P&G signs deal to enhance North American logistics network

By Simon Pitman

- Last updated on GMT

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Procter & Gamble has signed a new deal with Miami-based Ryder System to manage a part of its US and Mexican logistics network.

The deal will cover the company’s cross-border transportation operations, an important aspect of the business as a significant number of its products are manufactured on both sides of the border and then transported in either direction.

Ryder specializes in providing end-to-end logistics management that concentrates on enhancing both material and product flows, ultimately providing increased logistics efficiency and helping to keep costs down.

Specializing in cross-border trade

The company also specializes in all aspects of trade in relation to cross-border activity, helping to ensure that the transportation of goods in either direction is optimized.

Ryder president of supply chain solutions, John Wilford, spoke of the fact that the company’s newly developed Control Tower service had been important in brokering the deal.

Speaking of this service he said, “We take advantage of our technology and execution skills to put in place a solution with significantly less inventory and cycle times.”

P&G sales and profits take a hammering

P&G has said that targeting costs through enhanced logistics efficiency will be a key part of its strategy in coming quarters as it faces falling profits and sales bought about by challenging retail conditions.

For the quarter ending in June, net sales fell by 11 per cent to reach $18.66bn; a figure that fell short of analysts expectations, who had forecast sales in excess of $19bn for the period.

The performance meant that sales for the full year fell by 3 percent to reach $79.0bn, a figure that still places it in a clear leading position as the largest consumer goods company in the world.

Greater efficiencies should help profit rebound

Net earnings for the fourth quarter fell from $3.02bn in the corresponding quarter last year to $2.47bn, while full year net earnings declined 11 percent, down from $13.43bn in 2008, to $12.07bn this year.

It also said that it wants to consider further consolidation or greater efficiencies for its purchasing, sourcing and distribution aspects of the business as a means of raising profitability.

Likewise, in view of the fact that developed markets such as Western Europe and the US have contracted significantly, it wants to pursue developing markets such as China, India, Brazil and Eastern Europe.