the factory every day full of goods. These finished products are sent to a logistics center in Savigny le Temple, near Paris. From there the products are dispatched to the French market, generally to the warehouses of the major supermarket chains in France. The Chartres factory also supplies foreign markets in Europe and the rest of the world.

The quality of the transportation infrastructure is crucial for Reckitt Benckiser as the firm adopted just in time production methods some years ago. Therefore very little stock is on hand. Generally more of Reckitt Benckiser’s raw materials and finished goods are in transport than sitting in the factory supply rooms or warehouses. This means that transportation infrastructure, including relations with the truck drivers and dockers unions, is especially important to Reckitt Benckiser’s success.

France is one of Reckitt Benckiser's strongest markets. Producing 504 million Euro in sales revenue it accounts for 8% of total sales revenue. Its Research and Development laboratory was particularly skilled at new product development and adaptation.

Production managers in Chartres are under tremendous pressure to meet the competitivity requirements. The philosophy of Reckitt Benckiser is to spur competition between its 15 European factories. Subcontractors in other countries, especially in Eastern and Central Europe, are pushing the competitivity standards up since their labour costs are lower. French workers productivity in terms of output per hour is very good but the taxes on labour and profits are high in France.

Facing such competition French managers must continuously adapt and design new methods to keep their production lines in Chartres and avoid outsourcing or relocations. Workers are aware of this extremely competitive context because of an active human resource involvement and play an important role in increasing productivity. One impediment is the lack of local trade schools in the Chartres region. This makes it more difficult to find qualified labour to staff the increasingly complex assemble lines. Fortunately employee loyalty is very high, as evidenced by the average tenure of 17 years.

Reckitt Benckiser employees are meeting these challenges. Production doubled over the past five years with the same number of employees. Managers implemented many Japanese methods of working such as Kaizen. Employees work in non hierarchical teams where each member can contribute to the whole production process and controls the assemble line and the quality of products. There is no loss of skills and creativity in this way of working since every worker is encouraged to accept more responsibility for the final outcome. Workers productivity is measured on an hourly basis. The workers track their own results on a graph. This cooperative way of working increases motivation and enables productivity increases while maintaining a good social climate.

The whole production process is monitored by state of the art software, which enables production manager to meet variations in demand. A day to day management of stocks allows for a lean production line. For seasonal products such as shaving creams and waxes, Reckitt Benckiser employs temporary workers. It is notable to add that the company’s sense of social responsibility is not jeopardized by the competitive demands of efficient, low cost production. The Chartres factory has a special “CAT” unit employing handicapped people from the region. Although the company receive some tax and other benefits from this policy, it is a strong reflection of the firm’s well-known sense of social responsibility.

When asked about the drawbacks of producing in France, the managers of multinational companies answer that the social climate is often one of the reasons why they prefer to build or relocate their factories elsewhere. Tense relationships between the social actors (managers, unions, and the government) lower the efficiency of production activities and numerous strikes lead to losses in turnover. But there has always been good relations between Reckitt Benckiser managers and production workers in Chartres. Using the number of hours of strikes as an indicator, it is unsurprising to find that there were only 2 hours lost to strike activity over the past four years. The good social climate, high productivity, and skilled workforce enabled the Chartres factory to win a new contract, and a new nine million Euro assemble line, for a product previously sourced in Poland.