Supply chain priorities are increasingly being shaped by three forces: automation, volatile input costs and pressure on logistics networks. Those themes were prominent at the Barclays Global Consumer Staples Conference in early September, where executives from Procter & Gamble, Colgate-Palmolive and Kimberly-Clark discussed the challenges and investments currently shaping their operations.
The three consumer packaged goods companies highlighted different pressure points across their supply chains. Procter & Gamble provided an update on its Supply Chain 3.0 programme, describing the initiative as being in full execution and focused on maximum automation. Colgate-Palmolive, meanwhile, is watching the impact of higher oil prices on material costs, while Kimberly-Clark expects additional costs as North American freight and logistics markets remain tight.
For P&G, automation is moving beyond individual processes and becoming a broader network strategy.
P&G Supply Chain 3.0 moves into full execution
Procter & Gamble CFO Andre Schulten said the company’s Supply Chain 3.0 initiative is now in “full execution, meaning maximum automation” across its network.
Launched in 2023, the programme was designed to create more comprehensive systems integration throughout P&G’s supply chain. Its scope has since expanded beyond mechanisation, with digital capabilities being introduced into areas including quality measurement and inventory management.
According to Schulten, these developments are expected to support productivity gains over the next five to 10 years.
The global rollout also includes the collection of sensor and imaging data to replace manual quality testing. At the same time, P&G is automating warehouse operations, including the loading and unloading of trucks.
Scaling these initiatives across the network is expected to take another 24 months, making automation a central part of the company’s longer-term supply chain transformation.
Colgate-Palmolive watches oil prices and material costs
Colgate-Palmolive is facing a different supply-side concern, with rising oil prices potentially feeding into material costs toward the back end of the fourth quarter.
President and CEO Noel Wallace said the company could seek to offset those increases through pricing actions and by accelerating its premiumization strategy.
The strategy is aimed at increasing sales, market share and margins through the development and marketing of higher-priced products with more advanced features.
Wallace acknowledged that Colgate-Palmolive has not yet achieved the level of market share it wants on the premium side in North America.
“That will be a key focus for the business moving forward,” he said.
The approach therefore combines commercial positioning with an effort to manage the potential impact of higher input costs.
Kimberly-Clark faces a tighter freight environment
Kimberly-Clark is feeling more directly the pressures of transportation and logistics costs.
President and COO Russell Torres said the company expects incremental costs of $30 million to $40 million in the current quarter. That increase includes higher prices in a still tight North American freight and logistics market.
Another disruption is also adding to the quarter’s costs.
A fire at a distribution center run by a third party near Los Angeles caused damage in April. The fire impacted a facility operated by NFI Industries, which caused Kimberly-Clark to divert products from the site and increased transportation costs.
The company also is preparing for network changes related to its pending acquisition of Kenvue.
Kimberly-Clark expects the transaction to close this year, with opportunities to reduce logistics and procurement costs over the next several years. Part of the savings are expected to be driven by combining supply chain operations and route-to-market activities.
The three companies taken together are representative of changing supply chain strategies in the consumer goods industry. P&G is stepping up automation and digitalization, Colgate-Palmolive is planning for possible material inflation, and Kimberly-Clark is managing short term freight costs while planning for wider network integration.
The common theme is the environment of a supply chain where the investments on technology, sourcing decisions and transportation costs are more and more interrelated.
