October 21, 2022
Spices and seasonings manufacturer McCormick & Co. is looking to cut $100 million in costs by 2023 by carrying out initiatives that will increase efficiency and remove bottlenecks across its operations.
“From a cost perspective, as we responded to demand volatility over the past several years, we have incurred additional costs above inflation, service our customers, and have seen inefficiencies develop in our supply chain,” McCormick’s chief executive officer and chairman Lawrence Kurzius told listeners in an earnings call this month.
The executive detailed that the company plans to invest in manufacturing capacity and debottlenecking projects that will reduce McCormick’s “excessive use of co-packers.” New flavor solutions seasoning capacity is slated to come online early next year, a new flavor solutions manufacturing site recently opened in Peterborough, UK, and the firm’s new logistics center in Maryland made its first shipment this month.
McCormick is also working to mitigate raw material and packaging shortages by seeking out alternative suppliers and packaging designs. A shortage of French’s mustard bottles is expected to ease in the first half of 2023 when the company receives new packaging models from a second supplier. Moves are also underway return inventory to historic safety stock levels, which the company increased as a safeguard from supply interruptions.
“We expect the impact of our actions to normalize our supply chain cost, increase our efficiency and ability to meet demand, lower our inventory level, and, importantly, increase our profit realization beginning in the first half of 2023,” Kurzius said.
The company intends to share more details on the initiatives in its 2023 outlook this January.
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