procter gamble supply chain management case study

• Search for:

Home       Resources       Case studies       Procter & Gamble

Procter & Gamble

Download PDF

Procter & Gamble was founded in the US in 1837, by William Procter from England and James Gamble from Ireland. Both men were travelling through the Unites States when they met by chance in Cincinnati.

What were the original business drivers for your SRM programme?

How have these business drivers changed and how has srm adjusted to remain aligned, what were the major barriers and how were they overcome (internally and with suppliers), p&g's five core strength focus.

P&G is a pioneer of open innovation – how does this apply to suppliers?

Given your reputation for innovation, is there a risk that you are overrun with innovation ideas that turn out to be little more than a sales pitch, how important is risk management in your srm approach, how do you measure the eff ectiveness of your srm approach.

• We create joint business plans with our most strategic business partners to identify two-three year goals for the relationship and key action plans which will deliver those goals.
• Quarterly scorecard metrics are used to measure performance, and are typically a mix of predictive, outcome, quantitative and qualitative measures.
• We also use a very comprehensive supplier performance management system, which uses multi-functional assessments to evaluate and reward supplier performance against four key areas: commercial, operational, innovation and relationship.

What do you think is the most successful aspect of your SRM? What makes you proud?

When you talk about leadership involvement, what does this mean in a practical sense for p&g, where next for p&g srm what are the next challenges, what advice would you give to organisations just starting out on their srm journey.

• Focus – Not all relationships are created equal and you have to be strategic about where value is created.
• Resource – Effective SRM work takes time and resources, and leaders must be involved and role model the effort.
• Measure and reward – Find a clear, simple way to know that you are making a difference, and make sure your business partners feel valued for the contributions they make to your business.

Reports and Publications

Case studies, newsletter sign-up, stay connected on linkedin, lang: en_us, enjoy customer of choice benefits.

Find out what your key suppliers really think of you and how to become their customer of choice. 

Find out more

Stay in touch

2020 global srm research report - supplier management at speed..

Now in its 12th year, this year we have seen an increase of 29% in the number of companies responding compared to 2019. In addition, the proportion of respondents at CPO/EVP level or equivalent has increased to over 50%. Learn how now, more than ever before, procurement has the opportunity to make the case for SRM to ensure organisations don’t just survive but thrive.

Sign up below to get our insight emails direct to your inbox.

Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: RC TOM Challenge 2017

P&G: End-to-end Supply Chain Model

P&G has established its competitive edge to lead the global supply chain with the concept of end-to-end model. How does the company leverage digital capability to build its supply chain model?

Emerging Digital Business Models

The past 30 years have been a massive change in P&G’s supply chain operations. Without a doubt, digital technology is being one of the biggest drivers of such transformation. According to Supply Chain 4.0 in Consumer Goods, the focus of the supply chain management role has altered to “advanced planning processes” based more on the actual demand from end consumers enabled by digital analytical forecasting and integrating operations planning. [1] Such demand-driven model, in which sensing and responding to demand as quickly as possible, requires manufactures to reconsider its production to shipment network design. In order to meet such demand, P&G integrated data-driven production flow of operations that significantly improved responsiveness as well as transparency. [2] As a result, the digital pieces of the supply chain that used to be discrete individual steps now become more holistic, real-time management of the entire ecosystem. [3]

End-to-end Supply Chain – From Factory to Shelf

P&G has leveraged large-scale application of advanced analytics and digital technology to excel in its ability to manage complicated global supply chain with more than 130 manufacturing sites serving over 180 countries. One of the key drivers is an “end-to-end model” that connected the siloed steps from suppliers to retailers to provide the most value to the end consumers, “with faster-than-ever response times” [2]. The concept of integrating the whole value chain allow every stakeholders of its eco chain to minimize the unnecessary inventory as well as to speed up the system.

