Build to Adapt, Not to Last: Church & Dwight's Manufacturing Evolution

I'm Jennifer and this is 0100, the Unboring Supply Chain Podcast. What happens when you inherit a supply chain that makes everything from oxyclean laundry products to clump in seal catalytic to trojan condoms? And you realize these massive, rigid manufacturing lines built to run forever are actually holding you back. Carlos Ruiz joined church and white just over a year ago as chief supply chain officer and he's making a bold bet. Stop building lines to last and start building them to adapt. Today we're talking about what happens when the business needs to pivot faster than your depreciation schedule. And when the future of manufacturing has less to do with how long your equipment lasts and more to do with how fast you can reconfigure it. Carlos, welcome to 0100. Thank you very much, Jenna. Thank you for having me. Happy to have you and really looking forward to our conversation today. And Carlos, you recently hit your one year anniversary as chief supply chain officer. The church and white, this company with an incredibly broad portfolio. When you walked in the door, what surprised you most about the complexity of running operations across such a diverse set of products? Yes, it's a little bit over a year and a lot of things surprised me. At first, we have a great team. We have a lot of technical knowledge and a lot of experience and a very lean and mighty team, I would say. Another thing is, as you mentioned, it's our portfolio. It goes from personal care, animal feed, specialties and also household. So that was surprising because the way that we organized today, we've been growing a lot and we never stopped reorganizing the supply chain teams, but also the way that we produce and we manage our products. So that was a little bit surprising at the beginning. And the third thing is we have been growing a lot, as I mentioned it before. A few years ago, we were a two billion company today, we are a six billion company and a lot of the growth has been coming through acquisitions. Armand Hammer is a powerful brand, but other brands, like you mentioned, TheraBret, Hero, are brands that have been growing a lot in the last few years after our acquisition. And that requires changes that we are about to start. One, as a huge lover of the Hero patches, I appreciate that that's continued to grow because they keep me from certainly picking it acting on my face. So just want to have a quick shout out there. Great. But two, I want to talk a little bit about the state of operations when you joined. Obviously, we're going to get into kind of where the business is going and how it's evolving. But what was the state of operations when you walked in the door? Again, as we've been growing, we have created a lot of strong functions. And I have to mention that my predecessor, Rick Espandita, great job after a strong career in call gate, coming and transforming the operation, improving manufacturing, bringing a lot of lean concepts to the company. So the operation was strong, was very stable. And I would say it's the foundation that we needed to go to the next level. I've been telling my team is we are about to start a revolution, not a revolution because not a lot of things needs to change. We just need to both and go to the next level. So saying mention is strong manufacturing, strong functions, a lot of technical capability and now is so returned to go to the next level. So sounds like we had a really strong foundation in operational excellence when you joined. But as you approach this kind of next wave, this evolution, this revolution, how are you thinking about continuous improvements specifically? And what maybe needed to change about the approach to continuous improvement as you're thinking about this next evolution of the business? The first thing is we have a very strong lean principles in manufacturing and in the corporate functions. We implement TPM. We started to talk about different parts of the what I call operational excellence because at the end of the day, operational excellence is a mindset, is a culture and is the integration of many things that needs to happen, not only in manufacturing. We know lean manufacturing, but lean is a principle that goes end to end in the whole organization to enter price. So we are moving now to an operational excellence concept where we're going to be integrating TPM, lean, maintenance reliability, even considering how do we bring that performance culture at different level in EHS safety and all these cultural areas that needs to be moving towards excellence in performance. So we are integrating those concepts. I have had the opportunity to see that working in my previous life in craft. We did it in L'Oreal and now is the time of George Andouye to move from lean on TPM to operational excellence and the team is excited about it. And you mentioned when we talk about operational excellence, it's culture, but it's operations at the same time. I want to get a little bit into more of the physical operations and I've heard you talk about this concept of build to adapt instead of build to last. It's this idea that we need to move away from these big rigid operations lines towards something that's more flexible. Can you give me an example of what that looks like on your factory floors and maybe how digital technology can help you get a little bit closer to what customers are the business actually needs? That's a great topic. We have seen that we are moving from economies of scale to economies of repetition. We as consumers, when we go to the grocery store, when we go to even to buy online, we are looking for a lot of different products and specific products. I remember many years ago, you used to go and you had to catch up sizes and two or three brands and that's it. Today you can go and you can find ketchup with Syracia, with Calapeno, sugarless and that's just an example. We are looking for specific things. So we as manufacturers and producers, we need to find a way to do it in a better way. So build to adapt is still valid with some specific products that require minimum change or the change is becoming after many years and that's worth it to build a strong line and not a lot of adaptability but a lot of scalability. Build to adapt is a concept that we are pushing hard because we as consumers, we are looking for something new over time and sometimes that can be one, two years but in some cases within a year we are looking for something different and we are looking for different format or different products. So now we are changing that to have more flexible equipment, more agile equipment that can have fast changeovers that can produce many different SKUs in the same piece of equipment because that's what is required by the