P&G: Customer Centricity and the Responsive Supply Chain

Long known as an efficient manufacturer, P&G is expanding its consumer-centric model to

actively include the customers needs. From the store shelves to the manufacturing floor, P&G is
assessing what supply chain solutions provide the most value to retail customers and consumer
alike, with faster-than-ever response times.
With approximately 73,000 team members powering a supply network that includes over 130
manufacturing sites and more than 200 distribution centers, P&Gs supply management
organization touches each and every one of our retail customers across the globe, says Yannis
Skoufalos, P&Gs global product supply officer.

Having the ability to take an uninterrupted thread from POS data to the supplier base
and on through the distribution network is what we are trying to addressYannis
Skoufalos, P&Gs global product supply officer
Supply Network excellence and professionalism is a very significant contributor behind a
planned $6 billion reduction in P&Gs cost of goods over five years, including the delivery of a
$1.6 billion reduction in 2013.
While metrics like cost of goods and case fill rates are traditional measurements, P&G is on a
journey to deliver more on what its customers need - one whose brand equity is measured by
how it touches the lives of its end consumers. P&Gs supply chain performance is measured by
the metrics that are important to its myriad of customers, each with its own yard stick.
The goal is to align 80 percent of total business and services in the same way as those that are
tracked by the customers. Think of it as Customer Centricity. Service as measured by our
customers is reshaping the way we engage with our market, Skoufalos says. 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.
To that end, P&G has already announced to Wall Street a major redesign of its flagship supply
networks in North America and Europe for 2015. Two ongoing initiatives illustrate how this
restructuring is impacting the supply chain.
First, in North America, P&G is putting a premium on responsiveness with a distribution goal of
being within one days transit to 80 percent of retailers. To do that, P&G is building six megadistribution centers in strategic locations across the country. The facilities are designed to receive
and cross-dock product from all of P&Gs business units for speedy and efficient delivery of
mixed truckloads. Facilities in Moreno Valley, Calif. and Shippensburg, Penn. are already up and
running. The other centers will be operational by October 2015.
To support the network of mega-distribution centers, P&G is also planning to reconfigure its
North American manufacturing base, again with responsiveness in mind. Rather than having a
dispersed network that is forecast-driven, P&G is adopting a demand-driven replenishment
model based on point of sale (POS) information coming from its retail customers.
To speed up response time, it is asking suppliers to create supplier villages next to its plants,
similar to the just-in-time model employed by the automotive industry. Suppliers can then
respond much more quickly to P&G. Having the ability to take an uninterrupted thread from
POS data to the supplier base and on through the distribution network is what we are trying to
address, says Skoufalos. This is the future of supply chain management at P&G.