Pathways to Just Digital Future

P&G integrates its supply chain software with its suppliers, distributors and retailers with a notion of joint business planning with key stakeholders. [4]. To fully integrate different parts of the chain, understanding that digital automation of workflows that allows high visibility of any movement in each step is a key to enable end-to-end model. Digital automation of workflows empowered by use of algorithm-driven tools to reduce exceptions, enables end-to-end planning, connecting headquarters, manufacturing plants, distributor, and retailers. [2]

One highlight in logistics capability, called “Distributor Connect” connects P&G with distributors. [5] Digitally enabled operational program, it allows all the transportation, from raw materials from suppliers to finished goods to retailers, be accessible in one source of data, on their laptop or mobile, for the supply managers to track the status of the delivery. With enhanced real time visibility of where things move, Distributor Connect significantly reduces inventory across the ecosystem and the ‘deadhead,’ trucks not optimally utilized, by about 15%. [3]

Similarly, not only does P&G support with mobile-phone applications that enable retailers to check the status and order more products, it fully incorporates “GDSN,” Global Data Synchronization Network with the operation with retailers. GDSN enables 100% automated commerce without human intervention. [6] This capability significantly improves the human error between retailers and companies and save cost for all the parties.

Leaping for the next step to enable R&D Lab to Shelf

These ‘end-to-end’ approach, enabled by digital capabilities, allow the company to accelerate the time to deliver its products to the market. However, the implications of rising digitalization trend do not just start from manufacturing. It goes back into product innovation. [8] If we look at different industries, for example apparel industries, digital landscape has pushed each brand to take advantage of latest technology such as AI to realize real-time personalization.   [7]

To truly accelerate the cycle of innovation, the company should consider the following:

• Unlocking insights through Advanced Analytics – If we can quickly identify the insights from the big data, could we capture primary demand for the manufacture without sequential researches to ‘qualify’ the products? AI will enable the company to better understand and interpret individual customers’ preferences. This will allow us to shorten the lead-time to explore different options of formulations. This approach will also significantly reduce finished goods inventory with more precise demand forecast while offering the better value proposition to the end consumers.

Questions to be answered

As we have better clarity of the current practice with digital capability, P&G will continue to face challenges including the following:

• How could the organization fully integrate the product innovation phase into the end-to-end model to meet the individual needs of end customers?
• How could a company continue to leverage economy of scale while meeting the demand from each retailer just in time?
• As digital technology is constantly evolving, how could P&G stay afloat in such transformation?

(word count: 776)

[1] Alicke, K., D. Rexhausen, and A. Seyfert, “Supply Chain 4.0 in consumer goods,”  McKinsey & Company,  April 2017, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/supply-chain-4-0-in-consumer-goods], accessed November 2017

[2] Aronow, S., Nilles, K. and Romano, J., “The Gartner Supply Chain Top 25 for 2017”, Gartner Inc., May 25, 2017, [https://www.gartner.com/newsroom/id/3728919], accessed November 2017.

[3] Chui, Michael, “Inside P&G’s digital revolution,” McKinsey Quarterly, November 2011, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/inside-p-and-ampgs-digital-revolution], accessed November 2017

[4] Fritzen, Soren., F. Lefort, O. Lovera-Perez, and F,. Spangar, “Digital innovation in consumer-goods manufacturing,” McKinsey & Company Consumer Packaged Goods Article, November 2016, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/digital-innovation-in-consumer-goods-manufacturing], accessed November 2017

[5] Trebilcock, Bob, “What Does It Take To Remain A Supply Chain Leader?”, SupplyChain247, January 2015, [http://www.supplychain247.com/article/what_does_it_take_to_remain_a_supply_chain_leader], accessed November 2017

[6] Vadino, Jessica, “Digital Transformation in Retail: How to Take Advantage of Innovation”, E-Apparel, June 23, 2017, [https://apparelmag.com/digital-transformation-retail-how-take-advantage-innovation], accessed November 2017

[7] Boudet, Julien., B Gregg, J Heller, and C, Tufft, “The heartbeat of modern marketing: Data activation and personalization,” McKinsey & Company Marketing & Sales, March 2017, [https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-heartbeat-of-modern-marketing], accessed November 2017

[8] O’Mahar, Kevin, “CPG: the Post-Replenishment Supply Chain Challenge,” Logistics & Transportation, Nov 30, 2016, [https://www.forbes.com/sites/kevinomarah/2016/11/30/cpg-the-post-replenishment-supply-chain-challenge/], accessed November 2017.

