Procter & Gamble (P&G), a multinational corporation, known for its products that include diapers, shampoo, soap, and tooth-paste, was committed to improve value to the customer. Its products were sold through various chanels such as grocery retailers, wholesalers, mass merchandisers, and club stores. The flow of goods in the retail grocery channel was from the factory’s warehouse to the distributor’s warehouses, to the stores where the grocery stores where customers selected the merchandise from the shelves.
The improvement-driven company was not satisfied with its performance and developed a variety of programs to improve the service and efficiency of its operation. One such program was the electronic data inter-change (EDI) that provided daily information about shipments from the retail stores to P & G. the installation of the system resulted in better service, reduced inventory levels, and labor cost savings. Another approach, the continuous replenishment program (CRP), provided additional benefits for P & G as well as its customer retailers. Eventually, the total ordering system was redesigned with the result in dramatic performance improvements.
The re-engineering efforts also required restructuring the organization. P & G has been known for its brand management for more than 50 years. But in the late 1980s and early 1990s, the brand management approach pioneered by the company in the 1930s required a rethinking and restructuring. In a drive to improve efficiency and coordination, several brands were combined with authority and responsibility given to category managers. Such as manager would determine overall pricing and product policies. Moreover, the category managers were given the authority to delete weak brands and thus avoid conflicts between similar brands. The category managers were also held responsible for profits of product categories for all stores. The switch to category management required not only new skills, but also a new attitude.
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