Estée Lauder: IBP Driving Inventory Improvements Within Profit Recovery Plan
The Estée Lauder Companies will be implementing operational and structural changes as part of a larger profit recovery plan that’s mainly focused on restoring gross margins via inventory optimization and price realization.
To drive $1.1 billion to $1.4 billion of incremental operating profit over the next two years, the company is identifying opportunities for increased efficiency in the supply chain and its wider organization.
Fabrizio Freda, Estée Lauder’s president and CEO, said the company’s enterprise-wide integrated business planning serves as the foundation for operational inventory improvements, helping to reduce excess or obsolete products.
“Our integrated business planning process, which has now rolled out globally, is contributing to operational inventory improvements,” he said, adding that it’s being complemented by technologies like AI to elevate forecasting accuracy and more dynamically position inventory.
The company has also planned to streamline its manufacturing and distribution by consolidating operations into fewer buildings and outsourcing powder manufacturing to third-party partners.
In addition to consolidating capacity and optimizing costs, they expect to improve speed to market as a result.
The company expects to share more details about the profit recovery plan in August.
“We expect to streamline and reduce some of the complexity in the organization that is built up over time in our processes and that's expected to increase our speed, agility, and effectiveness in our markets,” said Tracey Travis, EVP and CFO.