business. A good example is let's say when you are producing a liquid laundry and the format is going to stay there for years because it's normal to have it and the innovation is more in the product than in the packaging. You can build a line that can run to 100 to 150 pieces per minute and that's okay because it's going to be less SKUs and you just run fast and a lot of product. But when you are producing a thread where we have probably six to ten different flavors and then you have different formats, you want to have a line that you can change fast and not necessarily 200 pieces per minute. You may want to have four smaller lines that can produce 50 pieces per minute but you can produce four different flavors or two different SKUs so that's a concept of build to add that more than build to less. As you tell the story I just keep thinking that your marketing and commercial teams must absolutely love that level of flexibility. How has this approach in manufacturing helped you partner better with those commercial teams? Coming back to even the previous questions about how digital enable this is of course I consider supply chain as a neighbor of growth. We are here to support the growth and a lot of the growth may come from different products, different launches, innovation and we need to be ready to support that innovation and reduce the time to market because the reality and the opportunity is not going to allow us to wait 12, 18 months. We need to react faster and that's how we do it and the connection with marketing and the connection with the customer and the consumer is very important and that's when I see a big play of digital, like demand sensing, how can I get consumer insights faster through our marketing teams but all the way to our suppliers and our manufacturing plans to be ready to launch the new product faster. So I think that's how we are working today. It's still a lot of work to do because as you can imagine we cannot just replace all the equipment and we need to develop the technology and we need to work with the OEMs to build and develop those new lines but we are starting to work on that and I can see that happen in prison. I think you've got a very similar mindset to some of the other manufacturing leaders that we work with here in the 0100 community but many others have shared with us that oftentimes things like a capital investment committee or a board decision ends up being a bottleneck to making these investments in highly adaptable equipment and oftentimes boards want to see something like a 15 year equipment life and that equipment now might be obsolete in three years. How do you justify investing in adaptability over longevity and how has that conversation gone with the kind of decision makers within your organization? I appreciate part of the board because that's the job that they do. They try to recommend us and guide us to make the right decision. The way that we work in Torchandod and the way that we are approaching these changes is bringing very strong business cases and the way to do it is a lot of us in the industry. We know that we can go and get support with contract manufacturers to produce a lot of those short runs or very difficult. use, but of course that has a cost. So how can we really enable our teams to build a strong business cases that can make it attractive? A lot of investments that we are doing is because we are bringing back to our manufacturing plants, those products instead of paying outside. So for me, the way to present to our management team and our leadership is what is a business case and what is the value that we are going to get after these investments? We spend a lot of time here at 0100 talking about kind of the skills of the future and really interesting that you share value and storytelling. Because oftentimes we get very focused on some of the functional and operational skills. But what we've seen in the data is that skills like storytelling and financial management are rapidly on the rise, especially in the manufacturing environment. So really glad to hear you reference those specifically as an enabler of the investment within your facilities. I'm going to switch lanes a little bit though and talk really about some of the specific automation and digital tools that you utilize because we know you've got this incredibly diverse portfolio, different SKUs, different brands, different products. How do you decide what goes where? What needs really basic automation versus what needs kind of best in class? So the way that we are approaching it is there are three different levels that we're trying to address. First is automation and sometimes this mechanic is when you see value of putting automation in manufacturing because people is doing repetitive work because people is having some ergonomic algorithm. So those are the first step. When you have to address a safety issue, we need to go and do it. Or perhaps productivity. When you see somebody not really adding value but doing something that is repetitive that a cobalt or piece of equipment can do it and be consistent 24/7. So that's the first step. The second one is all the repetitive actions that is more mechanical. I would say in crunching a lot of data and putting together a lot of information. We want to avoid that. The team is starting to do a lot of robotic process automation, RPA, to make sure that we focus our teams to add value, to analyze that information, to make decisions instead of spending hours and hours to put it together. So that's the second level. Now having all that information, it's how do we automate some of those decisions. And to do that, we're focusing on making sure that we have a clean data lake. We have only one source of truth that our data is mature enough so we can make decisions with the right information. Because the worst thing that we can do is do an automation on information that is not real or is not relevant or the automation is going to be having the wrong output. So we are not focusing on making it faster or taking people out of the loop for us is to make the right decision at the right level but having the right information. And of course all this process needs to be driven by people. When I say driven by people is we are just going to make sure that the decisions that are made today by the people that has a lot of experience and understanding of the business are going to be made in the future by agents or by AI. But our people is going to continue adding value and continue developing the operating model that is going to be the source of that decision making. So we're in that process. We have started with our planning. We're collecting a lot of information in manufacturing and in procurement that's where we believe that the data maturity is ready to start putting on top of