Global Logistics and Supply Chain Management

The assignment delves into the intricate world of global logistics and supply chain management. It analyzes various aspects, including the impact of shifting global economies, sustainable practices in operations, and the role of technology like RFID and the Physical Internet. The document also investigates successful case studies, such as Procter & Gamble's innovative control tower environment and their approach to vested outsourcing.

Global Operations and
Logistics

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Company background and Overview:.........................................................................................1
TASK...............................................................................................................................................3
Critical analysis of company supply chain and its Additivity for company competitive
advantage:...................................................................................................................................3
Global Operations: Facilities, Transportation, Inventory, Outsourcing, Information
Technology:.................................................................................................................................6
Procter and Gamble Success in Implementing its Global Logistics Operation:.........................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Procter and Gamble (P&G) is a consumer good corporation based in down town
Cincinnati, Ohio, United states of America. It was founded by William Procter and James
Gamble in 1837. It have a range of portfolio's in the market in which its primary products are
cleaning agents, hygienic product and personal care. It use to deal in food, snacks and beverages
before it sold out Pringles to Kellogg Company. It is listed on NYSE, DJIA Component, S&P
100 Component, S&P 500 Component. It recoded a peak of $83.1 billion in sales in
2014.Currently they are focusing on the cost efficiency which can be bought by simplifying the
supply chain management also gaining competitive advantage (Heizer and Barry, 2013). This
report is about How their current supply chain management works, what advantages they have ,
complete evaluation about their supply chain management and how they managed to make it so
reliable.
TASK
Company background and Overview:
Procter and Gamble is also known as P&G, it deals in consumer goods Consumer goods
and it is based in down town Cincinnati, Ohio, United states of America. It deals in cleaning
agents, personal care and hygienic products. Procter and Gamble is a multinational company
which serves all the countries in the world except Cuba and North Korea. Currently Company is
in the process of streamlining its product portfolio into a simpler yet highly profitable one.
Procter and Gamble has Dropped or sold odd around 100 brands from its portfolio and it have
shifted its total focus on the the remaining 65 brands. These 65 brands provides around 95% of
its total company's profits. As the CEO of Procter and gamble said that the future Procter and
Gamble will be a lot simpler, less complex company who will be providing all the leading brands
of the market which are easier to manage and operate (Mangan and Lalwani, 2016). Procter and
Gamble is a 179 years old corporation. They have a large loyal customer base. P&G is listed on
NYSE, DJIA, S&P 100, S&P 500.
Procter and gamble started its expansion drive in 1930 when it first acquired Thomas
Hedley Co, from Newcastle upon Tyne. P&G after acquisition made 'Hedley House' its
headquarters in UK. It then started introducing more and more products at a rapid speed
(Myerson, 2012). It further acquired different company which bought in different portfolio's to
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the company . This made P&G to hold of brands like Gillette, Duracell, Oral-B, etc. Procter and
Gamble had many portfolio's which were providing not enough returns so P&G started to sell-off
or dropped them from its list of portfolio's. It has been understood that less number of highly
successful brands are more easier to operate and improve than keeping low level of portfolios,
which have either lost their worth or are not providing enough returns (Waters and Rinsler,
2014). They started restructuring in 2009 when P&G sold off their Prescription drug business for
$3.1 billion to Warner Chilcott. In 2012 P&G sold off few more brands and existed the food
business, they sold Pringles to Kellogg for $2.75billion. The restructuring process is still going
on as they have sold their entire beauty product portfolio to Coty for $13billion. It is one of the
biggest divestiture which is done by the Procter and Gamble. The reason they provided was the
sluggish growth in the beauty market.
Procter and Gamble Structure is categorised in Ten categorises and Six selling and
market organisation:
Categories are:
Baby care, Family care, Fabric care, Feminine care, Grooming, Oral health, Personal
health care, Home care, Hygiene and Hair care.
Selling and Market organisations:
Asia Pacific, Greater China, South America, North America, Europe, Middle East and
Africa.
Procter and Gambler has been awarded many awards and has received many recognition
which makes it one of the top corporations in the world (Folinas, 2012). Fortune magazine
awarded P&G a top spot on the list of global top companies for leaders. It also ranked the
company 15th on its 'Worlds Most Admired Companies” List.
P&G manages its activities in a effective manner as it has divided its various operations
into different sections Such as, supply chain management department is divided into supplier
relationship management, internal supplier group and customer relationship management. This
assist organisation in keeping the flow of goods and services to the end users smooth while also
maintaining employees and increasing customer satisfaction. These days company is shifting its
focus on using innovative approach to boost organisation capability to complete whole business
process in a more efficient manner. The recent changes in its supply chain states that it wants to
open various distribution centres which will be catering to the needs of different regions at once.
