The this project is Procter and Gamble also


The firm or agency that was analyzed
for this project is Procter and Gamble also known as P&G. Procter and
Gamble’s headquarters are in Cincinnati, Ohio and two men William Procter and
James Gamble founded the company in 1837.  Procter and Gamble started as a small soap and
candle company that began in the midst of an economic downfall.  Despite the tough economic times and rumors of
war Procter and Gamble was able to pioneer one of the nation’s first
profit-sharing programs and was among the first in American industry to invest
in research laboratories. (Procter & Gamble, 2006) Procter and Gamble’s
focus has always been on innovation, growth and marketing and they are now the
leader in manufacturing a variety of consumer-packaged products that are sold around
the world in over 180 countries.  They specialize
in a wide range of cleaning and personal care products such as toilet paper,
toothpaste, laundry soap and diapers.   Today, Procter and Gamble generates more than
$83 billion dollars, has over 73,000 team members, 130 manufacturing sites and
more than 200 distribution centers worldwide. (Trebilcock, 2015)

 

I chose Procter and Gamble for this
project because while I was doing research to try and choose a supplier I came
across several articles that stated Procter and Gamble was considered a Supply
Chain Master.  A Supply Chain Master is a
category for companies that sustained leadership for seven of the last 10 years
based on The Gartner Annual Supply Chain Top 25.  The Gartner Supply Chain Top 25, which began
in 2004 and is published annually in September, is meant to identify supply
chain leaders and their best practices.  Procter
and Gamble must be doing something right if they have been able to keep this
title for 10+ years.  Not to mention that
this was once a small soap and candle making company that is now one of the
leading manufacturing companies of consumer goods.  I found this interesting and wanted to learn
more on how they were able to stay relevant and innovative in an industry full
of competition.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

 

Beginning in 2015, Procter and Gamble
underwent a complete supply chain transformation.  This transformation was necessary due to competition
from other brands and negative revenue growth in all five of Proctor and
Gambles business segments.  The revenue
in 2016 was $65 million, 12% less than it had previously been in 2013.  The goal of this transformation is to increase
revenue, strengthen the portfolio by eliminating and consolidating brands and
to make productivity improvements by re-organizing the supply chain to better
control supply and demand.  Procter and
Gamble’s goal in doing this is to re-make its supply chain into something more
efficient, effective and profitable.

   

Procter and Gamble believing less is
more, decided to sell, discontinue and consolidate 100 of its brands and exit
several areas of business to strengthen its portfolio.  They currently have five business segments,
which are Fabric and Home Care, Baby, Feminine and Family Care, Health Care,
Beauty, and Grooming. (Morgan, 2015) Procter and Gamble made the decision to
reduce its brands through elimination of poor performing and inefficient
brands.  Brands that were considered poor
performing or inefficient were those brands in which there was a decline in
profit or brands that did not have growth potential.  The segment that had the biggest loss was
Beauty, Hair and Personal Care which revenue was down 7% to $18 billion.  Beauty, Hair and Personal Care, which
consisted of 43 brands, was sold to Coty for $12 billion dollars.  Procter and Gamble later sold Duracell, a
leading battery for $3 billion dollars, thus exiting the battery business.  By the end of the year, they had also
announced that they were going to sell soap brands Zest and Camay.  The brands were sold for an undisclosed amount
of money.  By eliminating the poor
performing products, they were able to focus on the remainder of the 65 brands
that were divided over ten business segments. 
The ten business segments made it easier to focus on productivity
efficiency by reducing inventory and will ultimately be a growth strategy for their
leading brands.

