1. 1. Supply Chain Management Submitted by Savio Cerejo 2010C25 Ayush
Bhagat 2010C29 Krishna Bajaj 2010C37 Sohan Tulpule 2010C39 Kritika
Priyadarshini 2010C40 Kunal Singh 2010C41
2. About P&GIndustry Consumer goodsFounded 1837Revenue $78.9
billionOperating income $16.13 billionNet income $12.74 billionEmployees
127,000
3. Supply chain initiatives of P& Control Tower Program Consumer Driven
Supply Network (CDSN)Other Initiatives Collaborative Planning
Forecasting and Replenishment (CPFR) GMajor Initiatives
The concept emerged when the logistics executives at Procter 4. CPFR
Pre scenario - Bullwhip Effect & Gamble (P&G) examined the order
patterns for one of their best-selling products Pampers. Its sales at retail
stores were fluctuating, but the variability was certainly not excessive.
However, as they examined the distributors orders, the executives were
surprised by the degree of variability. When they looked at P& At first
glance, the variability did not make sense. While the consumers, in this
case, the babies, consumed diapers at a steady rate, the demand order
variability in the supply chain were amplified as they moved up the supply
chain. P Gs orders of materials to their suppliers, such as 3M, they
discovered that the swings were even greater.&G called this phenomenon
the "bullwhip" effect.
Rationing and shortage gaming. Players in supply chain after receiving
order accumulates demands (Order Batching) before issuing an order.
Price fluctuations manufacturers and distributors periodically have special
promotions like price discounts, quantity discounts, coupons, rebates, and
so on. Separate demand forecast done by players in supply chain. 5.
CPFR pre scenario - Bullwhip Effect- Causes
Procter 6. CPFR - Overview & P Gamble’s CPFR focus is to build on the
current success of the Continuous Replenishment Program (CRP). CRP
has delivered greater than 99% service levels, and has reduced customer

2. distribution center inventories by as much as 50% in customers
representing over 40% of our U.S. and European businesses.&G has
deployed CPFR to enable creation and integration of consumer demand
data. This will trigger product flow from our manufacturing plants to our
customers’ DCs, from the customers’ DCs to their retail store shelves, and
ultimately from the store shelves into consumer homes.
Generating orders Resolving / collaborating on exception items
Identifying exceptions for order forecast Creating order forecast
Resolving collaborating on exception items Identifying exceptions for
sales forecast Creating sales forecast Creating joint business plan
Developing collaboration agreement 7. CPFR - ModelCPFR is a nine-step
process model consisting of
8. CPFR - Model
Supply Chain Management Processes Replenishment Processes
Integrated Planning and Forecasting Processes Collaborative
Processes 9. CPFR - InitiativeCPFR Processes Addressed
CPFR recognizes that the main causes of these two issues are identical:
1. Ineffective trust-based collaboration. 2. Ineffective planning using
visibility of POS consumer demand. 3. Ineffective forecasting. 4. Ineffective
product replenishment in response to demand fluctuations. Primarily
CPFR output concentrates on improving inventory and reducing out-of-
stocks. Since both the objectives are inversely proportional; trade-offs must
be made. 10. CPFR - Initiative
Selection of CPFR Partners P 11. Challenges in Implementing CPFR&
Trust Based Relationship CPFR involves sharing sensitive information.To
take full advantage of the benefits of CPFR, P G and Wal-Mart assess the
potential relationship according to anticipated, realistic benefits, pertinent to
common business goals, organizational and cultural issues.&G and
Walmart created a relationship founded on trust. Sharing sensitive data
and close collaboration demands reliability.

3. Senior Management buy in Senior management of P Detailed Definition
of Systems’ Capabilities For the success of CPFR it is key to collaborate at
the same data level. In particular, best practice would be to collaborate at
the lowest data level; sharing promotional plans, forecasts and
replenishment orders per trading unit and per point of sales. 12.
Challenges in Implementing CPFR&G made sure that the necessary
resources (Human Resources, Technical Infrastructure, Time and Project
Budget) are prioritized and dedicated to the project.
Improved responsiveness to consumer demand The reduction of out-of-
stocks and shorter cycle times leads to a more responsive and reliable
supply chain for P 13. CPFR - Benefits&G, thereby improving on-shelf
availability and increasing consumer satisfaction. Through CPFR P&
Greater forecast accuracy with single shared forecast Sharing a single
forecast along the supply chain enables P G reduced replenishment time
by 20%.&G to benefit from potential synergies and brings together trading
partners’ efforts. Depending on their position in the supply chain and
supply chain activities, trading partners may have different views of the
market and information. Combining this knowledge is the foundation for
greater forecast accuracy. Through CPFR forecast accuracy improved by
20%.
Increase in sales Collaboration on planning and forecasting potentially
reduces out-of-stocks, lost sales and increases on-shelf availability which
leads to increase in sale of P 14. CPFR - Benefits& Cost reduction P G.&
Improved relationship between the trading partners The relationship
between P G has aligned the production schedule with the agreed
forecast, so costs has been reduced by decreasing set-up times, effort
duplications and variations.&G, wall mart has improved when collaboration
takes place. Trading partners will gain a better understanding of their
respective businesses by regularly exchanging information and
establishing direct communication channels.