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It will reduce the time taken in delivery of goods to different outlets and retail stores. The image
shown below states about the corporate structure. It also describes how focused P&G and its
activities are on these four sectors.
The Image states about how focused P&G is on these four sectors while it also states
about how sales and logistics operations revolves around these four sectors.
TASK
Critical analysis of company supply chain and its Additivity for company competitive advantage:
Supply chain management states about the flow of goods and services have in the market.
It includes storage and movement of all the raw material, semi-finished goods and finished goods
from its origin point to the consumption point. Basically it is the management of the supply chain
where a company's goods and services move from different interlinked networks, channels and
nodes, as per the needs and wants of the end consumer. To define supply chain management
properly: It is the management of deigning, planning, executing, controlling and monitoring of
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Source 1: Corporate Structure, 2016

all the activities which are related to movement of goods and services to help the company in
gaining competitive advantage, cost efficiency, better performance and enables it in
synchronising the demand and supply of products on time (Narsing, 2011). The supply chain
management is very vital aspect of attaining high customer satisfaction which will ultimately
result in better returns.Procter and Gamble have one of the largest and best supply chain
management. There was a time when Procter and Gamble were not able to reach the far away
markets in the efficient way, which costed company billions of dollars. But now they have pare
out the high expensive model and has introduced a new supply chain management which have
already saved $1.2 billion dollars. It has also helped P&G in gaining the competitive advantage
in the market (Dekker, Bloemhof and Mallidis, 2012). The new supply chain management
changed companies purchaser item and retail commercial enterprises. This helped Procter and
gamble in achieving high customer certainty and on going changes will make the results even
better. While the whole process was going on Procter and gamble quietly moved to setup a set of
merchants to administer the factors of the supply chain.
Basically, Procter and gamble changed the structure and created two new key territories:
 It streamlined logistics and changed as well as set up new programs like Consumer
requirements planning(CRP) and Efficient Consumer response(ECR).
 It empowered administration with new framework, also devised new information
technology plans for making it more effective in arranging its item stream also providing
assistance to the whole process.
Procter and Gamble is in the process of expansion of its customer centric model which
actively includes the customers needs (Dey, LaGuardia and Srinivasan, 2011). P& is trying its
best to assess the supply chain solution to get the most out of the retail customer and consumer
alike, with high rate of responses. P&G has establish 73,000 personnel supply chain department
who empowers the supply of its products and services to over 200 countries from more than 130
manufacturing centre and 200 distribution sites. The goal of P&G is to align 80 percent of its
operations in same way as tracked by the customers. P&G Has build six mega distribution
channel in North America to achieve the target of moving 80 percent of the goods in one day
transit. These distribution stations are build at the strategic location to enhance the reach to the
market and smooth movement of good and services. The facilities are enabled to receive cross
dock products from the manufacturing units.
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As stated in the image, the international movement of goods and services in P&G takes
place in a well established manner. According to Gunasekaran and Ngai (2012), P&G is
developing mega distribution centres operations, P&G is trying to reconfigure the whole North
American manufacturing system, to enhance responsiveness in mind. They are adopting demand
driven replenishment model which is based on point of scale, where retail customers provide
information. P&G followed certain supply chain management elements to transform its supply
chain. These factors gained competitive advantage for the company:
 To get closer to Customer: P&G considers its customers as the driving force , the king
of everything and to facilitate more services to them they got closer to them by
modernising their supply chain management system.
 Synchronisation: P&G is trying to achieve high synchronisation rate so as to close the
gap which exist between the suppliers and customers (Creazza, Dallari and Melacini,
2010). This has helped the P&G in modernising all the departments in a ways which has
boosted their capacity to build move and deliver the product on time.
 Be more competitive: This is the main part, if P&G is not competitive then no will be
buying their products like they now (Montreuil, 2011). Being competitive enhances the
company chances of attracting potential customer and also getting larger customer base
of other companies.
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Source 2: Tim Feeman, 2017

 Differentiation: It provided differentiation to the P&G from its competitors in the eyes
of its customers. As customers saw that the P&G was much faster in providing the
product and services with high response time.
P&G currently has best supply chain in the world as stated in the image below:
Today P&G is leading the world in having best supply chain management. But in past
few years other companies also has introduced systems that has reduced the effectiveness of
company supply chain management (Myerson, 2012). That is why they are introducing change in
their whole supply chain concept as to increase its effectiveness and efficiency.
