P&G, once known as the preeminent household products supply chain company, is under attack. On February 15, 2017 Trian Partners, led by Nelson Peltz, purchased over a $3 billion stake in P&G qualifying him for a seat on the board. In prior years Trian Fund Management LP drove shareholder activism at PepsiCo and DuPont. The investment in P&G is their largest shareholder investment to date.
After two years of declining operating margins, Household Products Companies rebound in margin in 2016. With the reporting of full year results, the industry trend is clear. The margin improvement is due to a rise in price, and focused cost-cutting programs on labor productivity and sourcing. Note the patterns in the Clorox, Kimberly-Clark, and P&G results. P&G is making the greatest improvement in inventory turns while Colgate enjoys the highest margins.
The definition of a trap is something designed to catch a person or animal,
either figuratively or literally.
Nine out of ten companies are stuck. Their supply chains are not improving corporate performance. Despite multimillion dollar technology projects, and tomes of strategy documents, they are stuck in their ability to overcome market factors and rising complexity to drive continuous improvement on a portfolio of metrics.
Over the course of the last six years, I have helped many companies with their demand-driven initiatives. The Kimberly-Clark organization has been my best student. Their transformation took six years. The results are now clearly visible on the balance sheet. In this blog post, I would like to celebrate their story.
Bookend: be positioned at the end or on either side of (something)
I take supply chain seriously. My friends might tell you TOO seriously. I think that the entire world should. I believe that better supply chain practices can save the world, and I think that it makes a difference in warfare and welfare. I think that it is at the core of the Gross Domestic Product (GDP). Yes, I am an unabashed zealot.
I have been at it for a long time. I have gray hair. Some even call me a Shaman. Some use worse names.