GLOBAL: Diageo targets savings with supply chain restructure
Diageo said the move is due to its greater presence in emerging markets
Diageo has announced a review of its global supply operations aimed at annual cost savings of GBP60m (US$89.4m).
The group's regional structures will be cut back and responsibility for its local operations will be transferred down to its 21 "key" global regions, it said today (11 March). The savings are due to kick-in from 2016, a company spokesperson told just-drinks. Costs associated with the “restructuring” will be around GBP100m.
Diageo said the move is a consequence of its “increasing presence in new faster growth markets”.
The spokesperson added: "A number of the businesses we have acquired have local supply chains, which it makes more sense to manage locally... these changes will give local general managers more accountability and end to end control of their businesses.”
Asked whether the move would result in job losses, the spokesperson told just-drinks: "It is too soon to say, but there is likely to be some impact, as regional structures are reduced.”
Supply of Diageo's Scotch whisky brands, however, will continue to be handled on a global basis. A global supply group will also be retained by the company to oversee operational standards.
The move follows a similar shake-up of its global marketing and sales operations in 2011. The latest change will bring the supply operations into line with this structure.
“Further work will be required to establish the exact nature of the reorganisation to be made,” Diageo said in a statement.
But, it added: "An initial review has already established that efficiency-driven cost savings can be delivered, which, together with savings from footprint changes and cost reductions in respect of the regional supply organisations, are expected to amount to approximately GBP60m per annum."
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