that data lake the right agents to make decisions. You spoke a lot about people when thinking about where is the right place to add AI, automation, etc. I want to get a little bit deeper into that because you need different kinds of people to pull this off and you're going to need obviously some deep technical folks and folks that can handle the translation between the business and the technical side. How do you build that in an organization that's been more traditional manufacturing? Yeah. So what we are seeing now is that the word that we are doing today is different from what we need to start doing and what we will be doing in the future. So we are redefining the organization where we put people more to make decisions in to end. When we have people more understanding what is the business and how can we add value to the business instead of just doing our functional task. That's how we're transforming the organization to make sure that people understand the business and how can they add value. In terms of skills, probably you have heard many times this that we are not going to lose our jobs for AI. We are going to lose our jobs if we don't learn how to use AI and embrace AI. So the first thing is give our teams access to this transformation. Make them part of the change and develop those capabilities because the idea is not to replace people is to develop people and bring the teams to the level of technical understanding of how to use those tools. So that's what we start to do and yes, in the future we will need less people with hands-on fixing or doing things or crunching data, but more people understanding the business and making decisions and developing the AI solutions. And that's where we are today. And you talked about how these roles are really expected to think bigger picture, connect across the business systems thinking as a core value enabler. What is it that you can do today with that thought process that maybe you couldn't do before? And that's you or your organization. We need to reflect in our structures what we want people to do. If you are somebody to be an expert in manufacturing or expert on planning, people is going to do that, but we are probably not going to have the visibility of the end to end and how can we add value. So first is creating organizations that have end to end visibility and clarity from my perspective, clarity on how can I add value and what are the business needs and how can I enable the business to continue growing and to continue performing and to do that we need to have the right organization, but also expose our teams to those different roles where they can make the decision. I'm a firm believer on cross functional development. I'm a firm believer that our teams need to experience the different steps on the value chain to really have that end to end visibility in order to make the best decisions. So you're here on a 0100 podcast. We have to ask at least one question about AI and manufacturing before we wrap up here. And we know everybody's talking about its CEOs are throwing around AI at a very high level, but before we wrap up, I want to hear from you the real talk. When you talk to your peers, what's the reality? What are you actually seeing for AI and manufacturing versus what's a lot of the hype out there? Now what conversations is very open to exchange? What are we doing? What do we know and what we don't know? And I think a lot of us, we are trying different things. And in this community, the good thing is you can share and you can learn from others. And we are learning that there is not a silver bullet today. Nobody can go and say, oh, go with this company or go with this solution or with these agents because we know that it depends. It depends on how do you embrace the solution? How do you train your people? How do you manage the change? Because from my perspective, the most critical thing that we all agree is the challenge is not in the technology or in the people is how do we communicate to the people and embrace the change with a strong change management, enabling the teams to adapt to the technology and to embrace a new technology. So from my perspective, we have something in common. It's going to be a big change. We are all committed to do it and we need to enable our teams to go to this next chapter in the history of manufacturing and general supply chain. But at the same time, we don't have clarity on what is the right tool today or what are the pros and cons of all the tools that we have available. So what I'm hearing is it's not necessarily about the tech or the tools, but really the talent and how the organization is ready to adopt and adapt. Totally. I really think that if you ask me what are the things that I want to anticipate is the change management. The technology and the tools are going to be there. We need to make sure that our teams are ready to take them and drive with them because we have to demonstrate that our teams can do everything, but we just need to enable them. Carlos, one last question for you as we wrap up here. This has been an incredible conversation from Aron. You're building something really ambitious with church and Dwight. When you think about success, what does it look like three years from now? What's that picture in your head? Maybe even five or 10 years from now? What does it digitally enabled church and Dwight look like? What I see in the future of church and Dwight is to have a very strong understanding of the different supply chains that we manage. That is the household supply chain, the personal care supply chain. I can see that we are getting really fast signal and demand signal from what is being consumed all the way to our suppliers. We can really anticipate the consumption. We manage products that are heavy, are bulky. Today our distribution network is strong. While we continue growing, we need to continue making sure that our manufacturing distribution network is strong and is reflecting the consumption pattern. So that's how I see George and Biden in the future. I love it. Carlos, thank you so much for joining me today. I think you've given our listeners a lot to think about when it comes to adaptability, to economies of repetition. I really liked that little phrase that you shared with us. And then I think more importantly, what does the talent evolution look like over the time? How are you preparing your teams and your people to really adopt and embrace the forthcoming change of the technology that we have? And as always, a special thank you to Alicia Eileen and Ciersha O'Leary for production. For more insights from 0100, you can find us on LinkedIn at 0100.com or on our Members app. And if you enjoyed this episode, leave us a review or a rating wherever you get your podcasts. I'm Jennifer Inc., and this is 0100.