Photo credits:

Davenport, Thomas H., “How P&G Presents Data to Decision Makers,” Harvard Business Review, April 2013, [https://hbr.org/2013/04/how-p-and-g-presents-data], accessed November 2017

Fritzen, Soren., F. Lefort, O. Lovera-Perez, and F,. Spangar, “Digital innovation in consumer-goods manufacturing,” McKinsey & Company Consumer Packaged Goods Article, November 2016, [https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/digital-innovation-in-consumer-goods-manufacturing], accessed November 2017

Student comments on P&G: End-to-end Supply Chain Model

Shoko, I found it very interesting to understand a little better P&G’s supply chain and how they are taking steps to digitize it. I also agree that increasing speed to consumer, visibility and rastreability are key to win in this game. Companies have now the ability to create a digital “twin” of the products they sell and track it throughout its entire supply chain. One question that I have is to what extent is P&G leveraging Internet of Things in their products and whether or not this is even a consideration for them, since some of their products are somewhat commoditized.

Thanks for sharing this CPG example. The idea that P&G can go further in these digitization efforts to eventually cut off parts of the supply chain is intriguing. If this is the case, how and why are their supply chain partners currently collaborating in ongoing digital efforts, if the ultimate result might be to dis-intermediate them? Do you see a future where current supply chain actors remain in a partly digitized world, while P&G pursues a different segment of customers altogether through a P&G-only, truly digital approach? While there likely is enough gross demand to support multiple supply chain types at first, we can imagine that if the direct-to-consumer is superior, the impact of factors such as network effects may favor an winner-take-all shift to that model.

Shoko, thank you for the great insight into P&G’s world renowned supply chain. You addressed many of the aspects I wondered about in my previous career as a Walmart category manager!

The question you brought up about customization in order to meet the individual needs of end customers is particularly salient. The crux of this issue is something we’ve discussed greatly in class recently: network effect and a chicken or the egg situation. Retailers and suppliers both hold an immense amount of rich information, but are often reluctant to share with their partners. Trust needs to be built into these relationships in order to maximize the size of the pie and total potential upside for everyone. Digitization is making this increasingly easier in practice, but time will tell whether the retail and CPG industry titans will be willing to share their “secrets”.

Thank you Shoko for this insightful article about P&G and its supply chain. I think you brought up a very interesting point around ‘Direct to Consumer’ and the possibility that some part of supply chain would be cut out. It is applicable to both how the physical goods get from manufacturing plant to consumer and how the information feedback loop goes back from customer to manufacturers.

I totally agreed with ‘Distributor Connect’ and its benefits to all the parties ‘from factory to shelf’. In addition, we could already see that digitalization has disrupted the industry even further as manufacturers bypassed the ‘shelf’ and went directly to consumers through online platform. Traditional retailers have changed the way they operate as well as their role in the whole supply chain from being the ‘shelf’ to being the ‘logistic guy’ as they moved to online channel. The joint business plan will have to be more rigorous as customers become omni-channel.

One way P&G could do to stay up-to-date with digital transformation is to form strategic partnership with cutting-edge parties in the supply chain. For example, it joined with Amazon to introduce P&G’s brand dash button where consumers have the button at home and place their orders when they are running low on specific consumable products. This is extremely convenient for customers and also gives a real-time order transparency right from the consumers – one step beyond the transparency at retailers.

Leave a comment Cancel reply

You must be logged in to post a comment.

Procter & Gamble’s Tech Spending Boosts Supply Chain Resilience

Companies are scrambling to address the intensifying supply chain crisis. Inflation, product shortages and logistics backlogs jeopardize business strategy, erode customer loyalty, deflate profitability and squeeze cash flow.

While specific pressures vary across industries, Invesco chief global market strategist Kristina Hooper advised investors that an universal “differentiating factor may be how much investment companies have made in technology to increase productivity.”