 

 

Procter and Gamble decided that
implementing digital technology was necessary because staying digitally
connected to your suppliers and customers can reduce errors and inventory costs
and can also give you a competitive advantage.  With digital technology now available
everywhere, it makes it much easier to communicate with suppliers and customers
in real-time.  By using digital
technology Procter and Gamble has been able to base production on actual point
of sale data that comes directly from its customers instead of relying on
forecasts or inventory fluctuations to meet demand thus saving money.  This was done by integrating the supply chain
software with that of the suppliers, distributors and retailers.  Products can them be tracked throughout the
supply chain.  Inventory count can be
maintained on all Proctor and Gamble products and the costs of storing and
producing excess inventory can be reduced.

 

In creating a more responsive digital
supply chain Procter and Gamble wanted to have distribution centers that can
replenish 80% of orders within one day.  To
achieve this goal Proctor and Gamble built six distribution centers that have
been set up strategically within North America. (Gunn, 2015) These distribution
centers are connected to retailers and receive digital data in real-time.  In doing so Procter and Gamble is able to
replenish inventory with suppliers quicker. Procter and Gamble also pushed
suppliers to build manufacturing facilities called supplier villages.  These supplier villages enable Procter and
Gamble to rapidly and effectively serve retailers and consumers.  In turn, these supplier villages also give
back to the communities in which they are built by providing hundreds of jobs
to the people that live there. 

 

Digitalizing the machinery offers
improvements in predicting maintenance, monitoring data that provides
information that minimizes breakdowns and provides diagnostic information about
what is wrong with the machine.  Procter
and Gamble has made its whole operation digitalized and has plans in the future
to improve its operational efficiency by being able to monitor production data
in real-time which means that they will be able to track every product as it
moves through the plant and once they integrate the operation system with the
financial system they will be able see the cost of each and every product as
well.

 

Procter and Gamble’s success of this
purchasing transformation was released in a statement in September 2017.  The statement reiterated the reduction of the
number of brands from 170 to 65 and that they now have the brands divided over ten
business segments. These business segments are Baby, Feminine, Family, Fabric,
Home, Hair, Skin and Personal Care, Grooming, and Oral and Personal Care.  Procter and Gamble feels these ten business
segments have the greatest potential for revenue and that the largest brands such
as Pampers and Tide are growing the fastest. 
The decision to sell the less profitable and inefficient brands was a
good decision since according to the statement they are a stronger more
profitable company and the changes that were made are delivering results.

 

The changes overall have made an
improvement on the entire company. The improvements were able to strengthen
their portfolio by making it a faster growing, more profitable and simpler
company.  The redesigned manufacturing and
supply chain has reduced overhead costs, and simplified the organizational
structure and instituted a more focused advertising campaign to promote its
biggest and largest brands.  Core
earnings per share have improved by several points due to the restructuring
even though the sales growth has been slow.  Procter and Gamble also exceeded its long-term
goal of free cash flow productivity.  Adjusted
free cash flow productivity exceeded $12 billion up 20% from 2014 thanks to
cost cutting initiatives.  They will
continue to measure their progress annually and have already projected 2% to 3%
organic sales growth for 2018.  They will
also continue to work on productivity improvement and cost savings to meet this
and other goals.

 

 

Not knowing anything about supply chain management
I have learned that it takes planning, implementing and controlling of the
operation to make it truly successful.  Supply
chain management requires change and the change requires synchronization of the
entire supply chain in order for it to be successful.  With today’s technology, having a completely
digitalized system is important it really can help to reduce the number of
errors and it takes the guess work out of forecasting. With everything being data
driven, having systems tracking supply and demand helps to meet the needs of customer
demand especially since supply chain management is so competitive one mistake can
end up costing you hundreds to thousands of dollars or it can allow a competitor
to take the business away from you. The importance of supply chain management is
to control and reduce costs, speed up product flow to customers without sacrificing
quality. Procter and Gamble has been around for almost 200 years and they have
always been innovative. I think innovation is one of the things that has kept
them relevant in this ever-changing industry so it doesn’t surprise me that Procter
and Gamble has one of the best Supply chains in the world  

x

Hi!
I'm William!

Would you like to get a custom essay? How about receiving a customized one?

Check it out