Thursday, May 22, 2014
Supply Chain Management of
Proctor and Gamble
By: Ramandip Singh and Yihui Li
Procter & Gamble is
currently the biggest seller in the global household and personally product
industry. It manufactured its products in forty countries and sells them all
over the world among more than 180 countries in terms of earning a great amount
of revenue. P&G’s sells over eighty different kinds of products from best
in basics to the hottest trends through mass merchandisers, grocery stores, membership
club stores, drug stores, department stores, salons, e-commerce and
high-frequency stores, and the neighborhood stores. Currently P&G has five
segments, which are beauty, grooming, health care, fabric and home care, and
the baby and home care. Nearly 66% of P&G’s revenue is from outside of the
U.S.
P&G has over 90,000
suppliers and they do not only provide raw material to 150 manufacturing
plants, but also produced finished goods to P&G. They use multimodal
movement distribution strategy to move their goods to the distribution center.
For instance, operations in four major continents require combination of
trucking, airfreight and waterways. The unique aspect of P&G’s supply chain
management is their supply network, which is voted number one in supply chain
management in the past three years by Power Ranking Industry survey. They
call it supply network is because they believe information flows in the
different direction, not a one way movement. P&G uses consumer-driven
supply network as its centerpiece business strategy. It believes in two moments
of truth, which are “when customer buys the product from the shelf” and “when
they actually use it and like it”. To accomplish the first truth, P&G has
to make sure there are stocks available on the shelf for customers when they
need it. P&G linked their actual sales with their supply chain process and
mainly focus on the customer demand. Therefore, what they are actually
producing is not based on forecasting but on customer demand instead. To implement
this strategy, P&G formed “web order management”, this enables retailers to
connect to P&G and access its inventory, scheduling and replenishment
level.
At P&G their core objective
is to meet customers demand at any given level. Their consumer and market
knowledge is critical for the managers to efficiently supply the products to
the consumers and not to create a surplus. Company “core work is the
integration of consumer, shopper, and market understanding to catalyze business
growth all of the brands” (P&G)”. Also P&G reduced its
transportation cost by switching to environmental sustainability “We continue to implement logistical efficiencies
of our supply chain in order to make measurable environmental footprint
reductions. Our goal is to reduce truck transportation by 20% per unit of
production by the year 2020. Plans are in place for each region, including
optimizing transportation modes and routes as well as operational excellence”
(P&G). We live in the world with technology surrounding us in every corner
and it has become asset for humans and we are dependent on it. Technology
accommodates businesses to communicate data across the world and to globally
integrate information and create stronger bonds among countries as one. There
is abundance of information flowing through networks channels across
globe and with that much information security threats increase which can
disrupt the operations of the company “If the IT systems, networks or service
providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or
stakeholder information, due to any number of causes, ranging from catastrophic
events to power outages to security breaches, and our business continuity plans
do not effectively address these failures on a timely basis, we may suffer
interruptions in our ability to manage operations and reputational, competitive
and/or business harm, which may adversely impact our results of operations
and/or financial condition” (P&G). Here below are some videos and links
that can broaden your understanding of their supply chain.
Little background
information of P&G supply chain
P&G
environmental sustainability scorecard
https://www.youtube.com/watch?v=BHYgJMWVkLk
https://www.youtube.com/watch?v=BHYgJMWVkLk
Here
you can find P&G purpose& people, heritage, core strengths etc.
http://www.pg.com/en_US/company/purpose_people/index.shtml
http://www.pg.com/en_US/company/purpose_people/index.shtml
Reference:
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