Whether you know it or not, supply chain leader Procter & Gamble is likely part of your daily life. Procter & Gamble (P&G) sells a variety of consumer products, with brands covering beauty, health and home. Well-known brands from P&G include Gillette, Old Spice, Febreze, Tide, and Crest. Their total revenue was over $83 billion in 2014. With roughly 118,000 employees, P&G sells products in over 180 countries worldwide. As you can see, P&G products are trusted by consumers all over the world. They are continuously proving their ability to manage inventory and global supply chain. This year Gartner ranked P&G a supply chain master, above their usual Top 25 list, for their continued supply chain excellence.
So how does supply chain leader Procter & Gamble manage its 80+ brands and optimize its inventory for a global scale? Let’s take a look:
How do they do it?
P&G integrates their supply chain software with suppliers, distributors and retailers. This ensures products tracking throughout the supply chain to give visibility to partners and increase collaboration. Kevin Smyth, Director at CHEP, said, “An effective supply chain operation can significantly impact both the revenues and the margins of any business. We don’t see enough companies innovating and developing their supply chains to deliver better efficiencies and lower costs. P&G has constantly proved year-on-year that there’s more that can be done to raise the bar… ”
How does P&G keep their supply chain competitive? They are always adopting new technology to optimize their supply chain and lower costs. Also, they use demand-sensing and demand-driven replenishment to forecast demand for each of their product lines. As a result, P&G reduces the costs of storing and producing excess inventory.
Putting the Customer First
P&G focuses on creating a customer-centric supply chain by determining what matters most to customers. From this, they can make sure that they’re delivering the right level of customer service. Supply Chain 24/7 reported that P&G is trying to have at least 80% of their business in tune with how their customers track their inventory and be using the same metrics as them. Yannis Skoufalos, P&G’s global supply chain officer said, “Some customers track on time delivery and some measure us on EDI data transmissions. As soon as you understand what measurements are important to them, it opens up an array of ideas about what service excellence is all about.”
In addition, P&G is developing a responsive supply chain. This is extremely important, since risks and situations can come at any time. Firms need to react quickly in order to stay on track or adapt to changes in demand. Why is this so important on a global scale? This is because there’s so many more factors and things that can go wrong. How does P&G hope to combat this problem? They are implementing six distribution centers in North America, aiming to increase their response rate to one day shipping for 80% of their suppliers.
How many P&G products have you used in the last week? Did you use Crest to brush your teeth this morning or Tide to do your laundry? This supply chain leader uses innovation and customer-centric models to stay ahead. It’s no wonder they’re considered a supply chain master.