Dive Brief:
- Colgate-Palmolive plans to optimize its global supply chain as part of a three-year, $200 million to $300 million productivity program, CFO Stanley Sutula told investors on an Aug. 1 earnings call.
- The initiative will also include restructuring parts of the personal and home care company's organizational framework and streamlining operations to reduce overhead and increase efficiency, per the company's Q2 earnings statement.
- "We're not going to go into detailed specifics here, but as we said, it would be a combination of optimizing our supply chain and then looking at areas where we think that we can optimize where we have our allocation of resources," Sutula said.
Dive Insight:
Colgate-Palmolive, like many manufacturers, is leveraging its supply chain as a source for higher productivity, lower costs and operational efficiency. In June, Procter & Gamble unveiled plans to reorganize its network as part of a two-year restructuring project.
Colgate-Palmolive's latest productivity program comes less than 12 months after it completed a two-year initiative that included streamlining the company's supply chain to reduce structural costs, per the company's latest annual report.
However, the company’s subsequently leaner supply chain faces different macroeconomic conditions than when Colgate-Palmolive completed the effort at the end of 2024.
"Colgate-Palmolive is dealing with volatile and rising costs due to tariff increases, higher raw and packaging material costs and lower category inflation, which leaves less room to raise retail prices in response to rising costs in other parts of the business," CEO Noel Wallace said on the earnings call.
Colgate-Palmolive's supply chain has also had to respond quickly to demand changes fueled by consumer uncertainty, Wallace said. That includes adjusting to consumer preferences when they shift between more expensive product multipacks and less expensive single packs or smaller sizes.
"We can then leverage our global supply chain's breadth, resiliency and agility to respond to these changes in consumer preference," Wallace said.
In releasing its Q2 earnings, Colgate-Palmolive lowered its projected 2025 tariff costs to $75 million from the $200 million stated in its Q1 earnings call. The latest estimate is based on tariffs announced and finalized as of July 31, per an earnings presentation.
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