Following a significant cyberattack in August, Clorox has been diligently working to restore its operations and service levels, with a strong rebound in market share and inventory levels as it enters the fourth quarter.
Resilience in the Face of Adversity
Clorox has been on a steadfast journey to regain its operational footing after a cyberattack in August led to substantial manufacturing and supply chain setbacks. CEO Linda Rendle reported in a recent earnings call that the company has successfully recaptured nearly 90% of the market share it initially lost due to the incident. With the majority of its distribution channels back in action, Clorox is on track to achieve full recovery and standard merchandising levels by the fourth quarter.
Strategic Recovery and Financial Impact
The cyberattack’s ramifications were felt across the board, resulting in a 5% dip in net sales compared to the previous year. Clorox has been proactive in addressing the challenges, incurring $57 million in costs related to IT recovery and consulting services, as well as additional operational expenses. Despite these hurdles, the company has managed to rebuild its inventory, with EVP and CFO Kevin Jacobsen noting a positive trend in volume recovery. While some products like Glad trash bags and Fresh Step cat litter faced more pronounced inventory challenges, these too have returned to normal service levels.
As Clorox heads into the fourth quarter, the focus is on ensuring shelves are fully stocked during the critical period when retailers typically conduct shelf resets. With confidence in their distribution and merchandising strategies, the company is now observing consumer behavior as it prepares for the upcoming fiscal year.
Clorox’s experience underscores the importance of robust cyberattack recovery strategies within supply chain operations. The company’s ability to bounce back demonstrates resilience and a commitment to maintaining service levels despite unforeseen disruptions. Supply chain directors can glean insights from Clorox’s approach to crisis management and inventory recalibration as they navigate their own challenges in an increasingly digital and interconnected marketplace.
