Supply Chain Management of...

Touching lives,Improving lives.

What is Supply Chain Management?

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers . Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

History and Background

William Procter, a candle maker, and, James Gamble, a soap maker, immigrants from England and Ireland, respectively, who had settled earlier in Cincinnati, who met as they both married sisters, Olivia and Elizabeth Norris formed the company initially. Alexander Norris, their father Alexander Norris, their father--in law called a meeting in which he convinced his new sons in--law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born.

The moon-and-stars trademark became a symbol of quality to Procter & Gamble's base of loyal customers.

Today...
The Procter & Gamble Company (P&G) is a giant in the area of consumer goods. The leading maker of household products in the United States, P&G has operations in nearly 80 countries around the world and markets its nearly 300 brands in more than 160 countries; more than half of the company's revenues are derived overseas. Its products, which fall into the main categories of fabric care, home care, beauty care, baby care, family care, health care, snacks, and beverages Committed to remaining the leader in its markets, P&G is one of the most aggressive marketers and is the largest advertiser in the world. Many innovations that are now common practices in corporate America--including extensive market research, the brand-management system, and employee profit-sharing programs--were first developed at Procter & Gamble.

P&G FOCUSES ON 5 CORE STRENGTHS REQUIRED TO WIN THE CUSTOMER PRODUCT INDUSTRY. THEY ARE DESIGNED TO LEAD IN EACH AREA.

Product Portfolio

Procter & Gamble competes through differentiation, and spends heavily on research and development to create products that are differentiated from that of competitors, and spends heavily on advertising to signal the value of the company s brands. Due to their relationship with many retailers and investment in learning about consumer behaviour, P&G has a good sense of what consumers want in a product, and can effectively focus research and development to create new products, and improve existing products to better meet consumer needs. P&G is decentralized, with global business units focused on individual countries. This cuts overhead, and more importantly, lets the business unit optimize operations for a particular country. The combination of global scale and local focus enhances the company s competitive advantage.

The 10 Pillars of P&G

Ariel Head & Shoulders Olay Always Pampers Safeguard Whisper Pantene Tide Pringles

Coconut-based cleaning and food products

Purico Star Perla Sunshine Camay Mayon PMC Victor Ola Agro Fresco

Laundry and personal cleansing products

Tide DariCreme Primex Safeguard Ariel Gain Bonus Lava Mr. Clean Prell Crest Zest Ivory

Health care
Vicks Fibresure Thermacare Pepto Bismol

Hair care and laundry categories Pampers Whisper Rejoice Tide Max Factor Vidal Sassoon Ivory Pantene

Dishwashing and fabric care

Laundry, personal care and hair care

Joy Mr. Clean Downy Alldays

Ariel Ascend Camay Clairol Nice n Easy Old Spice Safeguard Secret Wella Zest

P&Gs Supply Chain Management

The company previously used supply chain mastery to carve out strong lasting competitive advantage. It first partnered with Wal-Mart in USA to develop a pioneering continuous replenishment system. It systematically shifted its strategic focus towards supply chain based service innovation-and in the process transformed both consumer products and retail industries.

 The company modified its supply chain focus and remade itself through a series of innovative initiatives. These initiatives reduced variations and uncertainties in demand, thereby reducing the need for surge production capabilities and large inventories. Thus by evolving their primary supply chain focus from marketing to production, inventories and logistics in response to changing business requirements, P&G was able to cut costs, meet customer demand and build strong co-ordinated relationships with retailers ,partners and customers.

P&G's New Innovation Model

Procter & Gamble has operated one of the greatest R&D operations in corporate history. But as the company grew to a $70 billion enterprise, the global innovation model it devised in the 1980s was not up to the task. CEO A. G. Lafley decided to broaden the horizon by looking at external sources for innovation. P&G's new strategy, Connect and Develop, uses technology and networks to seek out new ideas for future products.

Connect and Develop will become the dominant innovation model in the twenty-first century, according to the authors, both P&G executives. "For most companies, the alternative inventit-ourselves model is a sure path to diminishing returns.

 The company developed a careful Account selection plan as part of an innovation product supply model. It also developed an operating partnerships with major customers capable of linking electronically, taking full loaded truck deliveries and engaged in joint business process re-organisation programs. The new supply chain strategy required direct distribution to major Accounts-enabled to develop an extraordinarily high degree of customer intimacy.

 The company cleverly put an end to all the smaller Accounts setting up a set of master distributors to service them. These master distributors in turn gained enough volume to sustain direct value added relationships with P&G. P&G also used agent based marketing which helped them transform its supply chain system so fundamentally that the company no longer calls it a supply chain. Quality, value and technology are the core of their product supply organisation.

SWOT Analysis

Strengths
Strong financial position both in the domestic and foreign markets. The company has the ability and capability to push innovation to commercialization faster than any other competitor in the industry. P&G has effective and efficient manufacturing processes which include total quality management as well as just in time inventory systems.

 Another unique strength of P&G is its pool of skilled labour. P&G has 9,000 R&D associates including 1,100 PhDs. P&G has a track record of producing high quality products which is very difficult to match or beat. P&G s innovative products and services have helped consumers save a lot of money on dental hygiene and on other health care products.

Weaknesses
Lack of effective distribution system in some segment as well as poor location in some foreign countries and high cost of inputs. Employment of foreign based local management who doesn t have any international business experience.

Opportunities
Well defined market niche, just in time manufacturing technology, wide range of demography, and the removal of trade barriers in some foreign countries. The removal of trade barriers in some foreign countries has enabled the company to operate competitively without much government intervention.

Threats
New entry into the household product industry. Use of substitute products. Increased trade barriers in some developing nations. Unfavourable business laws and political instability. Investors do not like uncertainty.

The Indian Scenario

Procter & Gamble, the world's largest consumer goods firm, has invested Rs. 345 crore in its unlisted arm P&G Home Products in one of its largest investments in a decade in the country. Confirming the fund infusion into the 100% owned subsidiary that makes Ariel, Tide and Pantene, a P&G spokeswoman said the money will go into reaching out to "more consumers, in more parts of India, more completely".

 Analysts now expect the US giant to be more aggressive in the Indian market, enter new categories, including toothpastes, surface cleaners and hair oils, and make more products locally to offer more massconsumption products. The money will primarily power P&G's 'Project 2-3-4' strategy to double the number of Indians who use its products, treble per capita spending by Indians on its products and quadruple net sales of its India operations by 2015.

 The development confirms the Cincinnatiheadquartered company's move to shift its focus away from the western markets and catch up with archrival Unilever in emerging markets such as India. Procter & Gamble Health & Hygiene, which markets feminine hygiene brand Whisper and Vicks anti-cold balm and lozenges, and Gillette India, maker of razors and other shaving products, are listed on the bourses.

 Procter & Gamble Home Products is the largest subsidiary with presence in big categories such as laundry, hair care and skin care, which together make up a Rs. 18,000crore market, or more than half of the home & personal care segment. -The Economic Times of India

P&G aims to work towards achieving the perfect balance involving its business strategy, huge reserves of technical resources and most importantly its people.

Thanking you....

Presented by: Shusmita Choudhry -982 Sweta Sarda-991 Moumita Mallick- 992 Khushboo Agarwal -995 Amrita Mohta-996 Rohit Cyril -5814 Ashnil Satralkar- 5931 Amita -5889 Nicola Xalxo-5862 Priyanka Agarwal- 5853