Procter & Gamble’s Operations

Management
A former Procter & Gamble building in Baltimore, Maryland. The 10 strategic decision
areas of operations management are addressed to ensure Procter & Gamble
Company’s productivity and effectiveness in the consumer goods industry. (Photo:
Public Domain)
The Procter & Gamble Company’s operations management (OM) strategy follows goals
for optimization in efficiency and effectiveness in satisfying various needs of the
business in consumer goods markets worldwide. The strategy addresses the 10
strategic decisions, which pertain to various operational areas of the company. Procter
& Gamble’s operations management efforts push for maximum productivity in these 10
strategic decision areas. Highly productive operations support effective strategy
implementation. For example, based on higher productivity, Procter & Gamble’s
operations managers can implement higher production capacity directives. These
conditions contribute to the company’s ability to stabilize its global business. Current
OM strategies and tactics work to fulfill Procter & Gamble’s business goals. However, it
is essential to make adjustments in response to changes in P&G’s industry and market
variables. Such adjustments should match variables like market demand and
technological advances to maintain high performance and support market leadership
goals embodied in Procter & Gamble’s vision statement and mission statement.

Operations management decisions determine productivity and the capacity of Procter &
Gamble to respond to business needs. These needs change according to consumer
goods market conditions and organizational conditions. Procter & Gamble’s operations
managers implement changes in the 10 strategic decisions accordingly.

Procter & Gamble Company’s area of operation

1. Design of Goods and Services. Operations managers are concerned about product
specifications, which determine other strategic decision areas of operations. Procter &
Gamble’s objective in this area is to develop products within organizational capabilities,
while supporting goals for innovation. Innovation is a main factor in the company’s
intensive growth strategies (Read: Procter & Gamble’s Generic Strategy & Intensive
Growth Strategies). In applying this approach, the company’s operations managers
focus on cost minimization without sacrificing product quality. In this way, Procter &
Gamble’s vision statement and mission statement are satisfied in terms of ensuring
quality and value of consumer goods. For example, cost minimization is possible
through high quality P&G products designed for high operational productivity levels.
Thus, Procter & Gamble maintains high quality standards while keeping flexibility in
other related factors for this strategic decision area of operations management.

2. Quality Management. Quality management’s objective is to implement quality

standards based on the expectations of target customers or consumers. In this case,
the Procter & Gamble Company’s goal for this strategic decision area is to apply high
quality standards in OM. These standards support leadership in OM, and business
leadership in the consumer goods industry. High quality standards address issues
linked to competitive rivalry shown in the Porter’s Five Forces Analysis of Procter &
Gamble. For example, products of higher quality are more likely to succeed in the
saturated market of consumer goods. At Procter & Gamble, operations managers use
current market data to determine the suitability of quality standards. Operational
specifications and productivity measures are adjusted according to changes in data
pertaining to P&G consumer expectations. Thus, in this strategic decision area of
operations management, Procter & Gamble’s dynamic quality standards are used to
match market expectations.

3. Process and Capacity Design. The strategic decision in the area of process and
capacity design considers the specifications and requirements in Procter & Gamble’s
production processes. The company’s objective is to maintain adequate capacity and
productivity. In this regard, the operations management approach used at Procter &
Gamble involves maximization of automation in production. For example, automation
increases productivity and capacity through higher operational efficiency. The resulting
condition contributes to the benefits of economies of scale, which is one of the strengths
identifiable in the SWOT Analysis of the Procter & Gamble Company. In this strategic
decision area of operations management, designs are also based on regular reviews of
P&G’s processes. The resulting data allow Procter & Gamble’s operations managers to
develop solutions to ensure that the consumer goods business remains highly
productive.