That’s true at Procter & Gamble. Over the past decade, P&G spent heavily on data, production and e-commerce technologies. Their investments illustrate how a long-term tech strategy can pay off handsomely in turbulent economic times.

Competitive edge

Known for iconic brands, including Tide, Cascade and Puffs, P&G also differentiates itself with an unwavering commitment to funding productivity investments.

On P&G’s FY2022 Q1 earnings call , CFO Andre Schulten explained, “We will recover these costs over time. We will not sacrifice investment in the business as we do so. [Our] productivity programs ramp up throughout the fiscal year. We intentionally take our time to recover the cost to protect investment in our superiority strategy, which is working well to drive our top-line growth and overall balanced growth model.”

Technology is central to those growth and profit plans. Led by CIO Vittorio Cretella, P&G partnered with Microsoft and Google to focus on three goals — supply chain resilience, retail execution and product superiority.

“The way we approach excellence as a company is to get the right product, the right package, the right communication and the right in-store execution,” chief data and analytics officer Guy Peri explained . “Pretty much everything about how we do that with our customers and the consumers who buy our products is changing—and data and algorithms are central to staying ahead of that change.”

“Advanced data analytics lets us offer consumers the best selection of products at their local stores and reach them on their preferred channels,” Cretella elaborated . “Beyond using data for descriptive and diagnostic purposes to understand what happens in our business and why, we’re using analytics to make predictions, such as the success of a promotion or the best product assortment by store clusters. During the pandemic, this capability helped manage supply chain demand spikes.”

Delivering the goods

P&G annually consolidates billions of consumer data points related to thousands of SKUs across hundreds of retail customers. That repository enables data-driven supply chain agility. Schulten emphasized, “The strength of our supply chains is mainly driven by the flexibility that we can create. Strong supplier partnerships around the globe allow us to shift sourcing, if we need to, from one supplier to another either because of [either] supply or freight lanes not being available.”

In addition to logistics support, data analytics aid production. “We have an ability to reformulate some of our products, which we're doing actively, without impacting the superiority of the product or any noticeable impact to the consumer, and that gives us flexibility to adjust again to material availability or cost,” Schulten added. “We also have an organization that anticipates potential bottlenecks and then chooses to build inventories either on materials or finished products to then be able to withdraw from those inventories on a global basis.”

In an industry highly sensitive to supply chain disruption, rival consumer packaged goods (CPG) brands have struggled to maintain availability and margins. Yet, P&G delivered record-high sales, profits and operating cash flows in FY 2021 — that’s very compelling evidence that its productivity investments are delivering.

Meaningful measures

On investor calls, P&G’s leadership team typically highlights three key financial metrics - organic growth, operating margins and free cash flow productivity. All help explain the past, provide aspirational benchmarks and justify future IT investment.

In FY 2021, P&G topped $76 billion in sales, buoyed by organic growth in each of its five major product categories. Notably, the growth was driven by roughly equal price and volume increases — a convincing sign of strong consumer loyalty, effective supply chain management and reliable forecasting.

On the FY 2022 Q1 investor call, P&G’s vice chairman and COO Jon Moeller, discussing margins, explained, “ If we look at the last 12 years, our operating margin on an all-in basis has increased 320 basis points from 20.4% to 23.6% last year. On a constant currency basis, that's an increase of 1,020 basis points. So the [goal] here is stay on course, continue to drive productivity to fuel investment in superiority in daily- use [product] categories where performance drives brand choice. That is the recipe for balanced [top and bottom line] growth.”

Best Travel Insurance Companies

Best covid-19 travel insurance plans.

Last, P&G relies upon a non-GAAP metric called “free cash flow productivity” which measures the ratio of free cash flow to operating earnings. P&G generated over $18 billion of operating cash flow in FY 2021 and posted an impressive 92% free cash flow productivity. Such a strong ratio shows low reliance on questionable accruals, bolsters credit ratings and signals ample cash for sizable share buybacks and dividend growth.

Most of all, over time, such financial performance reflects a well-run business, eases borrowing hurdles and should provide a lasting source of competitive advantage.

