Procter & Gamble (P&G) has announced a significant two-year restructuring plan aimed at simplifying its operations, boosting supply chain agility, and improving cost efficiency amid a challenging global economic environment. The Cincinnati-based consumer goods giant revealed that it will cut approximately 7,000 non-manufacturing jobs, roughly 15% of its office workforce and about 6% of its total employees, as part of this overhaul.
Central to the restructuring is a streamlining of P&G’s extensive product portfolio. The company plans to discontinue certain brands and product lines selectively by category and market, which may include divestitures, according to Chief Financial Officer Andre Schulten during Deutsche Bank’s Global Consumer Conference. This portfolio simplification is intended to reduce operational complexity, enable consolidation of production facilities, and enhance responsiveness to shifting demand patterns.
Schulten cited weakening consumer confidence, tariff uncertainties, and broader economic volatility as key factors prompting the move. The company has witnessed a 2% decline in category volumes recently, underscoring the need for sharper agility and efficiency. P&G estimates the cost of the restructuring program to be between $1 billion and $1.6 billion before tax, with anticipated annual savings of about $1.5 billion once fully implemented.
Digitisation and automation are at the heart of P&G’s operational reset. The company is investing heavily in digital tools to better align production with real-time demand signals. In Europe, P&G operates 50 distribution centres using a unified cloud-based platform, which has halved indirect administrative workload by removing site-level hand-offs, explained Chief Operating Officer Shailesh Jejurikar. In North America, pilot projects are underway to connect point-of-sale data directly to factory scheduling, allowing planners to adjust production within hours rather than days.
This factory-to-shelf integration positions P&G ahead of some competitors by embedding rapid demand-driven decision-making into its supply chain. A recent industry analysis emphasizes that such digital supply networks can substantially reduce the “bullwhip effect” — the amplification of demand fluctuations along supply chains — by replacing linear processes with real-time ecosystems. P&G’s initiative reflects a broader shift from pure efficiency gains towards resilience and adaptability in an uncertain global trade environment.
However, the success of this transformation may hinge on collaboration beyond P&G’s internal operations. As the company rationalises SKUs and production lines, upstream suppliers and logistics partners will need to adapt to shorter lead times, smaller batch sizes, and tighter schedules. Without coordinated forecasting and transparency across the supply network, these tighter requirements could create friction and strain partner relationships.
The planned job cuts primarily affect office-based roles, as automation, artificial intelligence, and data-driven processes absorb routine planning and administrative tasks. Manufacturing jobs are expected to be largely spared, with a focus on maintaining specialised expertise in science-driven categories such as fabric and baby care, which remain core to P&G’s innovation pipeline.
This restructuring follows a wider trend among consumer goods companies seeking to sharpen core growth areas by shedding underperforming brands and layers of management, while embracing digitisation to reduce costs and enhance speed. P&G’s approach — including phased divestitures, increased automation, and supply chain digitisation — aims to maintain the company’s competitive edge in a turbulent economic environment marked by geopolitical instability and fluctuating tariffs.
In summary, P&G’s strategy encapsulates a fundamental reset of its portfolio and operations, with significant cost reductions and agility improvements designed to sustain long-term growth. While the plan entails considerable upfront investment and workforce reductions, it reflects a determined effort to optimise a complex supply chain, leverage real-time data, and respond nimbly to changing market and trade dynamics.
Source: Noah Wire Services
