Procter & Gamble's Supply Chain Overhaul

By Jessica DiNapoli and Richa Naidu

NEW YORK (Reuters) – Procter & Gamble (NYSE:PG) has revamped its supply chain for its Gillette razors by sourcing ultra-thin stainless steel strips from India, aiming to safeguard profit margins against potential tariffs under U.S. President-Elect Donald Trump.

The specialized stainless steel needed for Gillette razors is produced by only a few global companies, none in the U.S., as stated by P&G in communications to the U.S. Commerce Department.

A recent Reuters analysis reveals that P&G has shifted its sourcing to a more affordable Indian manufacturer, Jindal Stainless (NS:JIST), to mitigate increased costs during Trump’s second term. This adjustment is a response to P&G’s previous $1.4 billion in external costs, including tariffs, which impacted profits significantly during Trump’s first term.

P&G has transitioned from sourcing more expensive Japanese and Swedish steel, which faced hefty tariffs. They managed to secure exemptions in office but are currently assessing how to modify their supply chain based on Trump's forthcoming tariff decisions.

P&G’s Chief Financial Officer Andre Schulten acknowledged the necessity for adjustments in sourcing strategies to maintain profitability in an evolving market.

India's labor-intensive steel manufacturing gives Jindal a substantial cost advantage, with estimates indicating their steel is 20-25% cheaper. Although Jindal has primarily catered to non-U.S. markets, P&G began importing from them in 2022, with over 4.7 million tons registered in the last 36 months.

Despite a long-standing collaboration, P&G has scaled back on imports from Proterial and Alleima, two longstanding suppliers, declining to comment on the changes.

P&G’s grooming segment, the smallest revenue-generating division, has struggled against rising competitors like Dollar Shave Club. As consumer preferences shifted during the pandemic, the market dynamics have become increasingly challenging for traditional brands like Gillette.

A four-pack of Gillette Labs Men's Razor Blade refills is priced nearly at $29 on Target's website.