Avinash R

Ravi Pandey

 One

of the largest manufacturers

supplying grocery to retailers and
wholesalers
Leader in designing how branded
consumer-goods go to market
Strong customer pull for P&Gs products
Products were sold through multiple
channels, with grocery retailers,
wholesalers, mass merchandisers, and
club stores

 Recognizes

the need to serve the needs of

both the consumer and the channel in
order to be successful
Changes at P&G in affected both the
company and the entire channel
Focus on improving consumer value by
eliminating non value-added processes in
the channel

 Swings

in price were creating variability

and massive inefficiency in the entire
grocery supply chain
Uncertainty in demand increased
manufacturer inventory requirements and
higher manufacturing costs
Profit margins for the retailers were very
low since costs were very high due to
inefficient operations

 The

retailer provide P&G with daily data on

warehouse orders received from the stores
P&G uses the daily warehouse shipment
data to determine warehouse
replenishment volumes needed
This would limit the retailer's warehouse
inventory to acceptable levels, eliminate
costly LTL shipments, and reduce stock
outs

 EDI

is used to transmit data from the

retailer to P&G on warehouse product
shipments to each store
EDI is an enhancement for the CRP and it
provided essential platform for CRP
operations
It is a powerful tool when combined with
proper process reengineering
It enabled transfer or large amount of error
free data between companies

 Benefits

Reduces transaction cost

Enables transfer of huge data
Error free transfer
Threats

In case of problems, seeks manual intervention

Potential for huge errors without human buffer

Increases cost for P&G due to manual rework

Without CRP it is useless

 Rewrote

the entire ordering, shipping, and

billing (OSB) system
The OSB system supported pricing, ordering,
shipping, invoicing, and separate credit
systems
The OSB integrated many systems that did
not work well together across functions and
product sectors
The system was designed to eliminate
manual processing steps and not to redesign
the existing processes

 Redesigning

the ordering process involved

a combination of systems and business
process changes
Shared database for product pricing and
product specifications
The batch processing system which was
both inefficient and ineffective was
upgraded

 Benefits

Standardization of the process

Automation
Reduction of complexity

Reduction in error
Reduction in the cost of the processes
Threats

Resistance to change
Time and cost of implementation

 P&G

led the grocery channel

transformation
Moved from brand management to
category management
Improvements in manufacturing and
planning processes
Created value to the customers

 1993

- P&G sold CRP system to IBM's

subsidiary (ISSC)
The P&G CRP system was to be offered
by IBM to all manufacturers
IBM CRP service offering allowed retailers
to interact with multiple vendors in a
common format

 Benefits

Standardization in the industry

Reduced barriers to CRP adoption
Reduced P&Gs cost of operation

Increased the base for P&Gs operations

Threats

There were no economic benefits for P&G by

outsourcing

 IT

can be a powerful tool when combined

with efficient process reengineering
IT can be used to reduce the complexity of
processes thereby reducing the errors
Outsourcing a process to a giant may
increase the chances of adoption of the
technology by masses