Digital transformation and sustainability are key concepts at Henkel, the multinational group whose products have been appreciated by generations.

Germany-based Henkel operates globally with leading innovations, brands and technologies in three business areas: Adhesive Technologies, Beauty Care and Laundry & Home Care. With a global workforce of over 52,000 people, in 2019 the group reported sales of more than 20 billion euros and adjusted operating profit of more than 3.2 billion euros.

The Laundry & Home Care business unit is the cornerstone of Henkel. The unit holds leading positions in many markets and categories around the world, and is the very basis of Henkel’s development – it all started here in 1876, when Fritz Henkel aged 28 founded the company Henkel & Cie in Aachen, Germany.

The company’s first product was a laundry detergent based on sodium silicate, named “Universal-Waschmittel” (universal detergent). Since then, this branded consumer goods business has grown into a globally active unit with well-known brands, such as Persil, Purex and Pril. For consumers around the world, Henkel’s brand names have become an integral part of their daily lives.

Digital transformation

The company’s future is guided by a long-term strategic framework with a clear focus on purposeful growth. Creating superior customers and consumers value to outgrow markets, reinforcing leadership in sustainability, and empowering its employees through a collaborative culture are crucial for this strategy.

With a strong foundation and company culture, Henkel wants to leverage innovation, digitalisation, and sustainability. Therefore, Henkel is continuously stepping up its investments to optimize business processes along the entire value chain. Delivering growth through its digital global supply chain is only one key pillar in the company’s digital transformation journey.

“When it comes to Laundry & Home Care, we have transformed our supply chain over several years in various phases and in the current phase we are really digging deep into digital,” says Mr Holbach, who – with more than 20 years of experience in supply chain, operations, purchasing and sales, has a specific focus on supply chain strategy and organizational development, network optimization, continuous improvement, and post-merger integrations.

“Everything we do in supply chain is embedded in our purposeful growth strategy,” he affirms, adding that the company’s technology, people and data capabilities must all work in parallel to ensure the transformation is a successful one to ultimately serve best our customers and consumers.

“Needless to say, people are key. Henkel has a feedback-driven culture and work is organised within cross-functional teams while supporting flexible hours. We must ensure that all of Henkel’s employees have the opportunity to upskill themselves, by having access to digital learning that will enable training on the capabilities that are relevant today and in the future. It is vital to give the employees time to understand and embrace new technologies and provide targeted support and training.”

Focus on sustainability

Digitalisation is not only crucial to meet the growing customer and consumer expectations on service in today’s fast-moving world, it is also an essential pillar to leverage sustainability. With Smart Factory concepts, Artificial Intelligence and Augmented Reality, Henkel is already on the right track towards Industry 4.0 with its digital global supply chain worldwide.

At the beginning of 2020, the company was recognized by the World Economic Forum and McKinsey for its state-of-the-art Laundry & Home Care factory in Düsseldorf. The company was chosen from over 1,000 competing factories – it is now part of a network of the world’s most innovative production facilities. Technology and data are crucial enablers to delivering growth and sustainability at the same time.

Mr Holbach acknowledges that as a global company, Henkel is aware of its role in promoting sustainability throughout its product cycles, and in reducing its environmental footprint. “Henkel’s purpose is to create sustainable value – as sustainability leaders we aim to pioneer solutions for sustainable development, and that is also one of our competitive advantages. As such, our focus on innovations is strong.”

“Sustainability has been a key topic over years and our key driver. Our long-term vision is to become a climate-positive company by 2040. We are starting by focusing on our own production, which we can influence directly, and in these efforts, we join forces with industry partners, NGOs, and governmental organizations.”

As a result of the company’s sustainability efforts, Henkel has reduced energy consumption in its Laundry & Home Care division by 50% over the last ten years, and the sustainability concept is anchored in the business’s DNA, says Mr Holbach. “Our products are used millions of times every day around the world and we recognise the potential impact we can make by developing sustainable innovations and by improving our productions and value chains.”

“For example, we have implemented a unique cloud-based data platform, called Digital Backbone, which connects all our Laundry & Home Care factories end-to-end, worldwide. It brings great advantages regarding energy efficiency and process optimisation – it is clearly one of our best practices, proving that digitalisation and sustainability go hand in hand.”

Strategic framework

Through AI, advanced analytics, and thousands of sensors across the production facilities, Henkel improves the product quality as well as the environmental results with the help of the collected data.

Mr Holbach reflects that efficient supply chain systems result in a better sustainability performance. “Our supplier base is one of our most important resources and significantly influences our environmental footprint. To accommodate increasingly globalised value chains and complex procurement activities, we require a holistic supplier management process. In this respect, new technologies and digitalisation have a strong influence on the supply process, and digital instruments are an integral part of the supply chain at Henkel.”

And that will continue to be so in the future, he affirms, as the company continues to work on improvements and innovations, identifying new technological advancements.

“We want to deliver what we believe will be a sustainable impact to the whole business. So, over the next two to three years, we’ll be rolling out technologies that we have identified recently, while also surveying the market to identify new technologies we think could be interesting in three to five years’ time.”

This will be in line with Henkel’s strategic framework, with defined key focus topics including innovation, sustainability and digitalisation as well as future-ready operating models, underpinned by a strong foundation of a collaborative culture and empowered people, and last but not least, pursuing continuous optimisation of the supply chain system, to secure a sustainable and lasting transformation to benefit both the business and people inside and outside.