4. Location Strategy. Optimal distances from resources and target markets are the
operations management objective in this strategic decision area. Procter & Gamble
uses an approach that prioritizes proximity to target markets. For example, facilities are
located where it is easy to transport P&G’s consumer goods to retailers. In this
condition, Procter & Gamble’s operations managers maximize the benefits of high
productivity. For instance, high operational productivity in manufacturing and distribution
facilities supports effective market reach through retailers.
5. Layout Design and Strategy. The Procter & Gamble Company addresses layout
design and strategy through real-time data. The objective in this strategic decision area
of operations management is to optimize the flow of resources and information to
support the consumer goods business. In this case, Procter & Gamble’s organizational
structure also determines the layout design and strategy. For example, internal
business processes are grouped according to the divisions in the corporate structure.
Moreover, operations managers are concerned about layouts that suit internal business
processes in Procter & Gamble’s corporate offices. The aim is to support P&G
employees’ productivity. Understandably, Procter & Gamble’s operations management
approach for this strategic decision area adapts to available spaces, considering
variations in facilities and regulations.

6. Job Design and Human Resources. Operations managers are involved in efforts to
ensure the adequacy of human resources. To address this objective, Procter & Gamble
implements employee training programs for innovation and productivity. Employees are
among the main stakeholders of the company (Read: Procter & Gamble’s Corporate
Social Responsibility Strategy & Stakeholders). The approach used for this strategic
decision area also supports leadership and passion for winning as a way to enhance
employee morale and career development. Aligned with Procter & Gamble’s
organizational culture, these factors and operations management efforts ensure
effective and adequate human resources. Adequate HR supports consistency and
effective capacity in P&G’s consumer goods business. For example, the strategically
developed human resources and its culture make it easier for Procter & Gamble’s
operations managers to address operational issues.

7. Supply Chain Management. This strategic decision area of operations management

has the objective of strategically aligning an effective supply chain that supports Procter
& Gamble’s consumer goods business. The condition of the supply chain determines
the capabilities of the company in terms of productivity and capacity. In this regard,
Procter & Gamble’s operations managers prioritize external and internal factors that
significantly influence the supply chain. The company aims to minimize the negative
operational effects of these factors on productivity. For example, the PESTEL/PESTLE
analysis of the Procter & Gamble Company shows that ecological factors can create
challenges in maintaining an adequate supply chain for P&G. Thus, the company uses
data on external conditions and internal conditions to address such challenges and to
fulfill the operations management objectives in this strategic decision area.

8. Inventory Management. For inventory management, Procter & Gamble’s operations

management team focuses on the objective of matching inventory and organizational
needs. At the same time, the company considers consumers, suppliers, and business
productivity in this strategic decision area. Moreover, Procter & Gamble’s marketing mix
(4Ps) imposes requirements on inventory management activities. For example, the
activities of retailers influence P&G’s operations management decisions in this strategic
area. The methods that Procter & Gamble applies for inventory management include
the periodic method and the first in, first out (FIFO) method. FIFO minimizes spoilage of
raw materials and consumer goods. Procter & Gamble’s operations managers also use
buffer inventory to address sudden fluctuations in market demand.

9. Scheduling. In this strategic decision area, Procter & Gamble’s objective is to

develop and implement short-term and intermediate operational schedules for optimum
utilization of resources to support business needs. In this regard, the approach to OM
involves fixed schedules for most of P&G’s corporate offices, and rotating variable
schedules in some facilities. For example, Procter & Gamble’s corporate office
employees adhere to their fixed schedules for data processing and analysis. On the
other hand, operations managers apply rotating schedules for manufacturing processes.
Some of these rotating schedules are variable to enable Procter & Gamble to
correspondingly vary its productivity as a way of addressing changes in market demand
for consumer goods.

10. Maintenance. P&G has the objective of maintaining effective and adequate
processes in this strategic decision area of operations management, in consideration of
productivity and capacity, demand, and resources. Procter & Gamble’s operations
managers maintain dedicated personnel for each process. For example, for problems
involving the supply chain, the company has a dedicated team that specializes in supply
chain management. This operational approach ensures continuity in Procter & Gamble’s
operations management policies and strategies, leading to consistency in productivity
and output of the consumer goods business.
Procter & Gamble Co.’s Mission
Statement & Vision Statement: An
Analysis
 NATHANIEL SMITHSON
The P&G Twin Towers in Cincinnati, Ohio. The Procter & Gamble Company’s mission
statement and vision statement satisfy conventions and serve as appropriate guides for
the company’s strategic objectives and corporate decision-making in the consumer
goods industry. (Photo: Public Domain)
The Procter & Gamble Company (P&G) is a leading firm in the consumer goods market,
directly competing against Unilever, which is also a major player in the global industry
(Read: Unilever’s Vision Statement and Mission Statement). A firm’s vision statement
describes the target future situation of the business. In the case of Procter & Gamble,
the corporate vision statement emphasizes leadership in the global market. On the
other hand, a company’s mission statement specifies the strategic approach to fulfill the
vision. Procter & Gamble’s corporate mission statement highlights quality and value as
the foundation for ensuring business success. The company’s growth path and
strategies in the consumer goods industry are based on this strategic approach to reach
the corporate vision. As a dominant firm in the market, Procter & Gamble needs to
ensure that its vision statement and mission statement are fulfilled. It is also necessary
to consider possible adjustments to these statements to address changes in market
conditions and Procter & Gamble’s business needs over time.

