8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

1/16

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

2/16

One of the largest manufacturers supplying grocery

to retailers and wholesalers

Leader in designing how branded consumer goods go

to the market

Strong customers pull for P&G products

Products were sold through multiple channels, with

grocery retailers, wholesalers, mass merchandisersand club stores

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

3/16

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

4/16

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 sincecosts were very high due to inefficient operations

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

5/16

The retailer provides 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 retailers warehouse inventory to

acceptable levels, eliminate costly LTL shipments, andreduce stock outs

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

6/16

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 providedessential platform for CRP operations

It is a powerful tool when combined with proper

process re-engineering

It enabled transfer or large amount of error free data

between companies

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

7/16

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

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

8/16

Rewrote the entire ordering, shipping and billing

(OSB) system

The OSB system supported pricing, ordering,

shipping, invoicing, and separate credit systemsThe OSB integrated to 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

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

9/16

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 bothinefficient and ineffective was upgraded

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

10/16

Benefits

Standardization of the process

Automation

Reduction of complexity

Reduction in error

Reduction in cost of the processes

ThreatsResistance to change

Time and cost for implemention

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

11/16

P&G led the grocery channel transformation

Moved from brand management to categorymanagement

Improvements in manufacturing and planning

processes

Created value to the customers

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

12/16

1993P&G sold CRP system to IBM 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

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

13/16

Benefits

Standardization in the industry

Reduced barriers to CRP adoption

Reduced P&G operations cost

Increased the base for P&G operations

ThreatsThere were no economic benefits for P&G by outsourcing

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

14/16

IT can be a powerful tool when being combined with efficient

process re-engineering-correct integration across organizations leads to efficiency

IT can be used to reduce the complexity of processes therebyreducing the errors

-reduced manual works and no need so much of monitoring andfollow ups (No human buffering which can causes error )

-can focus on core competencies

Outsourcing a process to a giant may increase the chances of

adoption of the technology by masses-will be commercially available whereby new suppliers and retailerscan take part

-many organizations in the supply chain can adapt the technologyand reducing cost

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

15/16

Difficulties In Direct Selling AndIndigenization

Database needs to be very

extensive

Difficult to acquire precise

information about people with

incontinences

Indigenization may reduce quality

will cause imitation products

Both may not provide the required

volume of business due to lack of

infrastructure and culture

AlternativeRetail Channel

Modern supermarkets and

department stores

Target higher-middle and rich

classes

Perfect selling environment

privacy to consumer

Saving on wholesale margin

Organized retail is growing in cities(Delhi, Mumbai)

8/10/2019 MIS GSM5170 - P&G 05-11-2014 - Copy

16/16