Pg Logistics Revolution: Co-Creating Value

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Evaluation of the Case Study:

P&G Logistics Revolution: Co-creating Value

Introduction

This report analyses the case study titled “P&G’s Logistics Revolution – Co-creating Value”, which examines the growth of Proctor and Gamble in respect to its supply chain strategy and development in recent years.

Today, Proctor and Gamble (P&G) is a global company, with more than 138,000 employees and operations in over 80 countries worldwide. The company competes in seven business segments with more than 300 brands, providing superior quality and value to customers and has a culture based on five basic values: Integrity, Passion for Winning, Leadership, Trust and Ownership.

However, it has only been in the last decade that P&G has become famous for it achievements as a significant global competitor in the goods industry, largely due to its innovation and lateral thinking in supply chain management. Originally, P&G adopted the traditional approach to supply chain where suppliers, manufacturers, distributors and retailers sequentially interact with each in a linear process flow perspective to fulfil consumer demand.

On evaluation of the case study, this report will outline how P&G has become a successful global player by first realigning their vision by focusing on the customer and working upstream in each supply chain thinking from a customers perspective – be it the retailer or end user.

The report will also provide a recommended action plan on how P&G can best progress to achieve its new found goals. The Changing Dynamic of Retailer Power

P&G’s issues started in the early 1980´s when the need for change started to gain momentum with senior managers. A team of P&G managers were observing and understanding how the revolution in retailing through point of purchase, point of sale and technological advancements in operations and customer data management were starting to impact the dynamics for all suppliers in the market.

The ability for the retailer to understand, influence and interact with the customer was assisting retailers who were previously seen as an extension of the distribution platform, to increase their ability to negotiate better terms of trade with suppliers like P&G.

With advancements in modern website technology only starting to emerge, suppliers like P&G were envious of the direct relationship between the retailer and the consumer, and as a result finding themselves having to pay retailers for access to basic data such as transaction information and new types of information such as basket sales data which with awareness was providing a new opportunity to increase product sales.

Questions started to be raise don who ‘owns’ the customer. Whilst P&G were focused on maximising sales to wide customer base and minimising product wastage, it soon became apparent that in reality due to the supply chain functions, P&G only had direct control of the retailer and not the customer.

Retailers successfully leveraged their position and over the next decade lead the power base shift to move from supplier to retailer by influencing decisions in relation to supply chain development, distribution processes, product development and product sale and marketing campaigns, product.

Furthermore, P&G were experiencing a large level of stock outs at retailer shelves and over supply in others adding to a substantial wastage and a need to ‘work’ with retailer willingly or not. P&G needed to introduce a new vision

Having a sound knowledge of the retail environment and motivation to get gain back a customer relationship for its brands, P&G started to focus all strategic thinking on the customer and all associated elements to influence the customer in order to drive sales volume and increase market share.

P&G knew that to remain competitive and achieve a customer centric vision, it would need a complete overhaul of its culture...
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