From the Supply Chain Insights Files

Colgate: A Closer Look at Supply Chain Excellence

April 26, 2013

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 10-year
comparison. In this blog post, I share insights from Michael Corbo, the head of supply chain at Colgate.

Michael Corbo - Vice President, Global Supply Chain

With a 30-year career at Colgate, Mike has a wide array of supply chain
experience, having worked in key Colgate Manufacturing and Supply Chain
positions in Latin America, North America, Asia and Central Europe/Russia.
Over his career, he has managed organizations in manufacturing and
customer service providing leadership for key initiatives in all areas of the
supply chain including simplification, lean manufacturing programs, Colgate’s
“Funding the Growth” savings programs, restructuring major global supply
networks and establishing new global supply chain planning capabilities.

In Mike’s current role he has end-to-end global responsibility for Colgate’s

supply chain. His accountabilities include providing leadership for the Global
Procurement function, a global network of over 50 global manufacturing sites
and the Global Customer Service organization while ensuring continuous
development of supply chain talent. As a key corporate executive and
change agent, Mike works closely with commercial leaders providing key direction in continuing to drive
Colgate’s strong business results.

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. At Colgate, 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

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 From the Supply Chain Insights Files
Colgate: A Closer Look at Supply Chain Excellence
April 26, 2013

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 per employee productivity numbers
in your analysis. This is a conscious choice.

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 25 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.

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 From the Supply Chain Insights Files
Colgate: A Closer Look at Supply Chain Excellence
April 26, 2013

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 e-commerce in our
future vision?” We are reconsidering the role of e-commerce (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 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?

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 From the Supply Chain Insights Files
Colgate: A Closer Look at Supply Chain Excellence
April 26, 2013

About Colgate-Palmolive:

Colgate-Palmolive Company is a $15.6 billion global company serving people in more

than 200 countries and territories with consumer products that make lives healthier and
more enjoyable. The Company focuses on strong global brands in its core businesses –
Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate follows a tightly
defined strategy to grow market shares for key products, such as toothpaste,
toothbrushes, bar and liquid soaps, deodorants/antiperspirants, dishwashing
detergents, household cleaners, fabric conditioners and specialty pet food.

About Supply Chain Insights LLC:

Founded in February, 2012 by Lora Cecere, Supply Chain Insights LLC is focused on delivering
independent, actionable, and objective advice for supply chain leaders. If you need to know which practices
and technologies make the biggest difference to corporate performance, turn to us. We are a company
dedicated to this research. We help you understand supply chain trends, evolving technologies and which
metrics matter.

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