Building upon the study of Dell’s supply chain in class brought to mind another stellar example of a company- P&G -that has an excellent supply chain as well. But unlike Dell, it is able to achieve continued success due to the efficient mix of marketing strategies that it uses.
“If you can’t drive sales and deliver product at the point of purchase, you lose,” – P&G
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. A supply chain of a business may be simple or complex but it is extremely essential to the survival of a business as noted by Jake Barr, the brain behind the supply chain operations at Procter & Gamble. According to Barr, “If you can’t drive sales and deliver product at the point of purchase, you lose”. He should know, after all based on certain criteria like effective brand management, customer management and agility of the supply chain, P&G was singled out for its “leading edge and scale” in a recent study by IGD. Also, it was hailed as the most admired manufacturer in the study.
So, what is the success mantra behind P&G’s efficient supply chain that enables it to transfer the consumer products giant’s detergents, soaps and personal care products to the 5 billion customers in 170 countries? The secret is the robust relationship between the organization’s marketing department and supply chain department. P&G heavily relies on its marketing strategies and consumer demand to determine what, how and what quantity of a product they need to produce. They follow the simple maxim: Cut out piles of inventory and produce only those products that consumers are actually buying. And it is cost effective too! By having less inventory, they reduce costs like warehouse rentals, maintenance, depreciation cost of the product etc.
Their marketing strategies involve both push and pull strategies. In the push system, they try to sell their products as soon as possible by carrying out independent studies to forecast the demand of a certain product. Then, they would tweak the sales if demand is low and the products to be sold is high, by various promotional activities and coupons. In the pull system, P&G comes up with tactics to attract customers to the retailers and also maintain customer loyalty. For example, one of their tactics which they used in the sale of Pampers was to offer a gift with purchase. Success rate at P&G’s supply chain increased even more when they concentrated on the information about the products and used it to their advantage.
P&G is definitely one of the best organizations when it comes to supply chains and an excellent entity for many organizations to base their supply chain model on.
http://www.industryweek.com/articles/pg_recognized_as_supply_chains_best_in_class_survey_11560.aspx