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Inventory Optimization At P G

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Inventory Optimization At P G
Inventory Optimization at Procter & Gamble: Achieving Real Benefits through User Adoption of Inventory Tools

Procter & gamble (P&G) is a leading global consumer products company founded in 1837 with $76.7 billion in sales in 180 countries. P&G is famous for their brand names like Tide, Gillette, Pantene and many others. It competes in 26 distinct product-category markets such as hair care, cosmetics, paper towels, skin care, oral care, blades and razors, diapers and fabric care.

Procter & gamble has leveraged its cross-functional organizational structure with operations research to reduce its inventory investment. Savings were achieved in a two-step process, spreadsheet-based inventory models and implementation of the multi-echelon inventory optimization software. Spreadsheet-based inventory model were the first inventory tool installed which locally optimizes each stage in the supply chain. As a result of which they achieved significant savings and established P&G’s scientific inventory practices. Secondly, P&G’s more complex supply chains implemented multi-echelon inventory optimization software to minimize inventory costs across the end-to-end supply chain. They achieved a $1.5 billion in cash savings with these supported tools by implementing it in a tightly coordinated manner. Today, more than 90 percent of P&G’s business units near about $70 billion in revenues use either single stage (70 percent) or multi-echelon (30 percent) inventory management tools. They are planning to increase the use of multi-echelon tools in the nearby future to manage 65 percent of P&G’s supply chains.

Each of P&G’s three global business units (GBU), Beauty and Grooming ($26.3 billion), household Care ($37.3 billion) and health and Well-being ($14.4 billion) has an internal support and line organization responsible for planning that takes into account the unique constraints of the business. To increase the efficiency of the P&G’s support network operations,

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