A corporate vision statement for global market leadership defines Procter & Gamble’s
business aims. These aims require strategies for achieving leadership in the
organization and leadership in the industry environment, while considering various
aspects of the business, such as the threat of substitution and competitive rivalry
(Read: Porter’s Five Forces Analysis of Procter & Gamble). In addition, a corporate
mission statement imposes pressure on P&G management to implement strategic
objectives for enhancing the company’s products to ensure competitive advantage
based on quality and value.

Procter & Gamble’s Vision Statement

Procter & Gamble’s vision statement is “Be, and be recognized as, the best
consumer products and services company in the world.” In this corporate vision,
 the term “best” characterizes what the company aims to achieve in the global consumer
goods market. This factor indicates how the Procter & Gamble Company sees itself
relative to other firms in the industry. In addition, the term describes the capabilities and
potential of the business organization. In this regard, the corporate vision statement
highlights the following characteristics relevant to Procter & Gamble and its business
condition:

1. Be the best consumer products and services company

2. Be recognized as the best consumer products and services company
3. Global market operations
The first characteristic of Procter & Gamble’s vision statement requires steps that
ensure the company’s leadership in the consumer goods industry. P&G does not
specify the criteria for determining the “best” position. However, typical considerations to
achieve industry leadership include quality and value of products, quality of customer
service, and corporate responsibility status, among others. The second feature of
Procter & Gamble’s corporate vision statement focuses on recognition. Such recognition
requires strategic objectives that involve marketing management, among others. For
example, Procter & Gamble needs to effectively implement its public relations strategy
to enhance corporate and brand image. Such strategy is included in Procter & Gamble’s
Marketing Mix or 4Ps. The vision statement also includes the characteristic of global
market operations. The emphasis is on maintaining an effective global reach. Procter &
Gamble already fulfills this part of the corporate vision by maintaining significant shares
of various markets around the world.

Procter & Gamble’s Mission Statement

Procter & Gamble’s mission statement is “We will provide branded products and
services of superior quality and value that improve the lives of the world’s
consumers, now and for generations to come. As a result, consumers will reward
us with leadership sales, profit and value creation, allowing our people, our
shareholders and the communities in which we live and work to prosper.” This
corporate mission contains a detailed specification that influences Procter & Gamble’s
strategic direction. Superiority in quality and value are emphasized, just as these factors
 are also highlighted in the company’s vision statement. Procter & Gamble’s corporate
mission statement has the following characteristics:

1. Branded products and services of superior quality and value

2. Improve the lives of the world’s consumers, now and for generations to come
3. Leadership sales, profit and value creation
4. Prosperity of people, shareholders and communities
The mission statement requires that the Procter & Gamble Company must ensure the
superior quality and value of its products. Based on this characteristic, a strategic
objective is to continue enhancing the company’s products to maintain superior quality
and value. For example, Procter & Gamble must always innovate and ensure adequate
R&D investment for product development as an intensive growth strategy
(Read: Procter & Gamble’s Generic Strategy & Intensive Growth Strategies). Another
feature of the mission statement is the improvement of consumers’ lives. Thus, P&G
develops its consumer goods to address challenges or problems consumers face. The
third characteristic of the corporate mission refers to business performance, especially
Procter & Gamble’s financial performance. The fourth feature depicts the desired
combined effect of the activities based on Procter & Gamble’s mission statement,
contributing to various stakeholders’ prosperity. Prosperity of stakeholders supports
long-term business survival. This consideration is included in Procter & Gamble’s
corporate social responsibility strategy.

