The Colgate-Palmolive Co. needed to automate its connections with suppliers in order to enable efficient customization of product. Josuê Muñoz, vice president of global supply chain demand and systems, tells the story.
SCB: What was the supply-chain challenge that you faced at Colgate Palmolive?
Muñoz: There were two challenges. The first was the our need to customize. How do we deliver customized product efficiently to our customers? And the second was, how do we make the process digital? How do we connect with our suppliers to be more agile and deliver that customization when it’s needed?
SCB: SKU proliferation isn’t a new phenomenon. Was it getting worse?
Muñoz: It continues to be a challenge, making sure that proliferation brings value. We understand that shoppers are looking for differentiation. So we have to provide that in a way that’s efficient for our supply chain.
SCB: What about the process was manual, and needed to be automated and digitized?
Muñoz: The interaction with our suppliers has to be digital. We have customization partners all over the world. They take our product and adapt it to the needs of the retailer, whether e-commerce or brick-and-mortar, for things like a display or specific promotional pack. We want to do this as late as possible in the process, through postponement. So we needed our suppliers to be connected to our systems. We needed visibility and quality control, integrated with our SAP platform.
SCB: You chose Nulogy as your technology partner. Why Nulogy?
Muñoz: We found a solution that was tailored to the needs of our suppliers, to begin with. We had to be able to provide something they were willing to adopt, and was also easily integrated with our platform. We found this with Nulogy. We executed a pilot that proved that even when we went to a not very sophisticated co-packer, a customization partner, we were able to put it in place and deliver immediate value to that partner and to us. It was easy to sell.
SCB: You started out with just one partner?
Muñoz: Yes. Now we're expanding, and we want to take it global.
SCB: Talk about the implementation of the solution.
Muñoz: It involved a lot of change management on both sides. We needed to change how we operate, but our customization partner had to go from fully manual processes with stacks of paper to managing quality on the line with iPads. They had to immediately track what was being produced, and drill down to where there were bottlenecks. So they changed their whole process and found efficiencies. If you look at their operation today, it doesn't look anything like it did before they implemented the system.
SCB: Every application of new technology also involves a change in business process. What were the challenges there on the human side, and how did the roles played by various people shift?
Muñoz: The good thing is that it made their lives easier. For our planners, there were no more emails and spreadsheets tracking what was happening. It involved a radical re-engineering of the process, from papers and spreadsheets to digital. Now it’s all iPads, mobile phones, dashboards and screens.
SCB: How long did the pilot take?
Muñoz: It took about six months to get it working. Once we created the interfaces and connections to our system, it worked very well.
SCB: Were you working on parallel streams — doing it manually the same time that you were implementing the digital system?
Muñoz: Absolutely. Initially it was that way, but once we switched over, it became digital very rapidly. It was more a question of whether we had issues to resolve, and making sure that we were able to operate with them.
SCB: What was involved in training both your people and the co-packers?
Muñoz: On our end there was training with our planners, giving them a different way of interacting with our customization partner. On their side, it was total retraining of how the job was done. It's very easy now for them to get updated on the new technologies.
SCB: Where was Nulogy during the process of training? Were they on site with you?
Muñoz: Absolutely. They were onsite all the time. They were supporting the change. They were adjusting the system to the needs of our customization partner, and were collaborating with us totally during the phase of implementation.
SCB: Any surprises or unexpected outcomes in the act of implementation?
Muñoz: Not really. We knew that the change-management piece was going to be critical. So we were prepared to do the training, and had the right amount of people on the floor making sure that everyone understood what was needed to be done. And with the support of Nulogy, we got it done.
SCB: When the six months were over, and the pilot was a success, did you then proceed to roll it out to everybody at once, or did you also phase that in?
Muñoz: We have a plan and are starting to roll it out. But once again, we have to sell it in to our customization partner. This is not something that we go and mandate. What we do mandate is that we're going to become digitally integrated. Our partner has to then provide us with the connections and platform so that we get the visibility we need with the Nulogy solution. If they decide to go with something else, OK. But we need that visibility. What’s powerful is that they see a case in which it works.
SCB: What’s the timetable for full rollout?
Muñoz: We have almost 200 partners globally. We expect to have all of them digitally connected in the next two years..
SCB: To date, even though the project is not yet complete, what do you see as benefits achieved up to now?
Muñoz: On the quality side, full visibility has allowed us to reduce inventory, because we now know where everything sits, and don't have to hold higher inventories while quality processes are being carried out. And our partners have seen better efficiency as well. We’re seeing higher throughputs, which drive lower costs on our side. And that's what we're looking for.
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