Estée Lauder bets on regionalization and digital twins to absorb global shocks

Estée Lauder wants to source where it manufactures and sell where it makes — a regionalization strategy the beauty giant sees as its best defense against tariff-driven disruption. Roberto Canevari, the company's executive vice president and chief value chain officer, laid out the approach ahead of his keynote at the Council of Supply Chain Management Professionals' EDGE conference, which runs Oct. 4–7 at the Gaylord Opryland in Nashville, Tennessee.

Canevari oversees an integrated global chain spanning planning, supplier management, engineering, global manufacturing, fulfillment, packaging, quality, and environment, health and safety. The scale is considerable: before joining Estée Lauder, he ran end-to-end supply chain operations for Unilever's European business — a team of more than 10,000 employees across 44 factories producing food, home goods and personal care products.

What is hitting retail supply chains hardest?

Canevari identifies two forces colliding at once. The first is geopolitical uncertainty — tariffs and inflation among them — that is straining global chains like Estée Lauder's. The second is a significant shift in consumer behavior, which is triggering a shift in channel mix and intensifying competition.

"Those two things are creating a lot of volatility and are impacting our industry, which is certainly a complex industry," he told DC Velocity, noting the company manages a large portfolio of brands, SKUs and components within its value chain.

Rather than treating that complexity as a burden, he frames it as a competitive opening. "It is a phenomenal opportunity to compete in a different way," Canevari said.

How does the company answer disruption?

Canevari points to two structural adjustments. The first is an investment in synchronizing the ecosystem through end-to-end visibility, supported heavily by digital tools. Estée Lauder has built digital twins of its network, allowing planners to run scenario planning and stress-test the chain before touching the physical operation.

"We can digitally play with different scenarios to identify challenges, bottlenecks, and future possible challenges where we might be weaker than expected," he explained. "And then we can go from the digital world into the physical work to make needed changes."

The second adjustment is regionalization itself: sourcing close to manufacturing and selling close to production. "The more we are able to regionalize our manufacturing and our sourcing, the more we can avoid problems and have a better answer to global supply chain disruptions," Canevari said.

What is the 'dynamic value chain' strategy?

The company is also developing what it calls a dynamic value chain strategy, built on three components:

• Speed — time to market.
• Agility — how the network reacts and adapts.
• Resilience — how the chain recovers from a major shock.

In practice, that means evolving the regionalized network so production can shift quickly depending on conditions. "How do we continue to do it in a very agile way, shifting production depending on whatever is happening around us very quickly?" Canevari asked, describing the operating question behind the strategy.

Why a 'digital atelier' instead of AI pilots?

On artificial intelligence, Canevari is emphatic that it will reshape the profession, and that Estée Lauder is embracing it. "We strongly believe that AI will augment the capabilities we have. That's why we're positive and why we see it as an opportunity," he said.

To avoid scattered experimentation, the company created what it calls a digital atelier — a group under a strong leader charged with connecting every digital initiative. The operating logic is explicit: "Nothing should be a pilot but should instead be step one toward something that can become bigger," Canevari said.

Everything the atelier backs must tie into end-to-end visibility, so the company scales processes rather than isolated fixes. Canevari gives a concrete example: connecting quality and manufacturing data with consumer insight allows Estée Lauder to set up manufacturing lines differently, faster and better, because of the AI application.

The atelier also carries a workforce mandate — training and developing what Canevari calls the workforce of the future. His view of the human-machine split is direct: technology will deliver more powerful answers, but "the people will be key to recognizing the right questions to ask."

What message does he bring to Nashville?

For the supply chain community at large, Canevari's keynote takeaway centers on people. "People as a multiplier is the real competitive advantage," he said. Processes, tools and technologies, he argues, can be replicated by anyone — the differentiator is how companies develop team dynamics and empower people "to perform, to test, and to learn and then to fail fast, learn fast, and move on."

His advice to newcomers reflects the same conviction: supply chain is "a beautiful profession," and those entering it should learn the business deeply, stay curious, and "ride the change" rather than resist it. As companies across the freight sector weigh how far AI investment should go, Canevari's answer — matched spending on technology and on people — signals where large shippers are likely to place their bets next.