3M is betting on continuous improvement to navigate supply chain disruption, inflation, logistics hurdles

3M is juggling inflation, supply chain disruptions, demand spikes and logistic hurdles and navigates these issues with an ongoing focus on continuous improvement.

The company's fourth quarter earnings conference call served as a good proxy for what manufacturers are seeing across the economy. 3M saw fiscal 2021 organic revenue growth across its core businesses—safety and industrial, transportation and electronics, health care and consumer—ranging from 7.8% to 9.3% with operating margins a mixed bag.

3M CEO Michael Roman said the company's focus on continual improvement is helping offset various disruptions. "While focusing on customers, we also saw good benefits from our actions to drive productivity, improve yields and control costs, which helped offset the margin impact of supply chain disruptions, inflation and COVID-19," said Roman.

Monish Patolawala, 3M's Chief Financial & Transformation Officer, said the company is leveraging as much data as possible to "fine tune our analysis as much as we can on inflation." Patolawala leads 3M's IT and digital strategy as well as business transformation as well as CFO.

According to Roman, Patolawala's turf includes deploying digital capabilities such as its SAP ERP system, a move to the cloud and digitizing operations.

Patolawala said 3M, a Celonis customer, will continue to invest in growth, productivity and sustainability. To fund that investment, 3M is looking to continue to drive operating rigor.See more customer stories.

Indeed, Patolawala said 3M is focused on improving working capital via data and analytics to boost value. "If you actually see and do the math and (compare the) cash conversion cycle in Q4 of 2020 versus Q4 of 2021, you're actually going to see that the velocity of working capital went up," said Patolawala.

According to Patolawala, 3M will have to continue to manage through disruptions while improving efficiency to provide value. See: What is Process Mining?

"The macro environment in 2021 was defined by strong but fluid end markets, semiconductor constraints, supply chain and logistics challenges, along with ever-evolving impacts from COVID-19, particularly on the global health care industry. These dynamics were further compounded by winter storm Uri in mid-February, which led to significant disruptions to raw material supply and logistics availability, which further disrupted global supply chains," explained Patolawala.

3M also worked hard to navigate inflation and "drive improvements in operating rigor through daily management," added Patolawala, who also noted that data and analytics will be critical going forward. After all, inflation is being seen in many more places than before and that will impact what 3M pays for raw materials, said Patolawala.

"We are well positioned for 2022. And in the spirit of continuous improvement, there is always more we can do and will do," said Patolawala, who added that "driving supply chain efficiency, driving our factories, improving rigor, that's just something we're going to keep doing."

Larry Dignan

Editor in Chief (former)

Larry Dignan is the former Editor in Chief of Celonis Media. Before joining Celonis, he was Editor in Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine.