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The Procter & Gamble Company, also known as P&G, is an American multinational consumer goods company headquartered in downtown Cincinnati, Ohio, United States. Its products include pet foods, cleaning agents, and personal care products. Prior to the sale of Pringles to Kellogg Company, its product line included foods and beverages. It appears in the global, publicly traded Fortune 500 Company, and the largest consumer packaged Goods Company in the world. HQ: Cincinnati, OH Operations in: About 75 countries Sales: $83.7 Billion (FY 2012) Established: 1837

History WILLIAM PROCTER, a candle maker, and JAMES GAMBLE, a soap maker, emigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris. Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was created.

Organizational structure The organizational structure is comprised of Global Business Units (GBUs), Global Operations, Global Business Services (GBS) and Corporate Functions (CF).

Executive Team AG Lafley Chairman of the Board, President and Chief Executive Officer Lafley previously served as P&G’s President & CEO from 2000 to 2009. During this time, the Company more than doubled sales and grew its portfolio of billion-dollar brands from 10 to 23. Dimitri Panayotopoulos Vice Chairman, Global Business Units Dimitri, a global business leader with vast international experience, is Vice Chairman of Procter & Gamble Global Business Units.

Werner Geissler Vice Chairman, Global Operations Werner oversees business operations around the world including P&G offices in approximately 75 countries, and a network of 500+ distributors to serve over 4 million retail outlets every month.

GLOBAL BRANDS

P&G touches and improves the lives of about 4.4 billion people around the world with its portfolio of trusted, quality brands. There are 50 leadership brands worldwide which are some of the world’s most well-known household names.24 of these 50 brands each generate more than one billion dollars in annual sales. These 50 brands represent 90% of P&G sales and more than 90% of profits. The Company's leadership brands include Pampers®, Tide®, Ariel®, Always®, Whisper®, Pantene®,Mach3®, Bounty®, Dawn®, Fairy®, Gain®, Pringles®, Charmin®, Downy®, Lenor®, Iams®, Crest®, Oral-B®, Duracell, Olay ,Head & Shoulders®, Wella®, Gillette®, Braun®, Fusion®, Ace®, Febreze®, and Ambi Pur®. With operations in about 80 countries, P&G brands are available in more than 180 countries worldwide

PNG INDIA

The Indian market has plethora of P&G brands satisfying the varied and multi-cultural needs of the Indian people. Established in 1964, P&G India now serves over 650 million consumers across India. Its presence pans across the Beauty & Grooming segment, the Household Care segment as well as the Health & Well Being segment, with trusted brands that are household names across India. These include Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head & Shoulders, Wella and Duracell. Superior product propositions and technological innovations have enabled P&G to achieve market leadership in a majority of categories it is present in. P&G India is committed to sustainable growth in India, and is currently invested in the country via its five plants and over nine contract manufacturing sites, as well as through the 26,000 jobs it creates directly and indirectly. P&G operates under three entities in India - two listed entities “Procter & Gamble Hygiene and Health Care Limited” and ‘Gillette India Limited’, as well as one 100% subsidiary of the parent company in the U.S. called ‘Procter & Gamble Home Products’.

BUSINESS SEGMENTS The company structure is categorized into two "Global Business Units" with each one further divided into "Business Segments" according to the company's 2011 Annual Report

SUPPLY CHAIN Bull whip effect The concept emerged when the logistics executives at Procter & 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&Gs orders of materials to their suppliers, such as 3M, they discovered that the swings were even greater. 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&G called this phenomenon the "bullwhip" effect.

CPFR (collaborative Planning Forecasting and Replenishment) pre scenario - Bullwhip Effect Causes    

Separate demand forecast done by players in supply chain. Price fluctuations manufacturers and distributors periodically have special promotions like price discounts, quantity discounts, coupons, rebates, and so on. Players in supply chain after receiving order accumulates demands (Order Batching) before issuing an order. No communication and sharing of data between players in the chain

CPFR (collaborative Planning Forecasting and Replenishment) -Procter & 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 distribution center inventories by as much as 50% in customers representing over 40% of U.S. and European businesses. P&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.

It is a nine-step process model consisting of        

Developing collaboration agreement Creating joint business plan Creating sales forecast Identifying exceptions for sales forecast Resolving collaborating on exception items Resolving / collaborating on exception items Generating orders

Primarily CPFR output concentrates on improving inventory and reducing out-of-stocks. Since both the objectives are inversely proportional; trade-offs must be made. 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.

Procter & Gamble has put in place pilot programs that reach across product categories--including laundry, shampoo, beauty, and paper products--and involve retail partners such as Kmart, Target, and Wal-Mart in the United States, and Dansk, Sainsbury, and Tesco in Europe. Challenges faced by P&G in Implementing CPFR 

Selection of CPFR Partners

P&G and Wal-Mart assess the potential relationship according to anticipated, realistic benefits, pertinent to common business goals, organizational and cultural issues. 

Trust Based Relationship

CPFR involves sharing sensitive information. To take full advantage of the benefits of CPFR, P&G and Walmart created a relationship founded on trust. Sharing sensitive data and close collaboration demands reliability. 

' 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. 

Senior Management buy in

Senior management of P&G made sure that the necessary resources (Human Resources, Technical Infrastructure, Time and Project Budget) are prioritized and dedicated to the project. BENEFITS OF CPFR 

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&G, thereby improving on-shelf availability and increasing consumer satisfaction. Through CPFR P&G reduced replenishment time by 20%. 

Greater forecast accuracy with single shared forecast

Sharing a single forecast along the supply chain enables P&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 onshelf availability which leads to increase in sale of P&G. 

Cost reduction

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. 

Improved relationship between the trading partners

The relationship between P&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. 

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&G has reduced.

CDSN (Customer driven supply network) P&G believes in 2 moments of truth. First, when customer buys the product from shelf. Second, when they actually use it and like it. In order to handle the first moment of truth, it is important to have stocks available on shelf. P&G realized that 48% of times their products were unavailable on the shelf when the customers wanted it. They were losing a large quantum of sales and hence needed to take corrective action. P&G redefined its supply chain strategy under the leadership of Keith Harrison – Head of Global Product Supply Division. P&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&G started its supply chain from store shelves and moved back to its suppliers. This operating strategy was called Consumer Driven Supply Network. CDSN required P&G to create a responsive supply chain that would produce and supply products as per demand at the customer level. It adopted the line in their supply chain network: “We need to work off of real demand, so that we produce what is actually selling, not what is forecast to sell.” How did P&G implement CDSN? P&G collaborated with its partners across the supply network to win consumers at the point of purchase. It Implemented an online system-”Web Order Management” which enabled retailers to connect to P&G and access its scheduling, inventory and replenishment levels. Various other initiatives like using multifunctional resources, joint scorecards and sophisticated technology were undertaken in collaboration with retailers. Intelligent Daily Forecasting (IDF) IDF is one of the most important component of CDSN. IDF is a software used by P&G to forecast the demand based on actual sales. Following are the Inputs and outputs that this software provides.  

Input: Daily Order Information , Daily Shipment Information ,Weekly shipment forecast Output: Daily estimates for next 42 days , Refreshed Daily

It tracks daily demand across different stores, and that itself becomes the replenishment plan of P&G for those stores. 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. As a result of implementing IDF, P&G is running few plant at 6-8 hours response time. CHALLENGES IN CDSN The $83 billion company had a total of 90000 suppliers with 150 manufacturing plants globally. Reaching out to millions of customers across the globe was a major challenge. Meeting the diverse challenges of developed and developing markets as such markets like India depended on unorganized retail. The challenge was to reach the global large-scale retailers as well as the small and local street shops. Creating consumer value and meeting rising supplier costs. Impact of CDSN Performance Indicators   

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Forecasting Accuracy: Improved forecast accuracy by 30%. 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. 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. Total Supply Chain Inventory: The hard count of all products flowing through the supply chain at any given 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%. 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 bottom-line: Increased overall sales by 15% in one year. Net profits witnessed a 19% gain from $4.35 billion to $5.19 billion.