Global Operations: Facilities, Transportation, Inventory, Outsourcing, Information Technology:
The main aim behind the modernisation of supply chain by the Procter and Gamble is to
get the fully interconnected platform which can deliver holistic optimisation. By getting to real
time instrumented supply chain Procter and Gamble believes that their sales will increase more
than 2-3%, margin improvement will be around 3-6% and improvement in asset utilisation will
be around 6-10%. P&G says that they leveraged the models of supply sufficiency to bring
together multiple data points and analytics visualisation which resulted in inventory saving
billion of dollars (DShah and Ierapetritou, 2011). Today, Procter and Gamble is present in all the
countries except Cuba and North Korea. They have global operation running day and night. The
efficiency of these operation is very essential as to make sure that the company gets high
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Source 3: Supply Chain Digest, 2012

productivity while being cost efficiency. Company like P&G is not reliant on one country but its
profits and revenue is generated through the global operations. P&G is producing its products in
more than 80 countries. P&G being an innovative and learning organisation brought its
innovation to its global operations.
In 2000, when A.G. Lafley became the CEO of P&G he challenged the organisation
ongoing system and bought in innovation to make things simpler and more efficient while not
losing their effectiveness. He was determined to outsource the work as to fully utilise the
sufficiency and effectiveness the employee of P&G had. He Focused on outsourcing the
Facilities management. It was a Innovative idea. The R&D department of P&G was relieved
from the work stress and was able to focus on more important matters (M. Coe, 2014).
Facilities Management
The facilities management was outsourced to Jones Lang LaSalle (JLL) for $4.2 billion
dollars. It took over the management of technical centre and offices, also maintenance and
security of the facility. This deal affected the operations of more than 60 countries, where P&G
had its facilities established. JLL took care of facility management, project management(new
facility) and strategic occupancy services (Heizer and Barry, 2013). This helped P&G in locating
its new facilities into strategic places and getting to the efficiency level, saving tens of million
dollars.
Outsourcing to GT Nexus
Procter and Gamble has outsourced its transportations solutions to GT Nexus. They are
using GT Nexus since 2001 but now they have renewed and expanded the contract to provide
more transport solution. This expanded solution provide the users a centralised base for
transportation management and real time visibility into the flows in inventory across the global
supply chain. GT Nexus has named its model “single version of truth”. It delivers supply chain
visibility and execution. It is able to do that by shifting the processing of information from nodes
to the centre of the network (Mangan and Lalwani, 2016). Cloud technology has enabled all the
parties to stay connected on single platform and common views are provided to partners in form
of standard information set, including order status, inventory, documents, shipments and
payments.
Inventory Management
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The inventory management in P&G is a complex process which is being simplified with
modernisation and outsourcing. P&G since late 80's is using scientific methods to deal with the
complex inventory management. It has used distribution requirements planning(DRP). But it
needed a easy way to keep reliable safety stock levels at location level and site level. Any
uncertainty is met by the safety stock kept aside by the company. Later on P&G implemented
Lotus1-2-3 model. But it was also not sufficient to make the process easy and simple. So P&G
developed its own model of global inventory using Excel. P&G kept two things in mind while
developing the model:
 Fast method for setting safety stock in DRP structure.
 Educating the supply chain planners about different types, roles and root causes of
inventories in supply chain
P&G keeps reviewing the policies and frameworks of the operations it need to take on
everyday. This means that the sufficiency levels are monitored on constant basis. This helps
P&G in keeping the updated knowledge about the cycle stocks, safety stocks, frozen stocks and
anticipation stocks (Myerson, 2012). It alarms the company systems when inventory goes below
the set order point. Basically P&G has outsourced most of the task to the external companies as
to save resources and invest them somewhere else. The information technology was outsourced
to HP and IBM, to develop one platform for payroll, HR and other task.
Procter and Gamble Success in Implementing its Global Logistics Operation:
The first thing Procter and Gamble did was to integrate the whole supply chain software
with suppliers, distributors and retailers to ensure that all the packages of products are tracked
throughout the supply chain chain to provide better visibility to all the parties and increase their
collaboration (Waters and Rinsler, 2014). The effective supply chain can easily increase the
sales, margins as well as the revenues of the company. Not many companies are developing and
innovating their supply chains for better visibility, efficiencies and lower cost. P&G is proving
every year that there more that can be done to enhance the level and transform how product and
material are shipped to the manufacturing and then to the customer and finally to the consumer.
P&G keeps its supply chain updated with the adoption of new technologies to be more
competitive in the market. They are using demand sensing and demand driven replenishment for
doing the forecasting about the possible demand for their diversified product lines which in turn
helps in reduction of manufacturing, storing and transporting the excess inventory.
