Presented By

Mohnish Singh 29NMP46

Neerja Malik 29NMP47
Harshwardhan 29NMP48
Sanjay Yadav 29NMP50
Jayakumar S 29NMP94
 ABOUT P&G
• Procter & Gamble Co., also known as P&G, is an
American multinational consumer goods company
• Headquartered in downtown Cincinnati, Ohio, United States

• Established in 1837 : Made Soap and Candles

• Today P&G is recognised leader in development, distribution and
marketing of FMCG

• 300 brands 5billion consumers 160 countries

• 102000 strong work force in more than 80 countries work every
day to provide products of superior quality and value to the
customers worldwide.
 P&G AND THE SUPPLY CHAIN
INNOVATION
• From supply chain to supply network
• 50% reduction in cycle time and inventory
• $300M savings by investing 1%

• Optimised supply chain operations

• Improving the Dock Loading Throughput

• From product innovation to supply chain innovation

HOW DID THEY DO THAT???

 HOW DID THEY DO THAT???
• Visibility of information
• Agent based modelling of complex adaptive systems

• RFID
• Eliminating human errors
• Reengineering and automating site business processes
• Real time recovery of items and insurance claims

• Vendor managed inventory

• The “offensive terminal point”
• No “one size fits all”

ITS ALL ABOUT LOGISTICS..........

 AGENT BASED MODELLING
• Supply chain at P&G is not actually a chain, it
is a supply network.
• Such complex networks has multiple
interactions betwen its elements.
• Understanding how overall system reacts to
changes in certain parameters is important.

SUPPLY CHAIN  SUPPLY NETWORK

 Agent Based Modelling
• Software Simulation Model by Nutech
Model components
• Software
Plant
agents represent the individual
component of system- plant, stores, etc.
• Behaviour of eachStore
agent is programmed via rules
Dist.Centre
that mimic actual behaviour.
• Rules were varied during simulations based on
following policies: Store HQ
Plant shipping and store DC order policies
Store DC allocation policies
Lead time between Plant and store DC, Store DC and
Store
stores.
 AGENT BASED MODEL
• Model used
Actual customer demand profiles to determine
daily sales.
Actual promotion frequency with associated
increase in demand at stores for each item.
• Supply chain efficiency was gauged by:
Amt. of inventory need to be carried by a store to
avoid stock out
Daily plant shipping variability
 WHAT IF ANALYSIS
• What if analysis were conducted to test
impact of new logistic rules on 3 metrics:
– Inventory levels
– Transportation costs
– In-store stock-outs
• Effects of demand spikes, promotional events
were also simulated.
• Useful changes were noted & implemented.
TOWARDS A ‘RESPONSIVE’ SUPPLY CHAIN
 Product Innovation to Supply Chain
Innovation
• P&G used to be a mass marketer .
• Mass marketers understand the market segments.
• These segments were defined by demographics and
psychographics .
• They adapt/differentiate their products to fit these
markets.
• Supply chain is then organized based on the product
and the segment it serves.
• Here, Product Innovation drives the Supply Chain
Innovation.
DOCK LOADING THROUGHPUT- OPPORTUNITIES
• Bottlenecks at the Loading Docks.
• No space on the Dock for stacking pallets to be shipped.
• Production Stop .
• waste of time and Productivity.
• Moving the pallet twice.
• Productivity and profit declines

• Chaotic Business Processes.

• Prone to human Error
 AIT-Automatic Identification Technology

Bar
Code

AIT
Contact
RFID Memory
Buttons
 Modification
of Data
Potential Security of
Interference Data

Reading CRITERIA Amount of

Distance Data

Life Span Cost

Standards

Source: Supply Chain Management Study Material

 BENEFITS FROM RFID
• Increase the speed of Loading
• Loading time reduction by 40%
• Better utilization of Space and Personnel
• Avoiding the costly Mistakes of loading
• Fewer insurance Claims
• Fewer out of stock
• Increased Product visibility
• Increased responsiveness

EFFICIENT SUPPLY CHAIN

RFID CLIP
 RENDEZVOUS WITH WALMART
• SCM of P&G underwent a new change due to its
interaction with Wal-Mart.
• Earlier P&G used to have arms length relationship
with Wal-Mart.
• Focus shifted to
– Inter company supply chains
– Vendor managed inventory
• Wal-Mart's profits increased due to optimum
inventory management support.
• P&G became favoured supplier.
 CHANGED STRATEGY FOR OTHER
ACCOUNTS
• P&G changed its strategy for its small
accounts.
• It realized that “one size fits all” approach is
not appropriate.
• While it continued its product innovation,
P&G made another supply chain innovation.
 OFFENSIVE TERMINAL POINT
• Narrower the front, Deeper you can penetrate
the battlefield.
• P&G’s customer engagement front was very
broad.
• Hence, its offensive terminal point i.e. Its
inter-company supply chain ,was shallow.
• It decided to develop deep offensive terminal
point with Big customers.
 NEW STRATEGY
Wal-Mart Medium Small
• Inter Accounts Accounts
company  Arms  No direct
Supply length relation.
chain relationship  Relation
processes through
Master
distributors
It is this process of choosing and managing the development of different
relationships with different customers that characterizes the Age of
Precision Markets
PRODUCT INNOVATION TO SUPPLY
CHAIN INNOVATION
PUSH SUPPLY CHAIN
 THE IMPACT

REPLENISHMENT CYCLE MANUFACTURING CYCLE

“Re-stock every 24 HRS”

•“Every product Every day”
•Relaxation of rigid rules
•Re-tooling the manufacturing
•Flexibility and adaptability
•Short Runs
•Reduced Order cycle time
•Reduced Inventory
•Reduced in store stock-out
•Culture
 LOGISTICS RELATINSHIPS
TC TR
Logistics Cost

OPTIMUM

IMPROVEMENT

COLS Inventory
Improved Transportation service

IMPROVEMENT
IMPACT

Order Cycle Time

 STRATEGIC FIT
RESPONSIVENESS

EFFICIENCY
THANK YOU!