Colgate’s Classic Approach to AI for Supply Chain

For a company that is 218 years old, Colgate-Palmolive has shown a healthy appetite for new thinking on supply chain technology. I had a chance to talk to Colgate’s CSCO, Luciano Sieber, last week and got a look at how the global consumer goods company is approaching AI. The main message? Focus on practicality and scale.?

Essential to Corporate Survival? Yes?

AI is hot, and its potential to improve productivity makes it a “mandatory” element of supply chain transformation, according to 89% of CSCOs recently surveyed by Zero100. But this near consensus that supply chain organizations must tackle robotics and AI might lead some to jump without a solid plan.??

There is indeed a risk that too much rapid-fire investment with too little intentionality can trap an organization with little more than a science fair of interesting pilots. On the other end of the spectrum, this AI moment looks like the exact wrong time to play a wait-and-see game. Getting the balance right is a matter of practical thinking about what AI can do to change work processes, and, even more importantly, scaling with good data, solid training, and measurable impact on growth, operating efficiency, and resilience.?

For Colgate, one part of applying this sensible approach is to build on past success. Traditional discriminative AI, for instance, has helped improve manufacturing quality and uptime with predictive maintenance tools. In replenishment planning, the company has also experimented with AI decision support tools to improve in-stock performance. And, on the commercial side of the business, generative AI tools have shown results with a better e-commerce customer journey via product detail landing pages. As stand-alone investments, each of these examples has potential. Pulled up to a higher level, they can combine to create substantial enterprise value, assuming they are scaled across the wider business.

Not Just Survive, but Thrive?

The massive boom in AI stock valuations, and to some extent, the wider bull market for all stocks, suggests investors see more than just survival as an outcome for those who can scale AI. One consumer goods CSCO I spoke to last week said of the potential impact of AI on enterprise value:?

Investor expectations of AI as a powerful general-purpose technology akin to electricity or the internet are at least partly responsible for the Dow Jones breaking through 40,000 recently. Colgate-Palmolive may be a standard bearer for this optimism with a share price up almost 30% over the past year, nearly three times better than rival Procter & Gamble.?

The Classics Never Go Out of Style?

Colgate is usually the oldest company on the attendee list at any supply chain conference. Balanced, stable financial performance and a classical hierarchy of operating metrics are central to the company’s culture. And yet, innovation and leadership on technology, sustainability, and organizational strategy are key to its continued growth.??

One example may be the recent creation of an SVP role for Supply, Demand, and E-Commerce within Colgate’s global supply chain organization. This role institutionalizes the concept of an “end-to-end” supply chain, which makes it easier to think practically about how technology scales.??

Another is Colgate’s approach to automation. It starts at a plant level, looking first to site leaders and operators in places like China and Vietnam, whose digital skills are generally far more developed than those in North America and Europe. Coupling this ground-level perspective with system-level thinking about metrics like “robot density” helps ensure practical lessons are balanced with strategic thinking to benefit the whole company.

Consistent performance is easy to overlook in a world where glitz gets the most clicks, but it’s always something investors appreciate in the long run. Colgate is not the only company that thinks this way, but it is a good example of how to win with AI.?