3M Company Morgan Stanley's 14th Annual Laguna Conference

Well, thanks for having me. It's great to be back. Congratulations on your new role.

Thank you. So again, it's about 2 and a half years at 3M.

The team is making, I think, great progress building fundamentals, improving how we execute, the consistency in how we execute. The first 2 and a half years were really around just a back to basics focus on fundamentals approach across operations and all of our supply chain, across innovation, across commercial, doing commercial excellence. I think, and importantly, also building a culture of accountability and rigor and speed and urgency. Things I think go hand in hand with good day-to-day execution. I think when you look at the progress that's been made over the last 2 and a half years or so, we are clearly making progress. We're seeing more sustained organic growth. We're seeing clear step-up in margins.

We're seeing an acceleration of new products in the marketplace, more hustle at the front end of our sales force, and we're tracking ahead of our 2027 investor day targets, which we set at the beginning of last year when we had our first investor day. I think all of those pieces I think are going very well. I feel very proud for what the team has accomplished, particularly on the culture side, which I think is an important dimension. So, those are the things I think have gone pretty well. In terms of learnings, lessons, look, I think, one, focus matters. Clearly, clarity and transparency externally with the team inside of the company is critically important. Also, as you all know, execution and cultural change happens hand in hand. You can't have one without the other.

You can't see sustainable performance improvements in execution if you're not adjusting the culture. Again, really good progress on the fundamentals 2 years in gives us confidence in the trajectory that we're on to now shift more towards how do we transform the organization, take a harder look at our processes, structural costs, and all those things which give us a runway beyond 2027 in terms of margin expansion and organic growth. So, I think it's been a good 2 and a half years. It goes very fast, as you imagine, but good progress and I think we're all set up for the next 2 and a half years.

Look, OTIF is one, or on time and full is one metric, and you're right, we were low 80s, in which case, you're really not anywhere near what you're performing to what customers expect. We're now consistently running around 90% parts of the company, the consumer running more consistently mid-90s. We're still not where we need to be. Pleased with the progress, but not where we need to be. I mean, today from two and a half years ago, on time in full is not really a conversation with distributors. It's not necessarily a pain point. We do have opportunities. I think we're holding our own serve here, but I think there's an opportunity to distinguish ourselves here. But operational excellence goes way beyond just on time in full. That's one metric. It's a very important one.

It's all these others that I've been talking about with investors since I started around gross and net productivity, around utilization or operating equipment effectiveness, around cost of poor quality. All of those dimensions go into building a very strong foundation and execution model. That's what really we're focused on, but OTIF is a key part of it. Again, what's coming next? We see that marching higher, but it's not just on improving on time in full, but the key is to do that with lower inventory and actually compressing your cycle time at the same time. If you could do that, it's like a triple double. If you could do all those three together, that's what we're trying to do. Right now we're focused on OTIF. We're going to bring inventory down and start to neck in some of the lead time to our end customers.

I think that's what would distinguish the company going forward.

Look, it's one dimension. At the end of the day, when we think about our attrition has been running relatively high. It went up when our service levels went down. It's starting to come down as our service levels are coming up. It's hard to go point to point with what's a point of OTIF to a point on attrition. But at the end of the day, as I said, it was a pain point. It's not so much a pain point today. It is a key factor. We've done some work using AI tools to develop both predictive and responsive mechanisms, agents to understand when churn might be happening, and instead of letting it happen, but doing something proactively about it, having a closed loop system. As you're starting to see indications of customers wanting or desiring to shift their business, our salespeople go and do something.

The managers can follow up. So it's a factor. It's not the only factor. Quality, performance, other things actually go into that. Price becomes a dimension. But OTIF is clearly one that drives attrition.