Dive Brief:
- The Clorox Company is on track to implement the first region of its new ERP system later this year, CEO Linda Rendle said during the company’s Q3 earnings call earlier this month.
- The deployment of the new system will let the company improve access to consumer data, drive insights and speed decision-making, said Rendle said during the earnings call, according to a Seeking Alpha transcript. Through the new ERP, Clorox will also gain insights across its supply chain and the ability to reduce costs where needed.
- The ERP implementation is part of the company’s five-year, $500 million plan to accelerate digital transformation across the company, first unveiled in 2021 and initiated in 2022. Clorox is currently in year two of that plan.
Dive Insight:
The main initiatives within the broader transformation plan are the ERP upgrade, a streamlined operating model and supply chain optimization. For large enterprises, these processes can become costly, disruptive and time-consuming.
More than half of the total investment is expected to represent incremental operating costs. Most of that spend — 70% — is related to the ERP implementation, and the remaining costs will come from “implementing complementary technologies,” according to the company.
The company began implementing the new operating model in Q1 2023 and expects to complete it in fiscal year 2024, incurring costs of around $75 million to $100 million during fiscal years 2023 and 2024.
“Over the course of the implementation, related costs are primarily expected to include employee-related costs to reduce certain staffing levels, such as severance payments, as well as for consulting and other costs,” the company said.
While Clorox is spending above the company’s historical normal level of IT spending, the goal of the project is in line with how companies are enabling technology. Many organizations are working to change processes through technology so that work is faster, simpler and more efficient.
“We're still very early in that process,” Clorox CFO Kevin Jacobsen said. “But over time, as we bring new technology online, we're going to see more productivity opportunities.”
