Procter & Gamble consolidates Latin American supply chain planning in Costa Rica

Procter & Gamble (P&G) is not only one of the world’s largest consumer goods manufacturers, but also one of the most innovative managers of the supply chain. However, due to increasing competition and rising costs, the company announced in early 2012 a four year, $10bn restructuring plan.

Based on its most recent quarterly earnings, for the period October – December 2012, it appears the cost cutting plan may be working as the company reported that its revenue increased by 3% to $22.2bn and profits doubled.

While North America is by far its largest geographic region based on net revenues, the Latin America region is one in which the company is working to grow. Based on P&G’s 2012 annual report, this region is responsible for 10% of the company’s total net revenue, approximately $837m.

Recently, P&G announced plans to open a supply chain center for its Latin American operations in Costa Rica. The company plans to invest over $5m in the facility which will consolidate 11 parts of the supply chain including manufacturing plants, distribution centers and administrative centers that are currently being managed in more than 25 Company operations and in more than 10 Latin American countries.

The new center joins the financial services center and the business transformation center of P&G which have been in operation in Costa Rica since 1999 and 2008, respectively.

Tara Polanco, General Manager of P&G Costa Rica, stated that “P&G’s renowned track record in innovation in the industry is not only apparent through its products but also in the way it does business.  Centralizing the administration of the supply chain is something very innovative and will undoubtedly result in a competitive advantage for P&G.”

Its close proximity to Panama bodes well for Costa Rica as logistics providers such as FedEx, DHL and UPS have all established operations in this small Central American country. Companies such as Procter & Gamble, Intel, GE and Abbott have also allowed Costa Rica to increase its focus on improving foreign trade through free trade agreements with such countries as Canada, Chile, Mexico, the US, China, Singapore and the European Union.

Universities such as Georgia Tech University are also helping in this movement. In 2009, Georgia Tech established a Supply Chain and Logistics Center aimed at improving foreign trade by helping companies in Costa Rica move products to markets faster and more efficiently.