Presentation On P&Gs Supply Chain Management

Presenters: ALI JIBRAN MUJEEB MIRZA

About P&G
At a glance

Founded in 1837 Consumer goods industry $83.503 billion revenue (2008) $12.075 billion net income (2008) 135,000 employees More than 130 manufacturing facilities around the word 300 brands in More than 160 countries

HISTORY
William Procter and James Gamble ever intended to settle in Cincinnati, America. Although the city was a busy center of commerce and industry in the early nineteenth century, William, emigrating from England, and James, arriving from Ireland, were headed farther west.

HISTORY
On April 12, 1837, William Procter and James Gamble start making and selling their soap and candles. On August 22, they formalize their business relationship by pledging $3,596.47 apiece. The formal partnership agreement is signed on October 31, 1837.

LOGO
P&G's former logo originated in 1851. P&G later altered this symbol into a trademark that showed a man in the moon overlooking 13 stars. There new logo include fisrt alphabet of their name.

Presence In Pakistan
In 1991 P&G started operations in Pakistan. P&G Pakistan headquatered in Karachi. P&G reinvested over $100 million in Pakistan in last 12 years. In 1994 P&G acquired a soapmanufacturing facility ,7 acres of land at Hub Balochistan. In 2002 the plant tripled its manufacturing capacity. P&G has contributed close to billion rupees revenue.

Product Portfolio
July 1, 2007, the company's operations are categorized into three "Global Business Units" with each Global Business Unit divided into "Business Segments," according to the company's June 2007 earnings release. Beauty Care
Beauty segment Grooming segment

Household Care
Baby Care and Family Care segment Fabric Care and Home Care segment

Health & Well-Being

Health Care Snacks, Coffee and Pet Care

Brands with net sales of more than US$1 billion annual

Brands with net sales of more than US$1 billion annual

Two Moments Of Truth

When she buy

When she use

OOS (out of stock)

On average, retailers lose the sale 41% of the time P&G loses 25% of the time

Consumer behavior when confronted with an OOS

Delayed purchase 14% Did not buy product

Other

8%

10%

Substituted another brand 19%

Purchased at another retailer 31%

Substituted same brand (different size)

18%

Winning at the First Moment of Truth

The need for a Consumer-Driven Supply Network

CDSN Initiative
P&G redefined its supply chain strategy under the leadership of Keith Harrison Head of Global Product Supply Division. Network instead of a supply chain because of information flow in all directions.

CDSN -Initiative
P&G started its supply chain from store shelves and moved back to its suppliers. This operating strategy was called Consumer Driven Supply Network. Harrison was quoted saying: We need to work off of real demand, so that we produce what is actually selling, not what is forecast to sell.

How Did P&G Implement CDSN

P&G collaborated withits partners across the supply network to win consumers at the point of purchase. Implemented an online system-Web Order Management.

This enabled retailers to connect to P&G and access its scheduling, inventory and replenishment levels. Various other initiatives like using multifunctional resources, joint scorecards and sophisticated technology were undertaken in collaboration with retailers.

P&G and WalMart

P&G also collaborate with Walmart.
sign a pact according to which Wal-Mart was ready to share Confidential Marketing Data with their Supply Chain partners Proctor and Gamble (P&G). 1999 both Wal-Mart and Proctor and Gamble (P&G) were able to increase their revenue by more than 8 times.

CDSN Intelligent Daily Forecasting (IDF)

IDF is one of the most important component of CDSN. IDF is a software used by P&G to forecast the demand based on actual sales. Following are the Inputs and outputs that this software provides. Input: Daily Order Information Daily Shipment Information Weekly shipment forecast. Output: Daily estimates for next 42 days Refreshed Daily.

CDSN Intelligent Daily Forecasting (IDF)

IDF tracks daily demand across different stores, and that itself becomes the replenishment plan of P&G for those stores. Actual demand is picked up from the scanner data at the point of sale and it is made available at the plant where it becomes part of the daily production schedule.
As a result of implementing IDF, P&G is running few plant at 6-8 hours response time.

CDSN -Challenges
The $83 billion company had a total of 90000 supplierswith 140 manufacturing plants globally.

Reaching out to millions of customers across the globe was a major challenge.
Meeting the diverse challenges of developed and developing markets as such markets like Pakistan & India depended on unorganized retail. The challenge was to reach the global large-scale retailers as well as the small and local street shops. Creating consumer value and meeting rising supplier costs.

Impact of CDSN -Results

1. Forecasting Accuracy: Improved forecast accuracy by 30%.

2. Shelf-Level Out of Stocks:The percentage of products that are out of stock on retailers' shelves at any given time. P&G has cut this to 5%, from 10% within 8 months of implementation.
3. Total Supply Chain Response Time:The time from when a cash register records the sale of a product to the purchase of raw materials to produce its replacement. From six months, it came down to two months

Impact of CDSN -Results

4. Total Supply Chain Inventory:The hard count of all products flowing through the supply chain at any given moment, whether on store shelves, in back of the store, at warehouses, in trucks or wherever. P&G got a daily count, rather than weekly or monthly and hence reduced safety inventory by 10%. 5. Pricing-Design From the Shelf Back:CDSN helped in determining an acceptable price point for an item and then working it back through manufacturing and distribution to see if that product can be delivered at a price acceptable to consumers and a profit acceptable to P&G. 6. Top line and bottom line: Increasedoverall sales by 15% in one year. Net profits witnessed a 19%gain from $4.35 billion to $5.19 billion.

Impact of CDSN -Results

JakeBarr -In Charge Supply Chain Innovation was quoted saying: Twelve months into the new pull system, the company is close to its original goal of cutting out-of-stock conditions in half. Now 93% of outlets working under the new system are experiencing no more than 5% out-of-stock rates. That represents a yearly savings of $50 million to $100 million.