imagine a supply chain that can maximize profitability
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Imagine a Supply Chain That Can Maximize ProfitabilitySeptember 2014
Colgate Palmolive CompanyColgate Palmolive Company
Who is Colgate-PalmoliveWho is Colgate-Palmolive
Started in 1806 in U.S.
$17+ Billion Global Sales
35,000 Colgate people worldwide
Operations in over 80 countries
Selling products in 225 countries
Four core categories:
Oral Care Personal Care
Pet Nutrition Home Care
Started in 1806 in U.S.
$17+ Billion Global Sales
35,000 Colgate people worldwide
Operations in over 80 countries
Selling products in 225 countries
Four core categories:
Oral Care Personal Care
Pet Nutrition Home Care
18%18%
Truly a Global CompanyTruly a Global Company
21%21%
20%20%
28%28%
13%13%
Hill’s
Pet Nutrition
Hill’s
Pet Nutrition
Europe/
South Pacific
Europe/
South Pacific
Greater
Asia/Africa
Greater
Asia/Africa
North AmericaNorth America
Latin AmericaLatin America
2013 Key Results2013 Key Results
Organic Growth + 6.5%
Gross Profit Margin + 50 bp to 58.8%
Return on Capital > 30%
Colgate’s Global Supply Chain major company leader and contributor to results
Organic Growth + 6.5%
Gross Profit Margin + 50 bp to 58.8%
Return on Capital > 30%
Colgate’s Global Supply Chain major company leader and contributor to results
Colgate Palmolive CompanyColgate Palmolive Company
Colgate Global Supply Chain Video
Colgate Global Supply Chain Video
Colgate Palmolive CompanyColgate Palmolive Company
“Designing For Profitability”in an era of Complexity and Volatility
“Designing For Profitability”in an era of Complexity and Volatility
A Decade of SKU / Item proliferation
– Product lifecycles shortening
– Customer differentiation demands
– Competitive pressures
– Increasing Promotions
A Decade of SKU / Item proliferation
– Product lifecycles shortening
– Customer differentiation demands
– Competitive pressures
– Increasing Promotions
Colgate Palmolive CompanyColgate Palmolive Company
Supply Chain
Challenge For
Profitability
and …
TOTAL NUMBER OF SKUS
% OF TOTALREVENUE
The Supply Challenge20% of SKUs = 80% of Revenue
“80 – 20 Rule”
The Supply Challenge20% of SKUs = 80% of Revenue
“80 – 20 Rule”
Colgate Palmolive CompanyColgate Palmolive Company
How does the supply chain
help ensure that the challenge
does not become larger?
TOTAL NUMBER OF SKUS
% OF TOTALREVENUE
The Supply Challenge20% of SKUs = 80% of Revenue
“80 – 20 Rule”
The Supply Challenge20% of SKUs = 80% of Revenue
“80 – 20 Rule”
E2E Supply Chain MindsetNew processes and tools
E2E Supply Chain MindsetNew processes and tools
Cross functional exercises with Marketing and Technology
Guides to evaluate E2E impacts of new products
Constraints and opportunities evaluated
“What-if” scenarios developed
Goal to “manage complexity”
Cross functional exercises with Marketing and Technology
Guides to evaluate E2E impacts of new products
Constraints and opportunities evaluated
“What-if” scenarios developed
Goal to “manage complexity”
Supply Chain working with ourCommercial Partners
Supply Chain working with ourCommercial Partners
17
Plant Meeting with regionalcommercial partners
demonstrating and findingsolutions to SKU proliferation
Compounded Impact of Complexity on Manufacturing
Compounded Impact of Complexity on Manufacturing
Area of complexity driven by innovation
and competition
Area of complexity driven by innovation
and competition# o
f fo
rmu
las
# of Packaging Configurations
Capacity erosionHighest cost
Lowest flexibility
19
Cycle Time
Reduction
Increased Post
Addition Usage
Capacity
Losses
Energy
Mastering Manufacturing Complexity
Mastering Manufacturing Complexity
21
Colgate Palmolive CompanyColgate Palmolive Company
Post Addition ExamplePost Addition Example
Toothpaste making– Batch process – mixer constraint– Formula proliferation in last decade
Post addition technology– 15 year in house development– after mixer allows addition of color, flavor