Control Tower Program This optimization method includes   

Logistics optimized by making changes to the rate, route, mode and method of transportation. Helped in eliminating inefficiencies such as loading and unloading delays, rush transport upcharges, dead legs (empty trucks) and production line stops. The lead logistics provider centrally controls and optimizes the product flows, delivering maximum truck fill for every kilometer travelled in the fastest possible time, in an ecologically friendly manner.

It was kicked off in 2010 in Central and Eastern Europe, Middle East and Africa (CEEMEA). Turkey and Egypt were the first countries in CEEMEA region to adopt the Control Tower logistics optimization effort. Impact of CTP    

Amount of empty truck journeys reduced by over 15% to date. 58% reliability improvement on inbound operations in Egypt. 68% improvement in our finished product inbound operation in Turkey. 67,000 metric tons reduction in CO2 emissions.

Major Acquisitions 2012: New chapter, a vitamins supplement business for $134 million cash 2011: Ambi Pur, an air freshener business for $474 million 2010: Natura,a leading producer and distributor of brand premium natural pet foods for $425 million 2008: Frederic Fekkai, a premium hair care brand, in Beauty acquisition for $381 million 2008: Nioxin, a leader in the scalp care professional hair care market, which was incorporated into Beauty for $368 million 2005: Acquisition of the Gillette Company for approximately $53.43 billion. Gillette is a leading consumer products company that had $10.48 billion in sales in its most recent pre-acquisition year ended December 31, 2004. The acquisition of Gillette has added five billion-dollar brands to P&G’s stable of 17 billion-dollar brands. It has more than 70 percent global market share of razors and blades, 40 percent global market share in alkaline batteries and 36 percent share of the global toothbrush market. Apart from the above Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), Shulton's Old Spice, Max Factor, and the IamsCompany, among others. P&G exited the food business in 2012 when it sold its Pringles snack food business to Kellogg's for $2.75bn after the $2.35bn deal with former suitor Diamond Foods fell short. The company had previously sold Jif peanut butter and Folgers coffee in separate transactions to Smucker's.

Financial Highlights

Corporate social responsibility 

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Procter & Gamble has, for several years, funded a recycling school in the slums of Cairo, Egypt. Many of the people in the village of Manshiyet Nasser collect garbage and have done so for decades. Procter & Gamble along with UNESCO has started the Mokattam Non-Formal Education Project. The project teaches the people of the village about the business and economics of recycling and how to properly recycle plastic. In December 2008, The US Environmental Protection Agency Design For Environment program awarded P&G its highest level of recognition, Champion, for P&G work in developing safer detergents under the Safer Detergents Stewardship Initiative (SDSI). SAVE THE GIRL CHILD Procter & Gamble Partners with Save the Children to Help Girls Stay in School Industry Leader to Provide Health and Hygiene Education and Products to 9,500 Girls Shiksha (Education): Padhega India. Badhega India.

P&G’s flagship Corporate Social Responsibility Program Shiksha is an integral part of our global philanthropy program - Live, Learn & Thrive. Now in its 8th year, Shiksha has till date helped 280,000

underprivileged children access their right to education. The program has built & supported over 140 schools across India, in partnership with NGOs like Round Table India (RTI), Save the Children (STC), Army Wives Welfare Association (AWWA) and Navy Wives Welfare Association (NWWA), amongst others.

PnG in NEWS   

The maker of Tide laundry detergent and Gillette razors brought back AG Lafley as chief executive in May, as it came under pressure from investors to pick up the pace of improvements. In an expected move, the company will split its household care and beauty and grooming units into four sectors starting July 1: Global Baby, Feminine and Family Care; Global Beauty; Global Health and Grooming; and Global Fabric and Home Care. The much-anticipated entry of Procter & Gamble (P&G) in India’s largest oral care category, toothpastes, turned true in May 2013. The company announced its plans to make the foray under the Oral-B umbrella, familiar to Indians now as a toothbrush maker. Actor Madhuri Dixit, who is brand ambassador for Oral-B in India, will endorse the new toothpaste besides toothbrushes.

Top Competitors PnG faces tough global competition from Johnson and Johnson, Kimberley Clark, Hindustan Unilever. Below is the compared profiles of top FMCG'S.

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