McCormick starts continual improvement program for supply chain

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McCormick, which manufactures, markets, and distributes spices, condiments, and mixes, is planning to eliminate $100 million in supply chain costs under a program called Comprehensive Continuous Improvement (CCI).

The company, like many other organizations, is transforming its supply chain as it manages through demand spikes, shortages, and inflation.

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Speaking on McCormick's third quarter earnings conference call, CEO Lawrence Kurzius said:

"Across the supply chain, we remain focused on managing inventory levels and eliminating inefficiencies, though the normalization of our supply chain cost is taking longer than expected pressure in gross margin and profit realization in the current period. Over the coming months, we will be aggressively eliminating supply chain inefficiencies."

Kurzius said McCormick responded to demand volatility in the past several years and incurred costs to service customers. However, McCormick is now returning to more normal ship schedules and reducing spending on surge capacity.

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And like other companies, McCormick is moving to reduce expedited freight costs and less-than-truckload shipping costs and transportation inefficiencies, said Kurzius. Optimizing truckloads has been successful on the financial, supply chain and sustainability fronts for companies like Aldi Sud.

McCormick has also actively managed its supplier network and procurement practices. For instance, McCormick has had to find alternative suppliers due to shortage of bottles and certain organic spices. Kurzius noted that a long-running shortage of French's mustard bottles will be resolved in the first half of 2023 as new molds come online from a second supplier.