Dive Brief:
- Henkel is making several changes to streamline its consumer brands’ supply chain and cut costs, the Germany-based CGP said in a Q4 earnings call.
- The company is aiming to reduce complexity in its supply chain by 25%, and achieved a 15% reduction in Q4, Henkel CEO Carsten Knobel said during the call. Efforts include cutting 45 production lines and about 100 contract manufacturers.
- The changes, which are being rolled out in two phases, are now onto the second stage focusing on supply chain optimization. It is expected to be implemented by the end of next year, according to Henkel's 2023 annual report.
Dive Insight:
The second phase of Henkel’s initiative builds on the first phase, which aimed to save costs through SKU cuts and headcount reductions.
“The number of SKUs was reduced by a double-digit percentage rate already,” Knobel said on the call.
A Henkel spokesperson declined to comment on the total number of SKUs and further details in an email to Supply Chain Dive.
Henkel cut more than 2,000 positions after merging its laundry and home care and beauty care business segments into one unit in the beginning of 2023. Jobs affected were mainly from sales and administration.
Phase two focuses on optimizing Henkel’s supply chain network for its consumer brands business. More than 800 projects have been launched so far, Knobel said. The projects stemmed from factors including responding to portfolio shifts and accelerating capacity consolidation, the spokesperson said.
“So far, we consolidated the logistic footprint in North America and optimized our production footprint in various regions such as Europe, North America and Latin America, as well as EMEA,” Knobel said.
The company also integrated pilot programs in larger production sites in the U.S. and in Germany that reduced logistic costs, improved productivity and enhanced line utilization in numerous sites, he said. Henkel also rolled out flex shift models in order to further increase efficiency in various sites.
Henkel has already seen cost savings from these changes. The company initially expected to save around $425 million by 2026 and now anticpates to save up to $558 million, the CEO said.
Correction: A previous version of this article misstated the number of production lines cut. Henkel is cutting 45 production lines.