Money in the bank

As companies seek to modernize IT infrastructure and drive digital transformation, P&G’s supply chain resilience demonstrates that technology must be well-funded — long before market turmoil requires it. Otherwise, investment procrastination’s hefty price may be too steep to pay.

We see you are located in China. Do you want to switch to our Chinese website?

How full visibility empowers P&G’s Supply Flow Analysts

May 8, 2023.

With arguably one of the most complex supply chains in the world, The Procter & Gamble (P&G) Company has been facing the challenges of the consumer goods market. This has sparked a fundamental shift in P&G’s approach to supply chain planning, evolving them from the pursuit of excellence among individual sections to establishing end-to-end visibility over the entire supply chain. “We learned that full visibility is crucial to keeping our supply chain healthy and resilient,” says David Hamer, Supply Planning Program Director, based in Boston, MA.

Procter & Gamble is truly everywhere

Read the case study.

Leave your information and continue reading right away.

By clicking the button, you give OM Partners nv permission to store your personal contact details for further communication. Your contact details will be treated with care and in accordance with our privacy statement .

I give consent *

P&G is organized into multiple business units, each managing a vast array of brands and dynamic portfolios of SKUs in demanding markets such as baby care, oral care, personal health care, shaving, and fabric care. Worldwide supply is fulfilled by a network of nearly 110 production facilities spread across the globe, which leads Director Supply Flow Planning Systems, Christian Labeck, to make the declaration: “Procter & Gamble is not just big, it’s truly everywhere.” 

“We learned that full visibility is crucial to keeping our supply chain healthy and resilient.”

David Hamer, Supply Planning Program Director at P&G

How the best-of-breed approach bumped up against its limits

Unsurprisingly, it’s a daunting task to plan these operations efficiently while  assuring product availability all over the world and minimizing costs . Historically, planning was organized with what Labeck calls a best-of-breed approach: “We have a rich history of using the best systems available in dedicated functional areas such as raw material sourcing, production planning and scheduling, pack material sourcing, distribution, and so forth. But because these systems provide inputs and outputs for each other, you inevitably create noise between them. And this has become increasingly difficult to manage due to the  growing complexity within the supply chain .”

Co-innovation: valuable solutions for previously unaddressed problems

P&G’s Supply Flow Analyst program also confirms the company’s reputation for being an innovator and trendsetter. “Being at the forefront is in our nature,” Kiwan affirms. “And that means that we’re challenging solution providers to go the extra mile and co-innovate with us . That’s one more reason why we’re happy to work with OMP, because they’re doing a great job of seeking to understand the problems that we’re trying to solve.”

“We’re not dictating the solution. We want the OMP experts to be true consultants, coming up with valuable solutions for previously unaddressed problems. And they do. Some of these innovations will be integrated later in OMP’s standard industry solution, but inevitably we also have areas where there’s going to be some customization specifically for us. We have to admit that some of the requirements we’re putting on the table are only relevant to P&G.”

Weekly planning cycles are a thing of the past

Another factor changing the game is the  greatly accelerated pace of the consumer goods market . David Hamer: “Today, our markets require us to react incredibly fast to changes in demand. E-commerce drives a substantial part of our supply chain. In some cases, we fulfill directly to customers based on orders coming in through a variety of mechanisms. And the products need to be shipped the same day."

“Our best-of-breed approach had become increasingly difficult to manage due to the growing complexity of our supply chain.

"If you look at China, for example, this applies to almost any product. There are also huge levels of customization to be addressed, for example promotions inviting individual consumers to select four or five products to be packaged and delivered together, at a special discount. Our planning has to be at the same pace. Weekly planning cycles are a thing of the past. We’re planning in daily cycles now, or even per shift . We’re constantly doing a full review of our planning based on the latest demand info.”

Integrating functions into a single value stream

In this new reality, the old functional approach to planning has come under pressure because system interfaces have become unmanageable. “You simply don’t have the time to synchronize the different planning solutions,” explains Labeck. “I mean, production planners must have instant access to raw and pack material data, otherwise they’re navigating blind.”

