An company strives to be the leader in its industry by carrying out a well-designed strategy that includes the company objective, vision, prices, goals and targets so that it can attain its long-term competitive position in the market. One of the vital components of any business company is its supply string strategy and it needs to be properly aligned with the business enterprise strategy (Bhardwaj & Mitra, 2010). Any business that will not have a well-integrated Source Chain Management (SCM) strategy struggles to successfully meet the demands of its target market.
The SCM strategy ensures that the logistics of the company are planned out in advance so that there surely is adequate supply of raw materials, minimum degree of inventory is maintained and the supply chain functions' cost is reduced; many of these measures ensure that an organization is able to generate an appropriate amount of earnings and keep maintaining its strong position in the industry (Cho et al. , 2011). Every strategy in the SCM consists of the program that the company will implement for reaching its goal of capturing the mark market and enhancing the satisfaction level of consumers.
According to Sehgal (2011), the success of a resource chain strategy mandates the adoption of SCM strategy that is properly aligned with the organization's business strategy and ensures that its resources and features are utilized in highly effective manner. The business strategy of the company is defined as the key component that guides the business in making decisions that are compatible with the requirements of its objectives so that it can make successful development and improve its profitability effectively. It is assumed that SCM strategy is highly dependent on the business strategy as it is the basis on which most of the companies want to contend in the market and gain competitive border for long period (Elgazaar et al. , 2012).
For instance, in case a company is offering personalized products like Dell, then it has to ensure that it has an efficient and coordinated SCM strategy which will assist it in satisfying the demands of the clients perfectly and on time. If Dell encounters lack of key parts or prices of its raw materials go up significantly, then it'll be unable to provide products at reasonable prices. However, the success of Dell is basically dependent on the introduction of a powerful SCM strategy that works with with its business aim of offering personalized products to the consumers at cheap rates with the quickest delivery process (Green, Whitten & Inman, 2011).
As the organic material issues are being encountered by the companies worldwide, it is becoming important for every organization to enter into contractual contracts with the suppliers such that it can minimize its risk of facing any organic material shortage in its business tenure (). With the help of variable cost agreement, both the buyer and owner will have a win-win situation; each get together will get contact with the features of changes in the price. The seller is secured from the upsurge in price that could have eroded the margins and the buyer can avail the reduced listed product if the price of commodity declines during the period of a contract (Business for Public Responsibility, 2008).
Hence, an SCM strategy should be developed relative to the organization's vision, quest and goals so that it is compatible with its business strategy and offer support to the company for gratifying its guarantee of delivering the products and services within decided time frame (Elmeziane, Chuanmin, & Elmeziane, 2011). It really is vital for each and every firm to understand that if the source chain strategy lacks alignment with the business enterprise strategy then there are huge chances that its business businesses get severely impacted; in some extreme cases, the companies have undergone personal bankruptcy as well.
Introduction of Colgate-Palmolive
Colgate-Palmolive is one of the leading Multinational Companies that has been give top rank in the buyer products category. It has its head office in NY which is believed to have an asset of $94 billion that consists of all its products that it is advertising in more than two hundred countries. Colgate-Palmolive is mixed up in business of manufacturing and selling of varied consumer products that include cleaning products, soaps, toothpastes and dog or cat supplies; it includes broadly categorized its products into two categories i. e. Dental, Personal and Home Good care and Pet Nourishment ("Supply String Management", 2012).
Since the company has its procedures in various areas across the globe, it is of huge importance to truly have a well-integrated system that will assist in productive and quick exchange of valuable data and information. First, Colgate-Palmolive had a decentralized framework that was creating many issues in its business procedures especially in Supply String Management (SCM). In November 1999, the management team of the business decided to revamp its IT infrastructure by applying a distinctive and impressive system that ensured integration of each function throughout the business across all its functional activities on international level (Bolstroff, & Rosenbaum, 2011).
The global SCM system of Colgate-Palmolive has been substituted with SAP R/3 solution such that it can capitalize on its resources along with augmentation of the global SCM management so that the vendors, customers and management were provided service of superior quality, inventory cost was controlled to a great extent and earnings stream started to increase at a good rate (Blanchard, 2010).
Colgate-Palmolive eyesight and core values
To offer development opportunities to the business's employees both on professional and personal levels.
