Enterprise Planning Systems In Consumer Packaged Goods, Colgate

Consumer packaged goods ( CPG ) are the consumable goods such as nutrient and drinks, footwear and dress, baccy, and cleansing merchandises. As a general regulation, CPGs are referred to as things that get used up and hold to be replaced often, in contrast to points that people normally keep for a long clip, such as autos and furniture and other electronic points. They are by and large replaced or to the full used up over a short period of yearss, hebdomads, or months, and within one twelvemonth. This is in contrast to the lasting goods or major contraptions such as kitchen contraptions, which are by and large replaced over a period of several old ages.

CPG, besides known as Fast Moving Consumer Goods ( FMCG ) are merchandises that are sold rapidly at comparatively low cost. Though the absolute net income made on FMCG merchandises is comparatively little, they by and large sell in big measures, so the cumulative net income on such merchandises can be big.

FMCG industry, instead called as CPG ( Consumer packaged goods ) industry chiefly deals with the production, distribution and selling of consumer packaged goods. Some of the premier activities of FMCG industry are selling, selling, funding, buying, etc. The industry besides engaged in operations, supply concatenation, production and general direction. Although the CPG industry has been slow to put in new engineering, it is progressively turning to computerized and Web-based applications for client relationship direction ( CRM ) , supply concatenation direction ( SCM ) , enterprise resource planning ( ERP ) , and selling mechanization. Sellers including Oracle, SAP and Siebel Systems offer merchandises for the CPG sector.


About the Company

Colgate-Palmolive Company is an American diversified pudding stone and a transnational corporation focused on the production, distribution and proviso of family, wellness attention and personal merchandises, such as soaps, detergents, and unwritten hygiene merchandises including toothpaste and toothbrushes.

Colgate-Palmolive Company ( Colgate ) is a consumer merchandises company whose merchandises are marketed in over 201 states and districts globally. The Company operates its concern through two merchandise sections: Oral, Personal and Home Care, and Pet Nutrition.

Colgate ‘s Oral Care merchandises include Colgate Total and Colgate Max Fresh toothpastes, Colgate 360A° manual toothbrushes, and Colgate and Colgate Plax unwritten rinses.

Colgate ‘s Personal Care merchandises include Palmolive and Softsoap trade name shower gels ; Palmolive, Irish Spring and Protex saloon soaps and Speed Stick and Lady Speed Stick deodourants and antiperspirants.

Colgate industries and markets a scope of merchandises for Home Care, including Palmolive and Ajax dishwashing liquids, Fabuloso and Ajax family cleaners, and Murphy ‘s Oil Soap.

Colgate, through its Hill ‘s Pet Nutrition section, offers forte pet nutrition merchandises for Canis familiariss and cats with merchandises marketed in over 90 states globally

Business Challenge

Colgate-Palmolive is a planetary company, functioning 5.7 billion people around the universe in more than 200 states and districts. International concern represents more than 70 % of Colgate-Palmolive grosss. Colgate-Palmolive needed a exchequer system holding similar worldwide range.

Their exchequer operation in the United States is headquartered in New York, where they managed hard currency flow for the domestic subordinates and worked with international subordinates pull offing remittals and dividend payments. They needed the ability to make regional exchequer centres around the universe and back up them with a individual, incorporate exchequer system to pull off hard currency place, incorporate hard currency and exchequer direction, calculate hard currency flow and involvement disbursal, and associate hard currency and exchequer direction with proper fiscal accounting.

Colgate-Palmolive clearly defined those exchequer demands before choosing the SAP solution by set uping five strategic ends for the new exchequer system.

They wanted to

automatize hard currency place and entree fiscal markets rapidly ;

incorporate hard currency direction and exchequer direction ;

prognosis hard currency flows and involvement disbursal more accurately ;

enable concern integrating ;

and supply a templet for planetary application.

Further for an efficient direction of their warehouse operations, they decided to implement an ERP system, with a focal point on undertaking and resource

The new system had to supply complete integrating of exchequer minutess with other corporate systems, including histories collectible, histories receivable, gross revenues and distribution, and material direction. Operational cash-flow alterations had to automatically update the hard currency worksheet. In add-on, Colgate required entree to treasury information from anyplace in the universe, a individual system implemented worldwide in multiple currencies and linguistic communications, and common IT demands for back uping the exchequer solution.

Existing System

Colgate-Palmolive ‘s old corporate exchequer operation consisted of different systems for banking, foreign exchange debt, derived functions, and accounting. There were multiple ways of put to deathing the exchequer minutess across geographicss that did non back up a planetary vision.

