Question

Colgate- Palmolive : The business value of ERP Colgate-Palmolive is a global consumer products company that implemented SAP R/3 enterprise resource planning system. Colgate embarked on an implementation of SAP R/3 to allow the company to access more timely and accurate data, get the most out of working capital, and reduced manufacturing costs. An important factor for Colgate was whether it could use the software across the entire spectrum of the business. Colgate needed the ability to coordinate globally and act locally. The implementation of SAP across the Colgate supply chain contributed to increased profitability. Now installed in operations that produce most of Colgate’s worldwide sales, SAP was expanded to all Colgate divisions worldwide. Global efficiencies in purchasing combined with products and packing standardization – also produced large savings. •Before ERP, it took Colgate U.S. anywhere from one to five days to acquire and order, and another one to two days to process the order. Now, order acquisition and processing combined take four hours, not up to seven days. •Distribution planning and picking use to take up to four days; today, they take fourteen hours. In total the order to delivery time has been cut in half. •Before ERP, on- time deliveries use to occur only 91.5 percent of the time, and cases ordered were delivered correctly 97.5 percent of the time. After R/3, the figures are 97.5 percent and 99.0 percent respectively. •After ERP, domestic inventories have dropped one third, and receivables outstanding have dropped to 22.4 days from 31.4. Working capital as a percentage of sales has plummeted to 6.3 percent from 11.3 percent. Total delivered cost per case has been reduced by nearly 10 percent. 1. Referring to the above case explain briefly that in which business processes ERP was integrated in Colgate Palmolive to gain the remarkable results? 2. What are the important points that need to be considered for the timely Supply Chain. Explain briefly?

Answer 1

Colgate Palmolive case study:

ERP refers to Enterprise Resource Planning that is implemented by businesses to keep track of their business process and resoureces to increase the profit and growth of the company.

(1) Business process in which ERP was integrated in Colgate Palmolive Supply Chain are:

• Order Acquisition - For acquring orders and managing it properly it a well designed database.
• Processing - For processing order and tracking the order to resources available.
• Distribution - For distributing resources and order to correct manufacturing line.
• Planning - For evenly planning the manufacturing system.
• Picking and delievering.- For packing and delievering on time.

(2) Important ponts for timely supply chain:

Colgate Palmolive after implementing the SAP/R3 ERP system has cut down its order to delievery time to almost half. The points to note are -

• Keep track of the orders received properly.
• Distribute the resources efficiently.
• Cut down the packaging time so the to decrease the supply time overall.
• Deliever on time
• Deliever correctly.