Procter and Gamble Case: Information Technology - Admission/Application Essay Example

Procter and Gamble Case: Information Technology Overview of Essential Case Facts Procter & Gamble (P&G) is recognized as one of the renowned American Multinational Organizations (MNCs), and a leader in producing large array of consumer products. Its fundamental aim is to offer value added products to the customers and thus enhance their dependency and reliability by a considerable extent. In order to fulfil this desire, P&G attempted to redesign its entire procedure of operations, resulting in the augmentation of its total sales and profit margin. For this reason, it endeavoured to automate the practices of distribution system involving information technology with the expectation to reduce inefficiencies in the process and to improve its brand image in the market (Clark, 1995). Therefore, the management of P&G aimed to increase the total sales of its products both in small retail outlets and in supermarket chains which was attained by the company with the introduction of the system of Continuous Replenishment (CRP), resulting in alternation within the practices of the distribution system. This further helped in enhancing the availability of P&G’s diverse range of products which in turn assisted the organization in monitoring the amplification of the customer value and loyalty (Clark, 1995). In addition, through CRP the organization also introduced another significant system named Electronic Data Interchange (EDI) in its operational process, which eased the difficulties faced by the distributors and retailers while ordering the requisite products to P&G. Moreover, in order to prepare error-free invoice mechanism, Ordering, Shipping and Billing (OSB) System was also implemented along with Efficient Consumer Response (ECR) policy to improve consumer consistency (Clark, 1995). Identification of Major Issues/Dilemmas P&G is a branded organization in the sector of consumer goods, attempting to offer innovative products at an efficient cost. This is desired to enhance the identity and uniqueness of P&G in the market among other apparent players in this sector. Besides, in order to augment its efficiency and dominance over other market players and consumers, it is extremely essential to improve the organizational distribution structure. With due consideration to this aspect, the management of P&G has desired to implement an entirely automated system with the help of information technology. In addition, another significant issue faced by P&G can be identified in terms of discrepancies within the supply chain, resulting in lowering of customer conviction and trust. It has also enhanced the switching cost of the consumers thereby lowering the brand value and assortment of the brand (Clark, 1995). Furthermore, in order to reduce the inconsistencies within the supply chain and logistic operations, P&G also implemented an inventive system of EDI. It helped in improving the effectiveness of the process concentrated on the presentation of orders by the small retailers and mass merchandisers. It further enhanced the corporate image and value proposition of P&G within the minds of the customers, resulting in the overall augmentation of its profit margin and total sales. Moreover, other than these issues, another considerable dilemma faced by the brand is intricacy in the pricing and billing methods of the retailers and distributors. This resulted in convolution, while preparing the invoices of the retailers and distributors, due to pricing errors. The price rates of small as well as large distributors or retailers are predetermined, which may lead to complexities hampering the distinctiveness of P&G. This is because, differential price rates within the retailers and distributors, creates conflicts within them, leading to (Clark, 1995). Positives and Negatives of Two Alternative Paths of Action The two alternative paths of actions implemented by P&G are Continuous Replenishment (CRP) and Ordering, Shipping and Billing (OSB) systems. Attempting to retain the brand loyalty and its inimitability in this era of competitiveness, P&G attempted to implement varied innovative automated systems within its organisational structure. It is utilized in order to augment the sustainability and brand portfolio of the organization in global perspective (Clark, 1995). In order to reduce the discrepancies associated with the distribution and logistics system, P&G further introduced an inventive automated system named Continuous Replenishment (CRP) which is essentially implemented in order to reduce the difficulties associated with distribution system, leading to the improvement in the accessibility of its products. It might help in the overall augmentation of customer reliance and consistency towards the brand of P&G which is extremely essential to sustain in the long run. Moreover, it might also facilitate P&G to enhance its productivity and profit margin among other players of the market. Apart from the above mentioned positive effects, the CRP system also includes certain limitations as well. For instance, due to introduction of CRP, the total operating capital of the organization is quite likely to increase substantially thereby lowering the profit margin (Clark, 1995). Other than this, P&G also introduced another significant system to improve its billing and shipment procedure which was named as Ordering, Shipping and Billing (OSB) system. It facilitated P&G to offer the products in a proficient way, resulting in reduction of billing errors and misunderstandings. As a result, an excellent relationship can be maintained with the retailers and distributors, leading to augmentation of its individuality and exclusivity among other rival organizations of this sector. However, the negative implication of the system depicts that if this strategy is not implemented in a systematic process, it might hamper entire operational process incurring huge distribution costs as well as customer satisfaction. Moreover, it might also hinder the growth rate and prosperity of P&G in the market among other competing players (Clark, 1995). Recommendations To maintain its brand competitiveness, P&G might also attempt to implement SAP software within its organizational structure and thus augment its business operations. This might significantly help in the enhancement of its functions, resulting in the improvement of its distribution and supply chain procedure. This might also prove beneficial for P&G to maintain a billing and invoicing method for its retailers and other distributors. Moreover, it might also reduce the total cost incurred, due to the implementation of varied types of systems, as mentioned in the previous paragraph. The introduction of SAP helps in the automation of each and every process of logistics thereby enhancing the brand image and sustainability in the market among other competing players (Borland Software Corporation, 2006). It is worth mentioning in this context that these above mentioned strategies can be easily utilized by a mid-sized manufacturer as it might help in the enhancement of its brand equity and familiarity among other producers in the market. Although, it might increase the total operating capital of the organization, it can be effortlessly recovered in future time, due to effective and organized operations. Three Essential Concepts of the Case In order to retain its competitive advantage, P&G made various attempts to enhance its distribution system. It is extremely essential for an MNC like P&G to retain its brand loyalty and fidelity in the market and within the minds of the customers. As a result, many new customers might get attracted, facilitating its total sales and revenue in the long run. Moreover, it can also enhance the relationship within the retailers and customers, which might prove highly valuable for an organization to cope with varied types of challenges (Clark, 1995). In addition, the implementation of value pricing also facilitated P&G to reduce the errors related to pricing techniques. It also helped P&G to maintain a uniform rate of prices for the products such as dish washing solutions; thereby, reducing misapprehensions and conflicts with the distributors and retailers. Apart from this, the introduction of OSB system also proved quite advantageous for P&G, assisting it to maintain uniformity in its billing and shipping procedure of the products. It further helped P&G in preserving a unique position in the market, leading towards the augmentation of trust and reliability within the distributors and retailers (Clark, 1995). Thus, it can be avowed from the above mentioned facts, that in order to maintain a stable position in the market, it is essential to preserve a good relationship with the retailers as well as customers, in which, technology plays a vital role. Hence, technology can be identified to act as a vital ingredient for enhancing the profitability of an organization in the long run. Works Cited Borland Software Corporation, 2006. Silk Performer 2006 Release 2. SAP Software. [Online]Available at: http://echovera.com/img/SAPTutorial[1](1).pdf [Accessed May 24, 2012]. Clark, H. T., 1995. Procter & Gamble: Improving Customer Value through Process Redesign. Harvard Business School, Vol.9, pp.195-126 Read More