SAP Chosen as a New Solutions Provider

Colgate-Palmolive turned to SAP Treasury to run into its demands. SAP Treasury linked the overall SAPa„? R/3 System execution at Colgate-Palmolive to to the full incorporate the full Colgate Palmolive exchequer procedure from be aftering and determination devising to the direction of fiscal minutess and places and the transportation of records to fiscal accounting.

Portability and integrating were the two biggest advantages and the grounds why SAP Treasury system was chosen. Portability was needed to accomplish the long-run vision of making a planetary exchequer information system. Unless everyone is runing on the same architecture, it would ne’er hold achieved that vision in a meaningful manner.

The new SAP Treasury direction system streamlined the exchequer operations in the United States and provided a good return on the initial investing.

SAP Treasury v/s the Earlier System

Determining hard currency place is the individual most of import operational responsibility that exchequer has and the corporations these yearss are measured on the truth and seasonableness of this information. SAP Treasury enabled Colgate Palmolive to consequence dramatic betterments in the truth and seasonableness of this information. ”

Earlier they were unable to bring forth a basic day-to-day hard currency place automatically. They used to take informations manually from three different systems and set it into a spreadsheet to come up with the hard currency place each twenty-four hours ensuing in a cumbersome, time-consuming procedure which prolonged their month-end shutting procedure.

SAP Treasury has allowed exchequer forces to execute more value-added undertakings within the corporation and compact the month-end stopping point. The SAP Treasury solution has accelerated the day-to-day hard currency processing, liberating up staff clip for other analysis. With day-to-day poster and rapprochement, the quality of information has improved dramatically. As a consequence, the month-end stopping point is now a non-event.

SAP Treasury collects lock boxes and prior-day bank statements for Colgate -Palmolive every twenty-four hours. The elaborate bank history statements update the gap leger balances of the hard currency place and are automatically posted to the SAP R/3 General Ledger as portion of an machine-controlled rapprochement of anterior twenty-four hours activity. The system besides polls same-day bank balances in order to register latest history activity in the hard currency place.

In concurrence with the liquidness prognosis of awaited hard currency influxs and escapes from receivables and payables including fiscal minutess ( e.g. commercial paper, debt minutess, involvement rate barters ) SAP Treasury provides comprehensive information to place a current or future liquidness shortage or excess. All this underlying information moves automatically into the day-to-day hard currency place and short term prognosis enabling the hard currency director to concentrate on analysis, non transactions.SAP Treasury tightly integrates hard currency direction and exchequer direction. The hard currency director now does n’t hold to pass yearss doing journal entries or working on the month-end shutting. All the entries are booked on a real-time, daily footing.

The SAP Treasury is besides used to make currency hazard analysis and enter fudging minutess to countervail the currency exposure. It besides implements the Market Risk Management constituent of SAP Treasury to measure market hazard, particularly on foreign exchange and interest-bearing minutess.

SAP Treasury besides manages intercompany histories for ongoing lines of recognition with Colgate-Palmolive subordinates and books remittals and surpassing loans through the intercompany history.

SAP Treasury is integrated with an inbound electronic banking solution from Cerg Finance and an outward electronic banking solution from Citibank-both SAP Complementary Software Partners-to allow Colgate-Palmolive to pull off its short, medium, and long-run payment flows and matching hazard places on a planetary footing.

SAP Treasury itself includes three important constituents:

Cash Management, to pull off electronic banking and liquidness analysis ;

Market Risk Management, to measure currency and involvement rate exposure ;

Transaction Management, to pull off fiscal minutess and portfolios in the money market and foreign exchange locales and for derived functions, securities, and loans.

Now, Colgate-Palmolive is ever reconciled. With such simplified dealing executing, real-time integrating of hard currency flows with the hard currency work sheet and real-time poster to the General Ledger, they have integrated operational flows into the hazard direction country. We are able to back up a planetary exchequer solution.

Colgate ‘s exchequer section provides the corporation with the critical information it needs. A common system with centralised development and care will let sharing information services across major geographicss and extinguish cost duplicate and inefficiencies. Integration across all of our operational units and geographicss will let them to account for debt, foreign exchange trades, and day-to-day hard currency motion easy. All journal entries are automatically generated whenever a dealing is completed, whether it be implementing a foreign exchange trade, financess, or puting up a new debt contract, or publishing commercial paper.

