Strategy of Procter & Gambler Business Unit

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P&G measure their customer satisfaction based on two critical ‘moment of truth’; The first moment of truth is when the consumer stands at the store shelf and makes the purchase decision on a particular brand. This became the centre for P&G' which works back through the supply network starting from the store shelf. The second moment of truth was when the consumers use the product and decide whether it was satisfactory or not. Therefore, the complex consumer goods supply chain system of P&G, linked by sophisticated technologies and logistics systems, was centred round the consumer.

P&G top manager realize that the company’s supply network needed to be re-engineered so that it could be more responsive to consumer demand. This was especially important for promotional items, because of the cost of merchandising and promotional activities, and the long-term negative impact of stock-outs on consumers. After customers have been unable to buy the desired product and have switched to alternatives, it becomes hard to persuade them to return to buying the initial product when they go shopping again. P&G decided that sophisticated demand chain management, establishing direct connections between sales and supply chain business processes, could be the key to maintaining its leading position in the consumer packaged goods industry. Thus, P&G has implemented “consumer-driven supply network” (CDSN) program into their company where consumer is the boss.

P&G’s aim to create adaptive, responsive supply networks that will link together sales and supply processes, inside and outside the organization, to improve product availability. Through CDSN, P&G starts its supply chain from store shelves and moves back to its suppliers.

P&G’s vision of a consumer-driven supply network has two essential elements. •Building collaborative supply chains at several levels (local market and global markets) •Ensuring that manufacturing sites serving both local and global supply networks are...
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