Imagine a Supply Chain That Can Maximize Profitability

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 Global Supply Chain Video

Colgate Global Supply Chain Video


“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


Supply Chain

Challenge For

Profitability

and …

TOTAL NUMBER OF SKUS

% OF TOTALREVENUE

The Supply Challenge20% of SKUs = 80% of Revenue

“80 – 20 Rule”


“80 – 20 Rule”


How does the supply chain

help ensure that the challenge

does not become larger?

TOTAL NUMBER OF SKUS

% OF TOTALREVENUE


“80 – 20 Rule”


“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


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


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


Driving ProfitabilityDriving Profitability


Cultural MindsetCultural Mindset


Funding the GrowthFunding the Growth


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


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


On average, 3-4% to Sales

deliveredevery year since 2002

On average, 3-4% to Sales

deliveredevery year since 2002


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


Driving ProfitabilityCultural

From Design to Execution

Driving ProfitabilityCultural

From Design to Execution

Business

Imagine a Supply Chain That Can Maximize Profitability