On the warehouse Management forepart, SAP warehouse direction package integrates with mySAPa„? ERP application at Colgate-Palmolive. Through it, the company automatically manages all the warehouse undertakings and the resources like users and equipments as and when required to execute the assorted undertakings. The package assesses current demands, the work loads and the physical location of resources and continuously optimizes the manner in which undertakings are selected and processed. This manner each measure is undertaken at the right clip utilizing the best resource for the occupation. The package and its integrating now ensures transparence of operations, warehouse planning and makes the functions of supervisors more congruent. They can now maintain a better control and even overrule sequences if bringing precedences change.

Colgate-PalmoliveA rolled out the solution ab initio at high-volume distribution centres in Latin America as a paradigm. The SAP warehouse direction package initiates the transportation orders for stuffs by bespeaking the start and terminal points of the operations. The assorted undertaking and resource direction functionality so breaks the transportation order into assorted stripped, distinct, optimized procedures. These are the pulled into a truckload into the distribution centre. By utilizing the cross docking functionality, by this clip the warehouse workers are ready and after holding been electronically assigned the unloading undertaking via terminuss mounted to their equipments. The warehouse direction system optimizes the handling of the green goodss and the supply to the large clients automatically.

Changes Brought by the Treasury in Colgate Palmolive Business Process

The full procedure for looking at hard currency at Colgate-Palmolive had to be changed, from start to complete. They had to alter their charts of histories as they related to hard currency histories. They now make the differentiation between booked and realized hard currency, which they were non able to make before the SAP Treasury execution.

On the warehouse Management forepart, there has been an increased optimisation and volume for palette and instance picking in all the warehouses and related operations. Colgate- Palmolive has streamlined their put-away and picking procedures and now utilizes equipment more expeditiously and bettering stock list truth to greater than 98 % .

SAP System Characteristics

SAP System Characteristics

SAP Applications: SAP Treasury

Hardware Platform: Sun

Operating System: Solaris

Database: Prophet

Number of Users: 12

Number of Sites: One

Execution: Rapid-driven by Accelerated SAP

Business Change: Significant alteration to exchequer concern procedures

Undertaking FINANCIALS

Rate of Return ( ROR ) : 25 %

Discounted Payback Period ( DPP ) : 3.3 old ages

Spouses Working with SAP: Citibank, Cerg Finance

Conclusion & A ; Findingss

CPG or the FMCG is defensive sector, with a comparatively inelastic demand and relies on economic systems of graduated table and big merchandise volumes with lower borders. The sector has a limited net income border and operating disbursal border. Neither the sector ‘s grosss dip when trade good monetary value rise nor incomes contract and neither do they spread out when monetary values fall or incomes expand. Further, there is besides a clip slowdown between the contraction/expansion of incomes and the impact on FMCG grosss. These are the merchandises of the `daily necessity ‘ and day-to-day usage, it takes clip for consumers to travel off or into these merchandises.

Rate of Return ( ROR ) , besides known as return on investing ( ROI ) , rate of net income or sometimes merely return, is the ratio of money gained or lost ( whether realized or unrealized ) on an investing relation to the sum of money invested. ROR for Colgate Palmolive is +25 % by implementing the SAP Treasury.

Discounted Payback Period: It is the length of clip required to retrieve the initial hard currency escape from the discounted future hard currency influxs. It is the attack where the present values of future hard currency influxs are cumulated until they equal the initial investing. The present value is calculated utilizing a suited price reduction rate. For the Above SAP Treasury System, it was estimated to be 3.3 old ages.

The altering planetary scenario and concern demands lead to the acceptance of newer engineerings to do sense of informations and automate concern processes. Management Information Systems are needed to supply a competitory advantage, operational excellence, to last and better client familiarity.

Associating of the SAP Treasury System with the Reuters provides them with up to day of the month information on Commodity monetary values which can assist the Colgate Palmolive Company to fudge in times of volatility in the monetary values of natural stuff to be used as ingredients in the merchandise section.

The employees are now more efficient in their functions as Finance Officers as they no more have to make the boring occupation of informations entry but instead do informed analysis and determinations.

FMCG sector is recession cogent evidence. Human Beings as clients will ne’er halt bathing, brushing their dentitions, creaming themselves, therefore the consequence of recession was the least on this sector. The Real victors have been those companies who have synergized their concern with Information Systems and supplemented their market portion by taking advantage of the volatile state of affairs in those times.

Integration of assorted sections in any Company, FMCG or otherwise is what will supply them with the competitory advantage to last and do new market inventions to drive better growing.