These insights led P&G to develop an entirely new approach to supply chain planning centered around Supply Flow Analysts, or SFAs. Hamer explains: “The SFA concept is about integrating the previously separate planning functions into a single value stream incorporating raw material sourcing, bulk production, pack sourcing, finished goods production, and distribution to central and local DCs. And we want this value stream to be optimized as a whole, that’s why we want it to be overseen by one single person, the Supply Flow Analyst.”

Getting the right granularity level and implementing the right algorithms

P&G’s ambition also includes extending the planning horizon from about 12 weeks to as much as 18 months . “This comes with significant challenges,” Hamer explains. “Planning over such a long horizon means having to process exponentially more data. If you’re trying to solve these equations the same way as you would over a short time horizon, you’ll get stuck and never get an answer because you’re lost in too much detail. So, we had to find a way to make the problem manageable.”

“On an 18-month horizon, we’re working with a rougher granularity , but not too rough. Monthly buckets, for example, would be too rough and unusable for us and our strategy. We’ve been working very hard with the OMP experts to establish the right granularity level and implement the right algorithms that allow the system to compute useful answers in a reasonable timeframe.”

Synchronizing activities to avoid excess inventory or waste

A major consequence of pursuing this concept was that it exposed the need for a single integrated software solution covering everything from sourcing to delivery . P&G carried out a thorough market consultation and solution assessment exercise before choosing OMP’s Unison Planning™.

“This solution covers the complete time horizon of our supply chain, from sourcing and site-integrated planning to deployment across the distribution network,” confirms Amr Kiwan, a P&G Business Process Specialist based in Cairo, Egypt.

Kiwan points out that achieving excellence in supply chain planning often comes down to optimizing inventory levels across the chain . “If you’re organized in functional silos, you end up creating buffers everywhere to be able to address volatility in downstream demand.”

“If you’re unifying the organization and you’re planning all your activities with one fully integrated software platform, you can reduce these buffers and avoid excess inventory or waste. Having better visibility and access to smart optimizers means you can synchronize your activities better.”

Amr Kiwan, Business Process Specialist at P&G

Finding the sweet spot

Kiwan explains how optimizing inventory represents a big chunk of the SFA’s work: “Our supply flow analysts focus on satisfying and maintaining the inventory positions we’ve decided are best for us, depending on the go-to-market strategy of the products and product families. 

So, OMP allows us to create reality-based production and deployment plans that consider phase-in phase-outs of products, production capacity, changeovers, transportation, lead times, and order sizes so that we can respect our inventory policies and still make sure the products are available for customers. It’s about finding the sweet spot where we can reduce costs, keep inventory as low as possible, and still secure product availability .”

Planners become well-informed decision-makers

The organizational change also has a significant impact on the planner’s role. Kiwan: “Previously, planners would waste a lot of time collecting and arranging data, using their own brain power and their own methods to draw conclusions as to what would be the best plan. The solution we’re rolling out now establishes a much more standardized approach and is based on solid data and established methods.” 

“Our planners have access to reliable data and a clearer view of what’s happening with their products. Planners are now able to act as well-informed decision-makers .”

Agile implementation

The SFA program is being implemented with some agility. In a first stage, a number of pilots were set up, covering P&G’s entire business landscape. Hamer explains: “We had around ten pilot supply chains, each with its own specific requirements. That allowed us to gradually integrate the functionality we needed, either using OMP’s standard industry solution or by having them configure additional functionalities. We also used the pilots to train our staff and improve as we go.”

“We’re now preparing the roll-out of the solution to all our value streams. That’s complicated because every plant and market has its peculiarities. So, we’re implementing it region by region for the different business lines. That allows us to further finetune our various requirements so that we can be sure that it will work everywhere.”

About P&G

P&G serves consumers around the world with one of the strongest portfolios of trusted, quality, leadership brands, including Always®, Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®, Dawn®, Downy®, Fairy®, Febreze®, Gain®, Gillette®, Head & Shoulders®, Lenor®, Olay®, Oral-B®, Pampers®, Pantene®, SK-II®, Tide®, Vicks®, and Whisper®. The P&G community includes operations in approximately 70 countries worldwide.

