Supply chain strategy of Colgate Palmolive

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Introduction

        Colgate-Palmolive is one of the largest global companies in the consumer goods industry that has been ranked highest. This is based in New York. Colgate-Palmolive is involved in the development and sale of various consumer products which include cleaning products, soaps, toothpastes and pet supplies.As the organisation has its activities in different regions across the globe, it is of utmost importance to have a well-integrated system that will help to share valuable data and knowledge efficiently and quickly. Colgate-Palmolive initially had a decentralised structure which created many problems in its business operations , particularly in supply chain management. In November 1999, the company's management team agreed to revamp its IT infrastructure by introducing a specific and creative program that ensured the convergence of all functions within the organisation across all of its international operational activities.

Vision of Colgate-Palmolive

To deliver goods on a continuous basis on the basis of three core principles, i.e. global cooperation, attitude care and development. The firm's core principles are as follows:

• To offer incentives for development to the employees at both technical and personal levels of the organisation.
• To satisfy all the Corporate Social Responsibilities as a core member of the global community.
• To enhance shareholder value.
• Developing processes and practices that will ensure the organisation is able to improve its business and industry role.
• Exploring all the new projects and prospects available on the sector.

Supply chain structure

    

Colgate's global supply chain strategy was built in order to address the main problem of Colgate-Palmolive; the three core supply chain techniques that formed the basis of this program. The first was the implementation of the Vendor Inventory Management device, so that the inventory channel and the process timing also deteriorated. The second approach was to incorporate a resource planning program at cross-border level in order to create regional models for international patterns; it meant that the company had an appropriate pool of assets so that a balance with the business strategy of the company was created.

Global Resource Utilisation 

Colgate-Palmolive has been able to successfully combine demand and resource knowledge about the international market with its cross-regional resource management systems. As the feedback was rapid, there was an increase in the number of shipments, a decrease in the number of incorrect or incomplete orders and a substantial decrease in the number of inventories. With the aid of the new SCM program, the suppliers had formed direct ties with the manufacturing unit of the organisation and were responsible for efficient resource management at the distribution centers.

As the information on the supply chain becomes more visible, there is a high chance that the company will have access to timely, consistent and accurate data to ensure that the planning decisions are made efficiently so that the company can achieve its goals successfully. Business Intelligence System would allow Colgate-Palmolive to have easy access to reliable and clear data and ensure that there is an efficient decision-making process in the organisation.

Using the SCM system, the company will be able to enhance its competitiveness in the market, as well as strengthen its position in global business development, gain competitive edge in the price war and market its products strategically. Colgate has incorporated its e-enterprise by building cordial and stronger partnerships with its partners and customers to strengthen its business operations.

Conclusion

It is essential for each company to have a well-integrated SCM program which will ensure that the supply chain strategy complements the business strategy. Through an effective SCM program, Colgate and its customers and suppliers can provide faster and on-time orders, efficient production planning and inventory management is achieved, higher order delivery levels are improved, projections are performed effectively and the company's output can be tracked easily.

As the raw material issues are faced by the companies worldwide, it has become necessary for each company to conclude contractual agreements with the suppliers in order to minimise its risk of facing any shortage of raw materials in its business tenure). Use variable cost arrangement, both buyer and seller will get a win-win situation; each party will be exposed to the benefits of price adjustments. The seller is shielded from price rises that may have reduced the margins and the consumer will make use of the low price product if the commodity price falls during a contract period.

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