Behind the Supply Chain Scenes at Clorox: COVID Insights Show Mindset, Digital Transformation Critical to 2023 Resiliency

Supply chain leaders are warily eyeing 2023 as evidence mounts that disruptions are here to stay. Today, digital transformation of supply chains has become “table stakes” within the industry, as companies address data silos, disparate systems, antiquated manual processes and a lack of end-to-end visibility. But a new mindset, solutions and tools have emerged to guide supply chain operators.

During the COVID-19 pandemic The Clorox Company became a towering example of how to move swiftly to manage unprecedented demand and leverage digital tools to conquer new frontiers. TUNE IN to our latest webinar as supply chain expert panel members, Bruce Richardson, Chief Enterprise Strategist at Salesforce; Mike Landry, CEO at ketteQ; Cy Smith, SVP, Business Development at ketteQ and special guest Rick McDonald, SVP, Chief Supply Chain Officer at The Clorox Company share their insights and address how leading brands are tackling a new landscape for operations.

The COVID-19 pandemic swept The Clorox Company into an unprecedented phase of product demand and supply chain management. As coronavirus cases rapidly rose across the globe, demand for Clorox products spiked as well, increasing by 500 percent above normal demand and forcing the revered household brand to make quick decisions and landmark supply chain moves.

It was uncharted territory, said Rick McDonald, SVP, Chief Supply Chain Officer at Clorox. The company was forced to make a lot of decisions fast without perfect data to make sure life-saving supplies continued to reach families, hospitals, and stores. One of the smartest things the company did, McDonald said, was to hire an onsite epidemiologist to help them determine how to keep employees safe and factories open. The real heroes, McDonald added, were the employees who came to work every day.

Catalyst for Change

A $7.1B global consumer goods supplier serving 100 markets in 25 countries, the 110-year-old company has consistently evolved its supply chain strategies. Clorox was starting its digital transformation six years ago, which gave the company a vital head start on pandemic conditions. Key to developing a resilient digital supply chain network is mindset, McDonald explained. Leaders need the mindset to reimagine what a digital supply chain could look like – one that can move at the speed of the consumer.

Self-evaluation of inefficient tools gave Clorox a story to tell leadership about the company’s risk profile of capabilities and what that meant for consumers and financial performance. It was a catalyst for a half-billion-dollar investment and the company embarked on a transformation journey.

Then COVID-19 hit.

Pandemic Insights

When a company is faced with a 500 percent demand forecast increase there are not a lot of tools that can help, but the extreme conditions pushed Clorox to isolate which SKUs to produce, among other swift moves. The company went from 115 SKUs to 15 SKUs and ramped up manufacturing of those, resulting in fewer overall product delays and enormous efficiencies.

As Clorox went from around a $6.1B company to a $7.1B company nearly overnight, internally there was a scramble. On time delivery was off, customer service was at half its normal levels, and yet a spirit of generosity had fines being waived and customers in an understanding posture amid unprecedented conditions. The company also found new supply sources, taking that search international and bringing on a half-dozen new manufacturers of quality wipes and getting product on containers in as quickly as eight weeks.

One of the things Clorox learned is that it didn’t need perfect information to make decisions. Enough information, coupled with good judgement can be enough to move, if attention is paid to the impact of decisions and shifts and correction can be made, McDonald said. The company learned it could move faster.

Coming out of the pandemic, the insights gained have remained. The company realized its product portfolio might not have to be so broad. Managers were open to evaluating their portfolios and eliminating products not turning a profit. But, importantly, pushing digital transformation was essential.

Just-In-Case Mentality

Post pandemic, there is a consistent them among supply chain executives. Companies have realized they do not have the visibility they need or the agility or resilience across their supply chains. Many have also come to realize that they need to rethink their entire supply chains to be able to keep up, because risks are persistently unpredictable now, McDonald added.

Publicly traded companies have traditionally had a just-in time mentality with just-in-time capacity, supplier redundancy and just-in-time working capital. Clorox moved from just-in-time to a just-in-case model and that has a price tag that goes with it, explained McDonald. The move also comes with a series of policy considerations and questions. How will you have the capacity needed? What about insurance policies for working capital? What should targets be and why? How many redundant suppliers do you need?  

The search for skilled labor also will continue to factor into capacity and resiliency building. A report out from the U.S. Bureau of Labor Statistics shows that some 5 million men of prime working age are still missing from the workforce and not actively looking for work. That continues to put pressure on the search for skilled manufacturing talent. Companies have been forced to widen the labor search lens, often including workers from a wider variety of skills backgrounds, to find people willing and able to produce products. Robotics, AI and automations are helping. Leveraging technology to handle repetitive manufacturing work, for example, is that approach companies should be taking. McDonald said.  

Tips and Tricks

Another insight gained post pandemic is having a pragmatic assessment of risks early. The pandemic forced Clorox to get good not just at coming up with plan A and plan B, but plan C as well.

It is also the right time to look at nearshoring and friend shoring as companies assess supply chain designs and strategies. Evaluating the supply chain strategy as part of the business unit strategy is key.  

An important component of that evaluation continues to be digital transformation. Technology and software tools are increasingly sophisticated at offering critically needed end-to-end supply chain visibility and more accurate demand forecasting for the coming year and beyond.

ketteQ solutions offer the unique benefit of being built of Salesforce and AWS platforms, offering continuously updated capabilities for data analytics, service parts planning, workflows, security and complete visibility.

2023 will continue to bring disruptions, said McDonald, but companies have learned valuable lessons that will lessen the impact of unpredictable conditions and allow companies to build and scale capacity and performance.

If you are ready to grow your supply chain business and increase visibility and peace of mind in 2023, give us a call to discuss how ketteQ’s solutions can rapidly transform your operations. Let’s connect.

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