This is the secret to dealing with inflation

Procter & Gamble (PG), the consumer goods giant that makes Pampers diapers, Crest toothpaste and Tide detergent, says that running its business is far from simple right now.

“Supply chains are under pressure from tight labor markets, tight transportation markets and overall capacity constraints,” Chief Financial Officer Andre Schulten told analysts this week. “Inflationary pressures are broad-based and sustained.” But it does have confidence that it can weather the storm, thanks to its size, its ability to raise prices and a flood of consumer spending.

“These costs and operational challenges are not unique to P&G, and we won’t be immune to the impact,” Schulten said. “However, we think the strategies we’ve chosen, the investments we’ve made and the focus on executional excellence have positioned us well to manage through this volatility over time.” Investors agree. The company’s shares dropped 1.2% on Tuesday, but are still up 1.1% this year. That’s well behind the S&P 500, which has risen 20%, but significantly ahead of competitor Unilever (UL), which is off more than 12%. Kimberly-Clark (KMB) is down almost 4%, while Clorox (CLX) has plunged 21%.

Be big. Procter & Gamble is a $342 billion company. Unilever, by comparison, has a market value of $134 billion. That gives P&G market clout and flexibility across its supply chains that smaller rivals lack. “Strong supplier partnerships around the globe allow us to shift sourcing if we need to from one supplier to another,” Schulten said. He added that the company’s “global footprint is an advantage.”