Colgate-Palmolive has announced a three-year productivity program aimed at optimizing its global supply chain, with an investment of $200-300 million. The initiative, announced by CFO Stanley Sutula on an August 1 earnings call, will also involve restructuring parts of the company’s organizational framework and streamlining operations to reduce overhead and increase efficiency. This move is part of the company’s efforts to leverage its supply chain for higher productivity, lower costs, and operational efficiency, similar to other manufacturers such as Procter & Gamble.
The program comes less than a year after Colgate-Palmolive completed a two-year initiative to streamline its supply chain and reduce structural costs. However, the company’s supply chain now faces new challenges, including volatile and rising costs due to tariff increases, higher raw and packaging material costs, and lower category inflation. CEO Noel Wallace noted that these factors leave less room for the company to raise retail prices in response to rising costs.
To address these challenges, Colgate-Palmolive is focusing on optimizing its supply chain to respond quickly to demand changes fueled by consumer uncertainty. The company is adjusting to consumer preferences, such as shifts between more expensive product multipacks and less expensive single packs or smaller sizes. By leveraging its global supply chain’s breadth, resiliency, and agility, Colgate-Palmolive aims to respond effectively to these changes in consumer preference.
In its Q2 earnings release, Colgate-Palmolive lowered its projected 2025 tariff costs to $75 million, down from the $200 million estimated in its Q1 earnings call. The new estimate is based on tariffs announced and finalized as of July 31. The company’s efforts to optimize its supply chain and reduce costs are critical in today’s macroeconomic environment, where manufacturers face increasing pressure to maintain efficiency and competitiveness. By investing in its supply chain, Colgate-Palmolive aims to achieve higher productivity, lower costs, and improved operational efficiency, ultimately driving business growth and success.