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The Supply chain model used by P&G assist it in managing its energy and resources
while directing them in a direction that leads to achievement of goals. P&G has created a supply
chain which is customer centric in nature. This is done by analysing the metrics matter to their
customer and making sure that right level of customer service is done. Current target of P&G is
to achieve the one day transit system for the goods. They want to transit 80% of their good in one
day by making six mega distribution centre operational. Also they are trying to tune in least 80%
of their business with their customer tracking their inventory and be using metrics as them
(Folinas, 2012). P&G is also trying to develop a responsive supply chain which enhances the
supply chain efficiency to even higher level. The responsive supply chain will help Procter and
Gamble in dealing with the unexpected situation in much quicker way. It will also enable them to
keep their operations running and adapt to the situation so as to earn high profits even in
unexpected situations.
Procter and Gamble knew that without co-ordination across supply chain, there is no way
they can achieve efficiency with effectiveness (Mezzadra and Neilson, 2013). When planning
new facility design or focusing on customer demand, they have to look at different logistics, like
supplier availability, manufacturing cost and transportation ability. P&G also makes the short run
forecast to understand the need to understand the planning cycle and its factors. There are certain
factors which made P&G trade-off the risk while implementing supply chain management:
 Improvement of forecasting methods
 Reliable forecasting software usage
 For decision making source data is retained
 Focus on short range forecast more than long range.
Procter and Gamble believes in constant innovation in every field of business. Its the
innovation which has made them to come this far and be a big global enterprise. Today, P&G is a
leader in supply chain management (Dekker, Bloemhof and Mallidis, 2012). They have
outsourced most of the task to the companies to save resources and invested them in
innovation in other fields, it saved millions while other projects made billions.
CONCLUSION
Procter and Gamble(P&G) has been able to change the whole scenario in the market. It
has made other big corporation to think about improving their supply chain management system.
Procter and gamble has saved billions of dollars just by improving their supply chain
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management and also the outsourcing of the task like facility management to JLL has helped the
company in saving the important resources for much more important task. Procter and Gamble
has opt on the pool of opportunities by improving something which no one considered to be
important.
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REFERENCES
Books and Journals:
Creazza, A., Dallari, F. and Melacini, M., 2010. Evaluating logistics network configurations for a
global supply chain. Supply Chain Management: An International Journal. 15(2).
pp.154-164.
Dekker, R., Bloemhof, J. and Mallidis, I., 2012. Operations Research for green logistics–An
overview of aspects, issues, contributions and challenges. European Journal of
Operational Research. 219(3). pp.671-679.
Dey, A., LaGuardia, P. and Srinivasan, M., 2011. Building sustainability in logistics operations:
a research agenda. Management Research Review. 34(11). pp.1237-1259.
Folinas, D. ed., 2012. Outsourcing Management for Supply Chain Operations and Logistics
Service. IGI Global.
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and
analysis. International Journal of Production Economics. 135(2). pp.687-701.
Heizer, R. and Barry, R., 2013. Operation Management, Sustainability and Supply Chain
management (Vol. 11). Pearson, UK.
M. Coe, N., 2014. Missing links: Logistics, governance and upgrading in a shifting global
economy. Review of International Political Economy. 21(1). pp.224-256.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain
management. John Wiley & Sons.
Mezzadra, S. and Neilson, B., 2013. Extraction, logistics, finance: global crisis and the politics of
operations. Radical Philosophy. 178(March/April). p.8.
Montreuil, B., 2011. Toward a Physical Internet: meeting the global logistics sustainability grand
challenge. Logistics Research. 3(2-3). pp.71-87.
Myerson, P., 2012. Lean supply chain and logistics management. Colombus: McGraw-Hill.
Narsing, A., 2011. RFID and supply chain management: an assessment of its economic,
technical, and productive viability in global operations. Journal of Applied Business
Research (JABR). 21(2).
Shah, N.K. and Ierapetritou, M.G., 2011. Short‐term scheduling of a large‐scale oil‐refinery
operations: Incorporating logistics details. AIChE Journal. 57(6). pp.1570-1584.
Tzeng, G.H. and Huang, C.Y., 2012. Combined DEMATEL technique with hybrid MCDM
methods for creating the aspired intelligent global manufacturing & logistics systems.
Annals of Operations Research. 197(1). pp.159-190.
Waters, D. and Rinsler, S., 2014. Global logistics: New directions in supply chain management.
Kogan Page Publishers.
Online
Procter & Gamble's Futuristic Control Tower Environment. 2015. [Online]. Available through:
<https://www.forbes.com/sites/stevebanker/2015/07/01/procter-gambles-futuristic-
control-tower-environment/#35072d2d60e9>. [Accessed on 25th July 2017].
Vested Outsourcing: How P&G Brought its Focus on Innovation to Facilities Management.
2013. [Online]. Available Through:
<http://www.areadevelopment.com/siteSelection/December-2013/Procter-and-Gamble-
outsources-facilities-management-32627252.shtml>. [Accessed on 25th July 2017].
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