4. Inventory reduction Increased forecast accuracy facilitates a decrease in
the safety stock, reducing inventory levels and increasing on-shelf
availability. Thus the inventory cost for P 15. CPFR - Benefits&G has
reduced.
P 16. CDSN – Pre Scenario& P In order to handle the first moment of
truth, it is important to have stocks available on shelf. G believes in 2
moments of truth. ◦ First, when customer buys the product from shelf. ◦
Second, when they actually use it and like it.&G realized that 48% of t They
were losing a large quantum of sales and hence needed to take corrective
action. imes their products were unavailable on the shelf when the
customers wanted it.
P 17. CDSN - Initiative& P G redefined its supply chain strategy under
the leadership of Keith Harrison – Head of Global Product Supply
Division.&G decided to have a connection between actual sales and the
supply chain process. Paradigm shift in viewing supply chain management
from forecast driven to actual demand driven. Supply Network instead of a
supply chain because of information flow in all directions.
P 18. CDSN - Initiative& CDSN required P This operating strategy was
called Consumer Driven Supply Network. G started its supply chain from
store shelves and moved back to its suppliers.& Harrison was quoted
saying:“ We need to work off of real demand, so that we produce what is
actually selling, not what is forecast to sell.” G to create a responsive
supply chain that would produce and supply products as per demand at the
customer level.
19. How did P& P G implement CDSN& This enabled retailers to connect
to P Implemented an online system-”Web Order Management”. G
collaborated with its partners across the supply network to win consumers
at the point of purchase.& Various other initiatives like using multifunctional
resources, joint scorecards and sophisticated technology were undertaken

5. in collaboration with retailers. G and access its scheduling, inventory and
replenishment levels.
IDF is a software used by P IDF is one of the most important component
of CDSN. 20. CDSN – Intelligent DailyForecasting (IDF)& •Output: ◦ Daily
estimates for next 42 days ◦ Refreshed Daily Input: ◦ Daily Order
Information ◦ Daily Shipment Information ◦ Weekly shipment forecast G to
forecast the demand based on actual sales. Following are the Inputs and
outputs that this software provides.
IDF tracks daily demand across different stores, and that itself becomes
the replenishment plan of P 21. CDSN – Intelligent DailyForecasting
(IDF)& As a result of implementing IDF, P Actual demand is picked up
from the scanner data at the point of sale and it is made available at the
plant where it becomes part of the daily production schedule. G for those
stores.&G is running few plant at 6-8 hours response time.
Creating consumer value and meeting rising supplier costs. The
challenge was to reach the global large-scale retailers as well as the small
and local street shops. Meeting the diverse challenges of developed and
developing markets as such markets like India depended on unorganized
retail. Reaching out to millions of customers across the globe was a major
challenge. The $83 billion company had a total of 90000 suppliers with
150 manufacturing plants globally. 22. CDSN - Challenges
23. Impact of CDSN - Results1. Forecasting Accuracy: Improved forecast
accuracy by 30%.2. Shelf-Level Out of Stocks: The percentage of products
that are out of stock on retailers shelves at any given time. P&G has cut
this to 5%, from 10% within 8 months of implementation.3. Total Supply
Chain Response Time: The time from when a cash register records the
sale of a product to the purchase of raw materials to produce its
replacement. From six months, it came down to two months.
24. Impact of CDSN - Results4. Total Supply Chain Inventory: The hard
count of all products flowing through the supply chain at any given

6. moment, whether on store shelves, in back of the store, at warehouses, in
trucks or wherever. P&G got a daily count, rather than weekly or monthly
and hence reduced safety inventory by 10%.5. Pricing-Design From the
Shelf Back: CDSN helped in determining an acceptable price point for an
item and then working it back through manufacturing and distribution to see
if that product can be delivered at a price acceptable to consumers and a
profit acceptable to P&G.6. Topline and bottomline: Increased overall sales
by 15% in one year. Net profits witnessed a 19% gain from $4.35 billion to
$5.19 billion.
Financial Times once wrote,“An effective supply chain helps
manufacturers by reducing a retailers “out-of-stocks”, which in turn
prevents lost sales. Those sales also benefit the retailer, while efficient
delivery of products to meet demand can also reduce the costs of holding
inventory to the retailer.” Jake Barr - In Charge Supply Chain Innovation
was quoted saying“Twelve months into the new pull system, the company
is close to its original goal of cutting out-of-stock conditions in half. Now
93% of outlets working under the new system are experiencing no more
than 5% out- of-stock rates.That represents a yearly savings of $50 million
to $100 million.”Source: www.baseline.org – 01-07-2004CDSN helped
create a balance between excess inventory and stock- outs 25. Impact of
CDSN - Results
The lead logistics provider centrally controls and optimizes the product
flows, delivering maximum truck fill for every kilometre travelled in the
fastest possible time, in an ecologically friendly manner. Helped in
eliminating inefficiencies such as loading and unloading delays, rush
transport up-charges, dead legs (empty trucks) and production line stops.
Logistics optimized by making changes to the rate, route, mode and
method of transportation. 26. Control Tower Program
27. P& 67,000 metric tons reduction in CO2 emissions. 68% improvement
in our finished product inbound operation in Turkey. 58% reliability
improvement on inbound operations in Egypt. Amount of empty truck

7. journeys reduced by over 15% to date. Turkey and Egypt were the first
countries in CEEMEA region to adopt the Control Tower logistics
optimization effort.Results Kicked off in 2010 in Central and Eastern
Europe, Middle East and Africa (CEEMEA). G Control Tower Program