Procter and Gamble - Value Chain Analysis

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Proctor and Gamble

Overview

Proctor and Gamble (P&G) was incorporated in 1905 in Cincinnati, Ohio and is still headquartered there today. It is the twenty-fifth largest company in the United States by revenue, and employs 138,000 worldwide. P&G competes in the consumer goods industry, and boasts ownership of over 250 brands including Gillette, Bounty, Tide, IAMS, and Crest. Its products can be found in more than 180 countries around the world. P&G first became an international company when it acquired Thomas Hedley Co. of England in 1930. Since then the company has innovated- and acquired- its way into the large Transnational Corporation it is today.

Primary Activities
Research and Development - At P&G, the development of new products plays a vital role in the company’s success. As a result, P&G spends about spends about 4% of worldwide sales each year to fund 7500 researchers that it staffs in 71 countries. It also holds collaboration agreements with many external partners. More than half of all product innovations come as a result of such agreements. Currently, the company holds about 25,000 active patents. 1 Operations - For its existing products, Proctor and Gamble’s value chain begins here with the acquisition of raw materials, packaging materials, and fuel. P&G uses suppliers to provide almost all inputs to the manufacturing process with the exception of a few chemicals that it produces in-house. Currently, the firm uses a network of over 30,000 suppliers.2 After obtaining the necessary inputs, saleable products are created in one of the company’s 131 manufacturing plants, located in 42 countries. In the past, the company has operated using a push-supply system requiring local teams to forecast regional sales and conduct production runs in that same location, but recently the company has implemented a digital-integration strategy that enables it connect with plants around the globe and select the optimal production location considering

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