To gratify all Corporate Public Responsibilities as an integral member of the community on global level.
To improve the value of shareholders.
To develop operations and policies that will ensure that the company is able to fortify its position on the market and individual industry.
To explore all latest initiatives and opportunities that are existing on the market.
Supply Chain Composition of Colgate-Palmolive
In order to solve the main issue of Colgate-Palmolive, Colgate's global source chain system originated; the three key supply chain strategies that shaped the basis of the system. The first one was the release of owner Inventory Control (VMI) product so that there is a decline in the inventory route and timing of the cycle as well. The next strategy was the implementation of a source of information planning system at cross-border level so that regional models were developed for the international habits; it ensured that the business had enough pool of possessions so that there is a balance with the company's business strategy.
The last and last strategy was execution of the collaborative program that guaranteed there is a well-balanced downstream business system for effective management of the marketplace demand of resource chain along with effective coordination of the system's activities. With the help of new system, everyone in the organization is well-aware of the supply chain information; the IT system has enhanced the company's SCM system which includes helped in using the supply chain information with reliability so that the consumers always experienced quick access to the products and the shortage problems was reduced by 50% in the first three months of the SAP R/3 implementation.
Global Resource Usage in Colgate-Palmolive
When new and progressive systems were installed in the company that made up of SAP R/3 ERP software along with Oracle related DBMS (Databases Management System) and Solaris OPERATING-SYSTEM developed by the Sun hardware platform, the company could take benefit of a well-integrated system. Colgate-Palmolive could integrate with its cross-regional reference use systems (CBS) demand and reference information about the international demand effectively. Since the input was rapid, there was an increase in the number of shipments, reduction in the amount of improper or imperfect orders and a significant decline in the amount of inventory.
With the help of the latest SCM system, the suppliers got developed direct links with the business's production unit plus they were accountable for effective management of resources at the distribution centers for supplementing Colgate-Palmolive business operations. This new system is dependant on the order movement of the customers and powered by the syndication centers of Colgate around the world as the suppliers are now directly supplying the merchandise.
The business control strategies in CBS are backed by SCM system of SAP that is intensely dependent on the signs of daily demand along with the replenishment purchases of inventory that happen to be dependant on the calculation. With the help of this system, the source and demand level is retained at a constant level that helps the company in being more responsive to the fulfillment of special orders. It has been observed by the business that there surely is a significant decrease in the forecast inaccuracy, product inventory level is reduced, increase in the number of orders fulfillment, decrease in pattern time and the completed orders rate is further improved.
The SCM strategy has three main elements for real-time integration model i. e. SAP support system for stock, purchases and other indices of market, real information about the customer order needs and effective integration of ERP, SCM and CRM systems. The business is aiming that the SCM strategy is effectively applied in all its firms across the globe; VMI, collaborative engine unit and CBS are put on all shopping malls and brands so that effectiveness of SCM can be monitored effectively.
As the supply string information is more obvious, there are high chances that the company has access to timely, constant and appropriate data that will ensure that the planning decisions are made efficiently so the company can achieve its goals successfully. To be able to ensure that there surely is an effective decision-making process throughout the venture, Business Intellect System will allow Colgate-Palmolive to acquire fast access to precise and consistent data.
With the help of SCM system, the company can improve its market competitiveness along with building up its position in the global business development, increasing competitive edge in the price warfare and marketing its products in a tactical way. In order to enhance its business operations, Colgate has integrated its e-enterprise by expanding cordial and better relations using its lovers and customers.
For every corporation, it is important to truly have a well-integrated SCM system that will ensure that its source string strategy is complementing the business enterprise strategy. With the help of a highly effective SCM system, Colgate and its consumers and partners can have quicker and on-time purchases, creation planning and inventory management works well done, order fulfillment rate raises at a higher level, forecasting is successfully completed and performance of the company can be easily checked.
Hence, Colgate-Palmolive has completely revamped its SCM structure such that it can maintain its image as a global leader in the consumer products market by fulfilling all orders promptly and controlling the expenses that will assist it to make investment in other alternatives for further development decisions. Therefore, a highly effective SCM system is one that is aligned with the business strategy which will ensure that the business is able to achieve its objectives effectively, productively and profitability.
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