Kimberly-Clark to Consolidate Operations, Invest in Digital Optimizations Ahead of Kenvue Acquisition
Kimberly-Clark Corp. is consolidating 6,000 applications and more than 15 ERP systems as it prepares to finalize its acquisition of Kenvue.
Russell Torres, president and chief operating officer, detailed the strategy and cost-containment initiatives during a recent earnings call. He said the company is running ahead of schedule on a three-year plan expected to yield $1.9 million in savings.
"For several months, our operating teams and best-in-class advisers have used detailed cost analysis, benchmarking and an assessment of the operations of both companies to identify sources of inefficiency and opportunities to create value in the future combined company," said Torres.
Also: Kimberly-Clark creates leadership org for pending Kenvue acquisition
Kimberly-Clark assigned 50 integration teams to identify specific cost-saving initiatives and build actionable plans. The primary driver will be system integration, eliminating duplicate roles and software, leveraging scale, and consolidating platforms over the next one to two years.
"Beyond the actions Kenvue is taking on their own, we've identified more than $600 million of savings, with half coming in year one from implementing our operating model, leveraging our combined scale in procurement and optimizing overlapping non-people spend in areas like service providers, media, IT and data," said Torres.
The second-largest driver is integrating supply chain and commercial operations, a two- to three-year process. Kimberly-Clark plans to streamline supply chain planning, procurement, distribution and logistics using digital tools.
"We'll build much more efficient distribution and logistics platforms through integration in markets like the U.S., Canada, Australia, Brazil, China and India," he said.
The company will also merge its sales and merchandising teams to expand market coverage and cut costs. In IT, Kimberly-Clark is standardizing its infrastructure on a single platform to lower run costs, license fees and labor hours.
Aligning M&A Strategy With Commercial Objectives
These efforts align with an enterprise-wide digital transformation, which includes Kimberly-Clark’s joint venture with Suzano to create an independent global tissue and hygiene company called Arbex.
CEO Michael Hsu said the company continues to deploy artificial intelligence across its operations. Recent launches include Coupa, a global procurement platform designed to increase spend visibility, and an AI-enabled manufacturing agent that "puts more than 15 years of institutional knowledge at employees' fingertips," according to Hsu.
Pilot programs show the manufacturing agent boosted workforce productivity on knowledge-search tasks by 40% to 50%, while accelerating decision-making and standardizing manufacturing practices globally.
To support the transition, Kimberly-Clark created an academy program covering 17 technical disciplines, including agile methodologies, AI, and data visualization.
"As we continue our digital transformation, we're equipping our technologists with the capabilities needed to run the supply chain of the future," said Hsu.
The company expects to fully realize the cost and efficiency benefits of this digital transformation in the third year following the Kenvue acquisition.
