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Global Smarts: Colgate-Palmolive Finesses Procurement

As Colgate-Palmolive Co. expanded its global presence in the '90s, it became clear that disparate systems around the world and the inability to see inventory in real time was hampering its ability to "enter into the adventure," CIO Ed Toben says. That's when the company opted for standardizing on SAP's core ERP suite from distribution to manufacturing to finance to human resources. -- Sidebar to: ERPzilla
As Colgate-Palmolive Co. expanded its global presence in the '90s, it became clear that disparate systems around the world and the inability to see inventory in real time was hampering its ability to "enter into the adventure," CIO Ed Toben says. That's when the company opted for standardizing on SAP's core ERP suite from distribution to manufacturing to finance to human resources. "We went from many applications--quite frankly we couldn't count them all--into a core SAP R/3 platform in five deployments around the world," Toben says.

The strategy worked. About 70% of Colgate-Palmolive's $1.32 billion net income on more than $10.6 billion in annual revenue last year came from sales outside the United States. With so much business being done outside U.S. borders, the company is taking greater advantage of the Advanced Planning and Optimization module, a component of mySAP's supply-chain software that includes demand and production planning. The module will help Colgate-Palmolive move to regional-procurement systems for the direct materials it uses to manufacture products from toothpaste to pet food and for indirect products used throughout the company, such as computers and paper. Colgate began installing the module in 1998, even before it completed the first phase of its worldwide R/3 rollout that now extends to 15,000 users.

As Colgate has pushed its global R/3 model forward, it has made sure to define and standardize core tasks of more than 100 business processes. "A huge advantage is that, in time, the process matures and improves," says Toben, and newer deployments can leverage the lessons the company learned from earlier ones.

On Colgate's plate now is upgrading to SAP's NetWeaver integration technology. SAP modules beyond the core R/3 functions, such as the business-warehouse, supply-chain, and CRM systems, aren't fully integrated with the traditional R/3 ERP functions, Toben says, so using NetWeaver "to try to have a more seamless process of 'weaving' all that together makes sense to us."

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