Procter & Gamble’s Mission & Vision –

Recommendations
Based on the conditions of the consumer goods industry, the Procter & Gamble
Company’s vision statement is satisfactory in following conventions on writing ideal
vision statements. For example, P&G’s corporate vision specifies an ideal future
business condition, which emphasizes leadership or being the best in the global market.
A recommendation for a possible improvement of the vision statement is to include
variables that Procter & Gamble uses in determining such leadership position. For
example, the company can specify leadership or being the best in terms of financial
performance, customer service, and product quality. These variables can make Procter
& Gamble’s corporate vision statement more effective in guiding strategic objectives
and decisions.
 Procter & Gamble’s mission statement is a detailed account of strategic direction in the
consumer goods market. For example, the corporate mission specifies a product
development strategy that emphasizes quality and value. Also, the statement includes
information about high sales, profit, and value. Moreover, the mission statement’s
inclusion of the detail about the prosperity of stakeholders guides Procter & Gamble’s
corporate social responsibility strategy. Thus, based on conventions on writing ideal
mission statements, Procter & Gamble’s corporate mission statement is satisfactory.

References

 Ekpe, E. O., Eneh, S. I., & Inyang, B. J. (2015). Leveraging Organizational

Performance through Effective Mission Statement. International Business
Research, 8(9), 135.
 King, D. L., Case, C. J., & Premo, K. M. (2014). Does Company Size Affect
Mission Statement Content? Academy of Strategic Management Journal, 13(1), 21.
 Kirkpatrick, S. (2016). Build a Better Vision Statement: Extending Research with
Practical Advice. Rowman & Littlefield.
 The Procter & Gamble Company – Who We Are.
 The Procter & Gamble Company, Form 10-K.
 Von Dewitz, A. (2015). VAUDE: Sustainable Value Creation as a Corporate
Mission Statement for Small and Medium-Sized Companies.
 Product profile
Baby Care
Pampers

Nappies, Pants and Baby Wipes

Laundry Products

Fabric Care

Ariel Tide

Feminine Care

Whisper
Feminine Care Pads

Grooming
Gillette
Razors, Blades and Men's Grooming

Hair Care

Head & Shoulders

World Leaders in Dandruff and Scalp Care

Herbal Essences

Pantene

Home Care
Ambi Pur
Odour Eliminators

Oral Care

Oral-B
Toothbrushes, Toothpaste, Oral Care

Personal Health Care

Vicks
Cough, Cold and Flu Relief

Skin and Personal Care

Olay
Skin Care

Old Spice
Pre- and Post-Shave, Body Wash and Deodorants

Competitors profile
Who Are Procter & Gamble's Main
Competitors?
By INVESTOPEDIA
 Updated Feb 24, 2020
Consumer goods are goods that are sold directly to consumers. They can be
used for personal, recreational, or corporate use, and are classified in three
different ways. The first category is services, which include things like haircuts
and car washes. The second is the durable goods sector, which includes
products that don't necessarily have a shelf life—think of things like books,
appliances, and cars. Then there are nondurable goods or the products meant to
be consumed—usually with an expiration date—like toothpaste and razor blades.
The consumer goods market is very competitive. That's because consumer
needs and tastes vary from country to country, from gender to gender, and by
age. In order to get on top of the market, a company needs to be innovative and
diverse with its product lines and brand names, and also needs a great marketing
strategy.
One of the world's largest consumer goods companies is Procter & Gamble,
which operates in almost every country in the world with a variety of popular
brand names. But it's not the only company that's trying to race to the top of the
consumer goods industry. Read on to learn more about the company as well as
its main competitors.
KEY TAKEAWAYS
 Procter & Gamble is a very well-known consumer products company,
owning major brands like Crest, Gillette, Pampers, and Tide. 
 The company has paid a dividend for nearly 130 years and has increased
dividends for 63 consecutive years. 
 Major competitors for P&G include Colgate-Palmolive, Church and Dwight,
and Unilever.
 Nearly two-thirds of P&G’s revenues are generated from developed
markets, while Unilever gets the majority of its revenues from faster-
growing emerging markets.
Procter & Gamble: An Overview
Procter & Gamble (PG) is a multinational corporation headquartered in
Cincinnati, Ohio. The company, founded in 1837,1 employs over 97,000 workers
across the world except for Cuba and North Korea.2 The company is headed by
chairman, president, and chief executive officer (CEO) David S. Taylor, and vice-
chair, chief operating officer (COO), and chief financial officer (CFO) Jon. R.
Moeller.3
P&G reported net sales of $67.7 billion for the fiscal year 2019. The company
pays investors a dividend every quarter. As of April 2019, the company's
quarterly payout was 75 cents per share.4 Shares traded around the $115-mark
and the company's market capitalization hovered around $283.1 billion as of April
10, 2020.5
Segments and Brand Names
The company has six business segments organized centered around its product
lines. These include baby, feminine care, and family care, beauty, fabric and
home care, grooming, and healthcare.
The company has a number of iconic, well-known brand names from laundry
detergents and cleansers, to grooming and beauty products. Some of the most
popular and well-recognized names include:
 Tide, Bounce, and Downy
 Pampers
 Bounty and Charmin
 Always
  Gillette and Venus
 Head & Shoulders
 Dawn and Febreeze
 Crest and Oral-B
 Vicks
 Olay
According to the company's annual report, Pampers is P&G's largest brand
name.