and even actives
Toothpaste making– Batch process – mixer constraint– Formula proliferation in last decade
Post addition technology– 15 year in house development– after mixer allows addition of color, flavor
and even actives
Results For One CategoryResults For One Category
• +20,896 Tons in 2013
• +1,505 Tons in 2014
• +8,350 Tons (already implemented)
• +11,062 Tons as phase II
• +20,896 Tons in 2013
• +1,505 Tons in 2014
• +8,350 Tons (already implemented)
• +11,062 Tons as phase II
Capacity Gain
+21K Tons
2013 Results
Capacity Gain
+19K Tons
Capacity Gain
+30K Tons
Material LossReductions
$100K
Capacity Gain
+14K Tons
Material LossReductions
$140K
Water Saved
29K tons
Global, Local Key Bundles Complexity3 Billion Toothbrushes
One site 600+ SKUs
Global, Local Key Bundles Complexity3 Billion Toothbrushes
One site 600+ SKUs
Material SimplificationMaterial Simplification
Blue:35
Green:31
Red:25
Purple:24
Yellow:14
Orange:12
Gray:4
White:3
Black:2
Transparent:1
10 Color 151 M# 4 suppliers 398 ton/year10 Color 151 M# 4 suppliers 398 ton/year
Before After0
5
10
15
20
25
30
3530
11
27
9
21
8
21
1111 10
3 2
# o
f C
olo
ran
ts a
t C
SX
Colorant
24
Global Complexity Management3 Year Peak Reductions
Global Complexity Management3 Year Peak Reductions
No. of Formulas
No. ofBackbones
No. of Fragrances
Global SKU Count TrendColgate SKU count is down in two years
Global SKU Count TrendColgate SKU count is down in two years
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2012 2013
Sales / SKUs“Profitability”
Sales / SKUs“Profitability”
‘12YTD vs ‘11YTD
‘13YTD vs ‘12YTD
Total Company
Colgate Palmolive CompanyColgate Palmolive Company
Designing for ProfitabilityTake-Aways
Designing for ProfitabilityTake-Aways
Commercial partnerships essential
End-to-End supply chain process
SKU/Item management leadership critical
Commercial partnerships essential
End-to-End supply chain process
SKU/Item management leadership critical
Colgate Palmolive CompanyColgate Palmolive Company
Driving ProfitabilityDriving Profitability
Colgate Palmolive CompanyColgate Palmolive Company
Cultural MindsetCultural Mindset
Colgate Palmolive CompanyColgate Palmolive Company
Funding the GrowthFunding the Growth
Colgate Palmolive CompanyColgate Palmolive Company
FTG Program DefinitionFTG Program Definition
The systematic identification and progress tracking of our global savings initiatives across every line in the P&L that fund our growth and help deliver our profit and EPS goals
The systematic identification and progress tracking of our global savings initiatives across every line in the P&L that fund our growth and help deliver our profit and EPS goals
Colgate Palmolive CompanyColgate Palmolive Company
FTG Program ElementsFTG Program Elements Standard global process
Includes all functions and spend categories
Function, Division and Subsidiary Leaders own their local programs
Results are tied to Performance Objectives
Rewards & Recognition programs in place
Standard global process
Includes all functions and spend categories
Function, Division and Subsidiary Leaders own their local programs
Results are tied to Performance Objectives
Rewards & Recognition programs in place
Colgate Palmolive CompanyColgate Palmolive Company
On average, 3-4% to Sales
deliveredevery year since 2002
On average, 3-4% to Sales
deliveredevery year since 2002
Colgate Palmolive CompanyColgate Palmolive Company
Keys to SuccessKeys to Success
Strong Leadership Ownership & Commitment
Consistent Approach
Focus and Discipline
Visibility and Communication
Strong Leadership Ownership & Commitment
Consistent Approach
Focus and Discipline
Visibility and Communication
Colgate Palmolive CompanyColgate Palmolive Company
Driving ProfitabilityCultural
From Design to Execution
Driving ProfitabilityCultural
From Design to Execution
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