The Procter & Gamble Company (P&G) is the world's biggest manufacturer of consumer

packaged goods. Its wide range of hair, skin, and personal care, oral, family, feminine, fabric
care, grooming, and infant care product lines are divided into five global categories. Wal-Mart is
the world's largest retailer, as well as the world's most profitable corporation and largest
employer, employing 2.2 million people. Being both major players in their industries, P&G and
Wal-Mart found a way to leverage on information technology by sharing data across their
mutual supply chains. Since channel operations are better coordinated, the resultant channel
has become more efficient. By focusing on selling what customers desire, inventory
requirements are decreased and returns are increased. Overall, P&G and Wal- Mart's supply
chain has become considerably more cSharing information among supply-chain partners is an
essential approach for managing integrated supply networks. One of the most significant
advantages of exchanging information is the reduction in invustomer-focused as a result of their
channel collaboration. 

entory requirements. As a consequence, the supply chain gets higher financial returns,
higher service levels, and faster turnaround times. Instead of waiting for the retailer to make
orders, the manufacturer may utilize information about the retailer's inventory level to manage
the frequency, amount, and timing of shipments via information shared between the
manufacturer and the retailer. P&G and Wal-Mart have both implemented the Continuous
Replenishment Process (CRP), which allows the manufacturer to reduce the amount of
inventory required and plan shipments more efficiently. P&G replenished Wal-Mart’s inventory
based on inventory data received from Wal-Mart’s distribution center. This data helps P&G to
keep track of inventory levels and ensure that P&G items were always available. By connecting
Wal-Mart's inventory data at their distribution centers and P&G's refilled inventory based on
product movement via their DCs, P&G leveraged its information data highway to radically
transform the replenishment process. P&G cut the order cycle time (the time it takes from when
an order is placed to when it is delivered) by 3-4 days. This procedure also resulted in a
significant increase in inventory turns, resulting in a reduction in overall system inventory.. 

One way to explain the benefits of information sharing and CRP is from the perspective
of the so-called “bull whip effect,” that is, the small fluctuation of demands tend to be
progressively amplified when moved up the supply chains. Many factors contribute to this
phenomena in a multi-stage supply chain, including the usage of safety stock at each step,
changing batch sizes, ordering frequency, and lead times, as well as unusual behaviors such as
advance buying. In the retailing business, CRP has become a standard procedure. Wal-Mart, for
example, has made it a requirement for its suppliers to use CRP. The mutual trust among the
parties, however, lies at the heart of both the execution of CRP and the sharing of information.
Bargaining power is also an element of the information partnership equation. Retailers are
increasingly wielding negotiation power as a result of their access to demand data and
consumer information. As a result, they will be able to demand that their suppliers use CRP,
allowing them to avoid placing purchases. In addition to exchanging demand data, supply-chain
partners have begun to exchange other sorts of data as well.

The role of technology was to connect the supply chain by communicating critical
business documents using industry standards such as Electronic Data Interchange (EDI).
Purchase orders, invoices, advanced shipping notice, and financial payment are just some of the
EDI documents that may be sent electronically. It was essential that EDI not be utilized to
automate unethical business activities. We needed to simplify the business "handoffs" and then
employ automation to speed up the process. 

Technology also play a role in identifying and correcting pricing errors. A tool was built
called the Customer Table Checking Tool. P&G checked the price and product specifications in
Wal-Mart's item file of P&G items to the pricing and product specifications in P&G's item file
every Monday morning before any purchase orders were made. If any of the items didn't match,
they were marked as exceptions and rectified electronically. P&G's purchase order-invoice
match rate increased from 15% to 95% as a consequence. P&G has gone from being one of Wal-
Mart's worst vendors to one of its finest thanks to this new method. The customer service
organization insured the data in both systems would be correct and EDI was used to drive down
costs and improve the order cycle time. This tool has been used with P&G customers worldwide.

Looking back over the ten-year partnership between Wal-Mart and P&G, information
technology has helped to develop a common language, save expenses, and provide a channel for
higher sales.  Several key lessons learned are summarized in the following for understanding
the role that Information Technology can play in the manufacturer / supplier relationship: Use
Information Technology Resources; Take time to train your IT about the business; Focus on the
consumer and Employ Industry standards.