P&G Chemicals: Strategically Navigating Change in a VUCA World

At P&G, we frequently use the term VUCA (volatile, uncertain, complex and ambiguous) to describe the ever-changing and complex market and world we operate in. I’m often asked whether P&G created the term VUCA but it appears to have originated at the U.S. Army War College. The term was especially relevant as we navigated through 2020-2022, the initial years of the COVID pandemic. COVID affected all corners of the globe and every demographic, from preschool children to the elderly. It impacted the spectrum of life itself to life as we knew it. We exited COVID hoping for a return to “normalcy” but I’m not sure how to define the “new normal.”

Shifting Trends: During my 25 years at P&G, business has evolved with rapid technology shifts and the accelerated pace of change. Over the last few decades, business strategies revolved around globalization during a time of peace and prosperity. Interest rates remained historically low, making housing affordable and encouraging investments. Governments encouraged trade with broad alliances such as the expansion of the European Union (EU) and the North American Free Trade Agreement (NAFTA).

Those trends were already shifting prior to the COVID pandemic and they seem to have accelerated recently as geopolitical tensions have risen. We are also seeing a transition from globalism to an increased focus on national interests.

The Implications: From a pragmatic standpoint, it is crucial for us to understand these trends to assess and anticipate the implications for our industry. We are experiencing increased regional regulations and tariffs. The new EU Deforestation Regulation (EUDR) is an important moment and an example of a region taking matters into its own hands to do what its leaders believe is needed to address climate change. While different regions may disagree on the tactics, the reality is that this approach is becoming the new norm.

In addition, we are seeing more logistics disruptions, with rising freight rates and delays. More than 10% of global trade in recent years has flowed through the Red Sea. The current constraints on global shipping capacity there, combined with low water levels in the Panama Canal, will have extended impact on both service and costs.

Consequently, both logistics and regulation are becoming a much larger component of Total Delivered Costs. So how does our industry address and adapt? It is clear to me that building resiliency and agility in our business plans and supply chains is critically important to achieving long-term success in this VUCA environment.

At the Ready: As the only oleochemicals producer with fatty alcohol manufacturing capability in all three regions (the Americas, Asia and Europe), P&G Chemicals is well positioned to assist our customers in navigating the VUCA environment. Our commitments to our employees and our customers remain constant. We are proud of the resiliency and agility of the P&G Chemicals network and team.

Looking to the future, we continue to make investments in our network, utilize P&G demand as a baseload, and leverage P&G’s multifunctional expertise to navigate both supply chain constraints and increasing regulations. To our customers, thank you for trusting your business to P&G Chemicals. We look forward to continuing to build our business together for the next 25+ years!