Proctor & Gamble: Improving Consumer Value through Process Redesign - Assignment Example

Proctor & Gamble Proctor & Gamble Worldwide, normally abbreviated as P&G, is one of the leading producers producing wholesalers and retailers, as well as a leader in crafting how branded consumer-goods producers go to market (Ailawadi, 2001). The firm’s process innovation is influenced by it focus on enhancing consumer value through abolishing non-value-added processes in the channel. Transformations at P&G in procedures, organization, systems and policies affected both the firm, as well as the entire channel. These alters where managed through the acknowledgment that distributors, retailers and manufacturers should cooperate in developing industry-wide approaches, which will drive disorganization out of the grocery distribution system. Numerous changes bringing about organizational and channel transformations were formerly perceived as information systems innovation. Breakthrough transformation came with the understanding that the achievement of P&G brands relied on eradicating ever process, which did not bring about brand-loyal clients. The promotional frenzy of the late 70s and 80s, which characterized the retail field, had produced a backlash amongst brand-loyal clients who felt as if they were not being offered fair value continually (Bollen & Thomas, 2005). P&G studies prove that less than half of the organization’s promotional dollars were passing through to their consumers and that unbalances in prices were forming variability and substantial inefficiency. This effect was not only felt in P&G’s distribution and manufacturing systems, but also their entire grocery supply chain. After various deliberations, the firm decided to revise how in marketed itself as a branded consumer-goods maker. Therefore, it is vital to ask ourselves they key decisions that were taken by the company to improve its distribution channel, how vital is I.T. to P&G endeavors, to what level has P&G changed its strategy to make use of ECR and, finally, the next steps that P&G could take to revive itself. This four questions are what this paper intends to capture. Question 1 In the past 20 years or so, Procter & Gamble began even more officially and effectively linking its supply chain capabilities and strategies with its client go-to-market endeavors, with a resulting "business plan" for each and every product area, which connects marketing, product strategy, finance and more with the entire supply chain plan (Ailawadi, 2001). A majority of organizations have tried to do this, but it is clear that P&G is ahead in its level of sophistication. The distribution channel of P&G is exceptionally positioned to observe its supply channel from end-to-end beginning with their resources through the touch point of their brands with consumers in the marketplace. P&G decided to make itself the vital “voice of the client” for supply and the integrator in the commerce disciplines (Stock & Lambert, 2000). P&G decided to make product supply its most diverse department. The organization opened opportunities in fields such as logistics, purchasing, supply/forecasting, manufacturing, engineering and even quality assurance. This assortment opened up opportunities to create a broad range of skills and a career, which can lead someone in numerous directions and that is why the organization grew (Bollen & Thomas, 2005). A mid-sized cannot incorporate such an approach since they do not have the funds needed use superior techniques. The methods incorporated by P&G required high amounts of funds, which a mid-sized retailer cannot easily raise. Vital issues, which must be carefully addressed to guarantee retailing business includes reengineering of the existing processes, commitment from top management, incorporation of the ERP with other organizational information systems, management and selection of consultants and employees, and training of workers on new systems. Question 2 Global organizations today such as P&G are under great pressure to enhance their supply chain, develop efficiency and logistics operations and remain responsive to altering market conditions, as well as customer demands (Ailawadi, 2001). Therefore, the firm opted to adopt I.T. in order to support its supply channel, as well as increase the firm’s efficiency through attaining tighter cooperation over its supply channel. Exporters and importers at the organization need to know where their goods are. Lenders want to know how and when to pay for it. With the utilization of I.T. at P&G, it is much easier than ever for logistics managers to manage and supervise global shipments, as well as serve their altering urges as they go even much further across the world to source goods. P&G utilizes on-demand, Web-based data hubs to discover where their products are in real time, and if hitches along the way must be rectified in order to avoid wider supply chain disruptions along with expensive recovery work (Bollen & Thomas, 2005). Our purpose at P&G is to touch and improve lives; everything we do is in that context. With digital technology, it is now feasible to have a one-on-one relationship with each and every customer in the globe. The more close the association, the more obligatory it becomes. P&G endeavored to be the organization that forms those indispensable associations with their brands, and digital technology has permitted this. Through the use of technology, the organization has managed to centralize its clients and now it is much easier to be in contact with them (Stock & Lambert, 2000). Question 3 P&G, in the early 90s, introduced a "value pricing strategy" in which it increased advertising while, at the same time, cutting its distribution channel deals (trade deals and in-store displays) and considerably dropping its coupon promotions. P&G was disturbed by the cost of managing promotions, as well as the effect of uneven swings in demand on the production system. Secondly, the organization was disturbed by the effect of advertisements on brand loyalty, dreading that they caught the interest of "cherry-picking" bargain hunters who could care less regarding their brand and this destabilized the loyalty of their core clients. These factors persuaded the firm to break free from the normal marketing practices (Ailawadi, 2001). Therefore, during the course of six years (from 1990 to 1996) the firm reduced its coupon expenditures by more than 50%, lessened its distribution chain deal expenses by 20% and boosted its advertising expenses by 20%. This was in fact a contrarian plan as, during the same time, general market trends showcased a rise in promotion (coupons and deals) by 15% and a drop in advertising by 20% (Bollen & Thomas, 2005). The growth of Procter & Gamble's development of efficient consumer response (ECR) concerned a series of trials and errors, a resolution to distribute retail goods on the grounds of product movement, a mindful attempt to move to a fresh means of distribution across each and every line, an initial cut at a new system and, eventually, the growth of the existing mix of incorporated IT systems connecting the value chain from industrial unit to shelf. Question 4 P&G has not been treating innovation as a scalable factor in the past. The firm had always invested a great deal of funds in research studies and development. The firm should look for ways of integrating their innovation programs with its business strategy, budgeting or planning process adequately. The firm should redefine its social system to get every person into the innovation game. And, because of this, all P&G workers should understand the task they play in innovation. Even as they are operating, they should be always innovating (Stock & Lambert, 2000). An employee is making the cycles much shorter, creating new-fangled commercial ideas, or working on new-fangled business models. And all innovation is connected to the business plans. In encouraging this approach and developing the social system to aid it, the P&G leadership should be very much disciplined (Ailawadi, 2001). For example, the firm is, at the moment, sets up to see a lot of more new ideas. P&G’s external business development group is extremely small, and all it does is meet with groups, individuals, research labs, as well as other potential collaborators, counting in P&G’s competitors. References Ailawadi, K. L. (2001). Market response to a major policy change in the marketing mix: Learning from Procter & Gamble's value pricing strategy. Journal of Marketing, 4(3), 44-51. Bollen, J., & Thomas, G. (2005). ZIBSForum: Scott Neslin on Procter & Gamble's value pricing strategy. Retrieved from http://www.zibs.com/neslin.shtml Stock, J., & Lambert, D. (2000). Strategic logistics management (4th ed.). New York: McGraw-Hill/Irwin. Read More