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to better forecast its demand. That allowed the firm to reduce inventory and redistribution
expenses that occur when too much of a product is sent to one place and not enough to
another. Those supply-chain improvements accounted for a major part of the $325 million
Nestlé USA says it saved from its ERP implementation as of May 2002.
Colgate-Palmolive
Another company to consolidate its data is Colgate-Palmolive. With its headquar-
ters in New York, New York, the Colgate-Palmolive Corporation is the owner of some of
the most recognizable and widely used personal, household, and oral care products in
the world. This includes Colgate toothpaste, Mennen Speed Stick, Softsoap, Palmolive
dishwashing liquid, and Ajax detergent.
In 1994, the corporation used a series of IBM AS/400 minicomputers, several
mainframes, and a disparate set of business applications. The varied applications along
with the existence of 75 independent data centers contributed to an environment that
made it very difficult to track organizational resources. To address the problem, Colgate-
Palmolive embarked on a project to address inefficient processes arising from poor data
management practices (Barlas, 2002).
Colgate-Palmolive’s strategy was to integrate the dozens of dissimilar legacy
systems and applications into a single data system using a single data model. In addition,
the company wanted to decrease the amount of time products spent in the supply chain
by getting closer to a single information flow. Like Nestlé USA, Colgate-Palmolive chose
an ERP solution. The solution composed of SAP’s R/3, which is a comprehensive set of
integrated business applications. The system uses client-server architecture to provide
storage, retrieval, analysis, and processing of corporate data. The system supports
financial analysis, production operation, human resource management, and most other
business processes. This entire process began in 1994 (Konicki, 2000).
The corporation looked at its entire supply chain, from the purchase order to cash
in the bank, as an integrated process. Colgate-Palmolive analyzed all of its processes and
made appropriate changes (Barlas, 2002). The firm then implemented R/3 in its North
America division creating an operational template from business, IT, and data manage-
ment perspectives. Having established the template, Colgate-Palmolive extended R/3 to
its other geographies around the world (Barlas, 2002).
Colgate-Palmolive also used its new integrated approach for its e-business strategy
(Barlas, 2002). This business-to-business strategy included a mySAP.com-based private
exchange to connect the company with its suppliers through Transora, a consumer-
packaged-goods (CPG) manufacturer-supplier exchange company. Colgate-Palmolive’s
SAP applications were also integrated with its suppliers via XML (eXtensible Markup
Language) messaging so that the suppliers could retrieve Colgate-Palmolive’s SAP
information (Konicki, 2000). The company also engaged in vendor managed inventory
(VMI) with its various retailers’ distribution centers. The change made it possible to do
collaborative planning, forecasting, and replenishment (CPFR), and promotional plan-
ning with a number of its partners (Barlas, 2002). This enabled the suppliers to look at
Colgate-Palmolive’s product plans and inventory levels and automatically replenish
materials (Konicki, 2000).
At the finish of the project, Colgate-Palmolive managed most of its global opera-
tions on SAP’s ERP platform while integrating some of its older legacy systems. The