Dive Brief:
- WD-40 Company is evaluating the locations of its distribution centers as it seeks to cut costs by reducing the delivery miles for its products, company executives said.
- The initiative will involve structural changes to its distribution centers, but it won't have a major impact on capital expenses because the centers are outsourced to 3PLs, VP of Finance and CFO Sara Hyzer told investors in a Jan. 8 earnings call.
- "Some of that won't impact the business until FY '27 and beyond," Hyzer said of the changes, "but we're really excited about the work that the supply chain team has really taken on in the last couple of years and starting to see that come to fruition."
Dive Insight:
The global household products company has built a strategic framework for achieving "operational excellence in supply chain," President and CEO Steve Brass said. The effort has been key to expanding gross margins through cost-reduction initiatives, including packaging improvements, logistics efficiencies, and strategic sourcing.
"In the first quarter, we delivered global on-time performance of 97.6%, even while we continue to increase production capacity to support our must-win battles," Brass said.
WD-40 has also been rethinking sourcing more globally, starting with steel cans — an effort that began impacting the business in the second half of the last fiscal year, Hyzer said. Currently, the company is examining how and where it is sourcing its raw materials.
In general, the company's supply chain team is pushing to engage key suppliers and advance responsible sourcing, according to Brass. WD-40 conducted its first sustainability assessment among Tier 1 suppliers in 2024.
Last July, WD-40 executives told investors that the company had offset tariffs by decentralizing its supply chain and bringing sourcing closer to customers. They also said the company had strengthened global partnerships with key suppliers, which improved efficiencies, optimized networks and brought cost savings.
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