Global Markets and Competition

Procter & Gamble's market operations are divided into six different geographical
segments:
 Asia-Pacific
 Greater China
 India, the Middle East, and Africa
 Europe
 Latin America
 North America
P&G gets nearly 45% of its revenue from North America and some 23% from
Europe. Nearly two-thirds of P&G’s total revenue is from developed markets.6
This is one of P&G's most significant problems—being concentrated in slow-
growth markets, while rivals like Unilever are focused on driving growth and sales
from emerging or developing markets.
Who Are P&G's Main Competitors?
As a whole, Procter & Gamble is undoubtedly one of the biggest consumer
goods names around. But there are a number of different companies that aim to
chip away at its segments individually. Notably, along with the big names noted
below, Procter & Gamble also competes with countless smaller companies in the
international segments in which it reports revenue.
Fabric and Home Care
This is the company's top-selling business segment, representing 33% of its net
sales in 2019 with names like Tide, Bounce, Downy, and Febreeze.6 Procter &
Gamble's major competitors in this segment include brand names like Palmolive,
Ajax, and Fleecy from Colgate-Palmolive, Surf and Persil from Unilever, and Oxi
Clean and the Arm & Hammer product line from Church and Dwight Co.
Family Care
In the baby, feminine, and family care segment, major competitors include
Colgate-Palmolive—with brand names like Tender Care—Unilever's Zwitsal, and
Church and Dwight Co.'s Viviscal and Rephresh. This segment accounted for
27% of Procter & Gamble's 2019 net sales with brands like Luvs, Bounty, and
Charmin.6
Beauty
P&G's beauty segment represented 19% of the company's net sales for the 2019
fiscal year.6 Avon is a major competitor to Procter & Gamble and is known as one
of the world's largest direct-selling beauty, household, and personal care
companies. The company uses salespeople—often referred to as Avon Ladies—
brochures, and mailouts to advertise and sell its products.
Other names in the beauty industry that rival P&G include Colgate-Palmolive,
Estee Lauder, Revlon, and Unilever.
Healthcare
This segment accounted for 12% of net sales in 2019.6 You'll probably recognize
popular names like Vicks, Pepto Bismol, and Prilosec. But there are plenty of
other companies that give P&G a run for its money. Major competitors like
Colgate-Palmolive, Church and Dwight Co., Ecolab, Stepan Company, and
United-Guardian.
Grooming
Gillette is the dominant market player in the grooming segment. This segment
accounted for 9% of Procter & Gamble's net sales in 2019.6 But Bic is one of its
major competitors with a large international presence. This segment has also
seen a rise in startups—notably, in the shaving space with names like Dollar
Shave Club (now owned by Unilever). P&G purchased subscription-based
grooming company Billie—one of the first for women—in January 2020 for an
undisclosed amount.7

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