CINCINNATI, May 9, 2026, 16:07 EDT
Procter & Gamble is launching its Supply Chain 3.0 program across the company, leaning hard on automation to hit as much as $1.5 billion in cost-of-goods-sold savings—essentially, what it costs to produce and distribute its products. What started as pilot projects now expands to a sweeping rollout touching plants, warehouses, and planning systems.
Timing is critical here. P&G faces higher costs tied to oil, along with tariffs and shipping snarls that are squeezing earnings. Shoppers, still wary of price hikes on basics, aren’t making things easier. Just last month, the company reported a 100-basis-point drop in core gross margin for the fiscal third quarter and flagged that fiscal 2026 earnings will probably come in toward the bottom of its guidance range.
This isn’t only about factories for investors. P&G’s lineup—think Tide, Pampers, Crest—relies on tight margins, so tweaks in costs or logistics ripple through to hefty bottom-line shifts. Last quarter, organic sales climbed 3%, driven by both volume and pricing gains.
Chief Financial Officer Andre Schulten said on the call that the supply-chain effort has moved into “full scaling mode.” He rejected the idea that it’s just an artificial-intelligence project, clarifying that while some elements use AI, a large portion relies on “more basic automation.” AI, in this context, means software capable of learning from data and assisting or automating decisions. The Motley Fool
The rollout covers unattended warehousing and automated systems for loading and unloading both finished goods and raw materials, plus real-time quality checks that require less hands-on oversight. Schulten said P&G has tested a four-hour night shift in Berlin that’s run entirely through automation and robotics—just one of nine pilot projects. Across the automated shifts, productivity has improved anywhere from 15% to 60%.
P&G’s quarter ended March 31 brought a 7% gain in net sales, hitting $21.2 billion. Core EPS clocked in at $1.59, up 3%. Shareholders saw $3.2 billion come back their way in dividends and buybacks.
The cost issue has only intensified. On April 24, Reuters reported that P&G flagged an estimated $1 billion after-tax blow to its fiscal 2027 profit thanks to spiking oil prices. That’s on top of the $150 million hit expected in fiscal 2026, tied to inflation in commodities, exposure to feedstocks, and ongoing logistics snags. “Oil is ubiquitous,” Annex Wealth Management chief economist Brian Jacobsen told Reuters, adding that elevated prices “seep into everything.” Reuters
On the earnings call, Schulten pointed out that it’s not just crude prices creating headaches. He listed petro-based feedstocks, less efficient sourcing lanes, reformulation efforts, and higher diesel transportation costs piling on. He also noted some suppliers ran into force majeure—industry-speak for disruptions caused by uncontrollable events blocking normal deliveries.
P&G isn’t the only player leaning on tech to drive down costs. PepsiCo is piloting AI and digital twin systems across factories and warehouses; Hormel Foods has brought in an AI planning platform to revamp its supply chain. Hershey, for its part, is eyeing a $100 million cut in inventory, thanks to supply-chain technology, Supply Chain Dive reports.
There’s a risk automation might not make up for the blow quickly enough. On top of that, if energy and food bills keep crimping what shoppers can spend, higher shelf prices could face stiffer pushback. “The concern is that P&G cannot continue to raise prices at the same pace indefinitely,” Brian Mulberry, chief marketing strategist at Zacks Investment Management, told Reuters. Reuters
P&G shares finished Friday at $146.42, rising 0.25% for the session. That puts the company’s market cap around $341 billion. U.S. trading hasn’t resumed since.
P&G faces its next big moment in July, set to deliver fiscal 2027 guidance. For Schulten, the focus has shifted: it’s no longer about proving the technology, but speeding its rollout. “We know it works and what to do,” he told analysts. The Motley Fool
