Becoming demanddriven
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This document provides an overview of Procter & Gamble's efforts to implement a consumer-focused supply network. It discusses how changing consumer and retailer expectations necessitate more agile, demand-driven supply chains. P&G aims to shift from forecast-based production to producing to actual consumer demand. The key aspects of P&G's consumer-driven supply network approach are reliable service, agile demand-driven supply, and affordable differentiation. The document outlines steps P&G is taking to change its culture and relationships to become more externally focused on consumers and customers. It also discusses initiatives to build internal capabilities to better synchronize information and operations across the supply chain.
Becoming demanddriven
- 1. Bringing the Voice of the Consumer Into Your Supply Chain Jake Barr Director, Consumer Driven Supply Network Global Mfg, Planning & Logistics The Procter & Gamble Company
- 2. The Consumer is Boss Why Change What is Consumer focused Supply Network How to Change agenda 1 2 3 4 5 About P&G Understanding What to Design & How
- 3. about P&G
- 4. P&G + Gillette = 22 Billion-Dollar Brands
- 5. 5 P&G Today • $67.9 billion sales* • 140,000 employees • More than 140 manufacturing facilities in more than 80 countries • More than 25 R&D centers in 12 countries • Unique organization structure *Unaudited proforma condensed combined financial results of P&G and Gillette
- 6. consumer is
- 7. Two Moments of Truth When they choose… …and when they use
- 8. Winning at the First Moment of Truth The need for a consumer-driven supply network
- 9. why change?
- 10. 10 Consumer is Boss Ever-increasing expectations • Innovation • Value • Shelf presence • Customization • In-store experience
- 11. Retailers are Changing To meet the needs of today’s consumers • • • • • • • Industry consolidation Importance of free cash flow Growth of private labels Focus on margins Seeking to be unique Seeking to offer solutions Operational excellence
- 12. Challenges in the End-to-End Supply Chain Today’s supply networks aren’t fast/flexible enough Demand for affordability and value Agility Scale • Speed to market • Unique challenges of developing and developed markets • Ongoing effort to reduce time and costs in order to create value for our business Differentiation • Unique needs of large, global retailers vs. small, local high-frequency stores
- 13. what is CDSN
- 14. Supply Chain Evolution • Internal cost • Reliability and flexibility • Creating value with retail customers and consumers to drive business growth
- 16. Reliable Service Externally focused measures: • Right product • Right place • Right time • Right quality • Right price/value
- 17. Agile, DemandDriven Supply • Reducing end-to-end supply network time • Producing to demand • Increasing service and reliability at a lower working capital investment • Accelerating speed-to-shelf for new product innovations • Information replaces inventory
- 18. Affordable Differentiation • Shopper understanding – a common starting point • Customer understanding – existing and emerging needs (e.g., shelf-ready packaging) • Supply solutions • Late-stage differentiation • Flexible manufacturing
- 19. how to change
- 20. Change the Culture External Focus
- 21. Becoming Externally Focused Understand how the supply network performs from the shopper and retailer perspective • Remove barriers between supply community and commercial/sales (e.g., rewards) • Create awareness of customer needs into company/category management • SC leaders need to talk the business language (e.g., growing the business)
- 22. Change the Relationship with Customers Full Collaboration
- 23. Build Internal Capability • External focus: culture/measure change • Operational excellence: service and availability • Synchronization: information replaces inventory • Shelf-back design • Agility: take time and cost out of the system • Flexibility: customer and consumer driven differentiation
- 24. Produce To Demand Continuum Production Triggered By FORECASTS Today’s Operation Shorten Cycles < 3 Days Produce Every SKU Every 2-wks Produce Every SKU Every Month Production Triggered By KNOWN DEMAND Orders, Customer Inventory Levels, POS Produce Every SKU Every Week Produce To Order Today, Ship Tomorrow/Today Produce to Replenish Inventory Customer POS Replenishment Produce To Replenish Customer DC Inventory Withdrawal FOCUS: Improve Reliability/ Capability Reduce Inventory Levels FOCUS: Supply Chain Synchronization Supply Chain Integration LEAN AGILITY © 2002 The Procter & Gamble Company, All Rights Reserved.
- 25. What about the Initiative process? Reinventing the supply network • Shelf back based product design to win at the shelf • Short cycle consumer/retailer learning • Answering question of what innovation rhythm is required to win • Source of new ideas • > 50% Connect & Develop • Supply Design integrated from the beginning • Supply Chain Time
- 26. So … where would you start? Reinventing the supply network
- 27. BUILDING BLOCKS TO CONSIDER Demand Journey Demand Integration Distribution Response Time Event Visibility Supplier Integration Quick Changeover Batch Reduction Standardized Demand/Supply Processes Quality at Source TPM/Loss Elimination Value Stream Mapping Standard Master Data – Run to MRP Measures (Reliable data, predictable production & supply)
- 28. Do You know what The Business Model Requires for a SN Design?
- 29. How to 6
- 30. Why? Supply Network Design Process • Brand Equity • GBU & MDO Plans • Choice Structuring • Price Driven Economics 1. Business Strategy Business Needs • Business Strategy • Industry, Technology Trends • Value in Supply Chain • Sourcing Strategy • Organization Focus 2. Strategy Engagement What? Supply Network Requirements • Scorecards • Key Performance Measures Where? • High-Level Mapping SN Performance Gaps • Options Analysis How? 3. Gap Analysis 4. Strategic Design Strategic Direction • Supplier Selection CBA • Siting / Sourcing • Demand Analysis • Production Strategies • Inventory Policy Demand Strategy Initiative Strategy Material Supply Strategy Material Sourcing Strategy • Scorecards 5. Structural Design Supply Network Structure • Outsourcing CBA • Distribution/Replenishment 6. Operational Design Capacity Strategy Planning Strategy Production Sourcing Strategy 7. Deploy & Monitor © 2006 The Procter & Gamble Company, All Rights Reserved. • Operating Strategy CBA • Simulation • Mapping Distribution Strategy Inventory Strategy Information Strategy
- 31. Questions?