Colgate: A Closer Look at Supply Chain Excellence

by Lora Cecere on April 26, 2013 · 2 comments

Recently, I wrote a blog post that contrasted Colgate and Unilever. As a follow-up to this article, I wanted to talk one-on-one with the leadership teams of the two companies and get their insights on the ten-year comparison.  In this blog post, I share insights from Michael Corbo, the head of supply chain at Colgate.

Michael Corbo from Colgate-Palmolive

Tell me about your job as a leader at Colgate.  I am very impressed with your organization’s delivery of results over the last decade. What do you believe has driven this success?

We believe in consistency. My job starts with the shelf and service to the customer. I am responsible for the supply chain processes that deliver the goods and services to the shelf globally.  This is not a new mission for the supply chain organization. Over the last decade, we have had consistency in leadership and purpose. Eleven years ago we defined the supply chain organization to focus on improving processes from the customer’s customer to the supplier’s supplier.

As a team, we believe in funding the growth. We ask the organization to take out waste and invest it back into the business. 60% of our focus goes to business expansion or driving productivity. We partner with the business leaders.

In doing this, we want to leverage scale. We are data driven and hold ourselves accountable to the balance sheet. We realized, in this journey, that we needed to build systems to analyze data to drive better decisions. To do this, six years ago, we built a support group of supply chain finance to support our decisions. It is a parallel group to our corporate finance group that reports directly to me.

It is easier said than done. Our business is complex. We have worked hard to get good at understanding the financial levers of the supply chain. We are disciplined in making capital investment decisions. For example, we seldom outsource manufacturing. We take pride in our innovations in manufacturing.  Today 95% of manufacturing is directly managed by the Colgate team and we have taken steps to vertically integrate some of the operations. For example, we make the tubes for our toothpaste. This has allowed us to improve operating margin, and return on assets (ROA); but has hurt the revenue/employee productivity numbers in your analysis. This is a conscious choice.

updated_comparison_table Colgate vs Unilever including 2012

You are what you measure. We manage supply chain metrics. We pay attention from case fill to customers’ customer feedback, on-time deliveries, plant efficiencies and forecast accuracy. Success is never final.

Thanks Mike these are great insights. I have written a lot about supply chain talent, and I question if it is the true missing link of the supply chain.  What do you think? Do we have a talent crisis?

As an organization, we believe in building talent systems and hiring from within. I take my job as the leader of the 22,000 global members of the Colgate supply chain team seriously.  I oversee succession planning for the supply chain organization.  When it comes to talent management, it is a “single threaded needle.” While I am supported by an experienced and talented supply chain human resource team, managing talent is a large part of what I do.  It takes time. It is 30% of what I do on a day-to-day basis. As a result, the reward and feedback systems for talent development are very consistent. The leader of the supply chain team has led succession planning for the last twenty-five years.

When people come to see me and ask for career advice, I tell them to do their current job VERY well. My advice is to “get real good at something and drive value today.”  I believe that success is not always about moving up.  I encourage members of the team to take enrichment opportunities in other areas of the company or other geographies; but I don’t want them to just spend time, I want them to contribute and learn.  I believe that we should encourage people to move across the organization to get a greater understanding of the business. We do succession planning three times a year. I value cross-functional experiences.

I strongly believe that we cannot let regions operate as islands. We hire with the expectation that people will spend time in multiple regions and multiple functions.

How do you see Supply Chain 2020?

When we were starting to plan for Supply Chain 2020, the first thing that I asked my team to do was to imagine ourselves on a beach somewhere enjoying life.  We took ourselves out of the equation and imagined how we can pass on what we have built to this next generation. We want to continue the culture.

We have significant opportunity to strengthen inventory management. We know that corporate sustainability and enterprise risk management are going to play a larger role in our future vision. I believe that we have made great progress on the integration of corporate social responsibility programs into our continuous improvement efforts. I also believe that we are making good progress in the use of digital and mobile in the factories.  We want to continue these paths.

We are also trying to embrace change.  We are asking ourselves, “What is the role of ecommerce in our future vision?”  We are reconsidering the role of ecommerce (demand signals from others like Amazon or direct shipments to customers) on our supply chain. I asked my team to think harder about the management of end-to-end processes and our relationship with the shopper.

I am excited about the future with analytics.  We want to make data work for us. We want to better manage the present and shape the future. I think that the use of advanced analytics holds promise.

What advice do you have for ecosystem partners trying to help supply chain leaders move forward?

I would like for the community to work on improving the experience of using analytics. Our vision is that it is as simple as the application on a mobile phone  …or downloading a digital book from Amazon. Today, we are a long way away from applications that are this easy to use. I would like to see more work on a shared vision of how we can make data work for us.  We lose too much in the complexity.

Thanks Mike. I appreciate the interview.  For more on Colgate results and their role in driving supply chain excellence, check out their results in the Supply Chain Insights Report, Supply Chain Excellence, a Step Forward and a Step Back. Also see the previous blog post: Unilever and Colgate: Two Bookends?

{ 2 comments… read them below or add one }

Matt Taylor April 26, 2013 at 11:45 pm

My favourite quoteable quote of the week from this article:

When people come to see me and ask for career advice, I tell them to do their current job VERY well. My advice is to “get real good at something and drive value today.” I believe that success is not always about moving up.

Reply

Matt Taylor April 26, 2013 at 11:51 pm

The other point that cannot be emphasized enough is Mike Corbo says ‘you are what you measure’. This is the management side of the ‘you get the behaviour you reward’ adage.

In order to get good supply chain behaviour, indeed excellence in any endeavour, make sure you are measuring the right things, and rewarding only behaviours that drive you towards achieving the right things.

Lora “knows her stuff” and I urge readers of this post to look into her other posts and writings about how supply chain leaders need to rethink what they are measuring. It took 20-30 years to get factory owners to move away from measuring utilisation and look at throughput and real cost per transaction. Supply Chain leaders have to move away from ROA and productivity as the measures and treat them as outcome of working towards more effective and meaningful measures. DIFOT, supply chain cost per delivery, energy consumption per unit of product delivered, cycle time, etc …. these are the measures that relate to measuring (and fixing) what happens between product creation and consumption.

Great article.

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