Please visit www.pg.com for the latest news and information about P&G and its brands.

OMP helps companies facing complex planning challenges to excel, grow, and thrive by offering the best digitized supply chain planning solution on the market.

Its Unison Planning™ concept has a unique approach. It handles all supply chain planning challenges in a unified way. It’s full scope and in-depth. Unison Planning™ synchronizes all planning stages, horizons, functions, and roles. From source to deliver, from strategic to operational planning. The unique combination of services and technology boosts collaboration throughout your value chain, from forecasters to schedulers, from business leaders to technology experts.

Unison Planning™ is a cloud-based, out-of-the-box solution for industry-specific challenges. Hundreds of customers in consumer goods, life sciences, chemicals, metals and paper & packaging run it to make the right decisions at the heart of their business. Valued as a thought leader by experts as Gartner, OMP invests one out of every three dollars earned into innovation.

OMP for Consumer Goods is an industry-specific solution tailored to the consumer goods industry, and already in use at more than 250 plants.

• About / Contact
• Privacy Policy
• Alphabetical List of Companies
• Business Analysis Topics

Procter & Gamble’s Operations Management: 10 Decisions, Productivity

The Procter & Gamble Company’s operations management (OM) strategy follows goals for optimization in efficiency and effectiveness in satisfying various needs of the business in consumer goods markets worldwide. The strategy addresses the 10 strategic decisions, which pertain to various operational areas of the company. Procter & Gamble’s operations management efforts push for maximum productivity in these 10 strategic decision areas. Highly productive operations support effective strategy implementation. For example, based on higher productivity, Procter & Gamble’s operations managers can implement higher production capacity directives. These conditions contribute to the company’s ability to stabilize its global business. Current OM strategies and tactics work to fulfill Procter & Gamble’s business goals. However, it is essential to adjust to changes in P&G’s industry and market variables. Adjustments should match market demand and technological advances to maintain high performance and support market leadership goals embodied in Procter & Gamble’s vision statement and mission statement .

Operations management decisions determine productivity and the capacity of Procter & Gamble to respond to business needs. These needs change according to consumer goods market conditions and organizational conditions. Procter & Gamble’s operations managers implement changes in the 10 strategic decisions accordingly.

Procter & Gamble’s Operations Management, 10 Decision Areas

1. Design of Goods and Services . Operations managers are concerned about product specifications, which determine other strategic decision areas of operations. Procter & Gamble’s objective in this area is to develop products within organizational capabilities, while supporting goals for innovation. Innovation is a main factor in Procter & Gamble’s generic competitive strategy and intensive growth strategies . In applying this approach, the company’s operations managers focus on cost minimization without sacrificing product quality. In this way, Procter & Gamble’s vision statement and mission statement are satisfied in terms of ensuring quality and value of consumer goods. For example, cost minimization is possible through high quality P&G products designed for high operational productivity levels. Thus, Procter & Gamble maintains high quality standards while keeping flexibility in other related factors for this strategic decision area of operations management.

2. Quality Management . Quality management’s objective is to implement quality standards based on the expectations of target customers or consumers. In this case, the Procter & Gamble Company’s goal for this strategic decision area is to apply high quality standards in OM. These standards support leadership in OM, and business leadership in the consumer goods industry. High quality standards address issues linked to competitive rivalry shown in the Five Forces analysis of Procter & Gamble . For example, products of higher quality are more likely to succeed in the saturated market of consumer goods. At Procter & Gamble, operations managers use current market data to determine the suitability of quality standards. Operational specifications and productivity measures are adjusted according to changes in data pertaining to P&G consumer expectations. Thus, in this strategic decision area of operations management, Procter & Gamble’s dynamic quality standards are used to match market expectations.

3. Process and Capacity Design . The strategic decision in the area of process and capacity design considers the specifications and requirements in Procter & Gamble’s production processes. The company’s objective is to maintain adequate capacity and productivity. In this regard, the operations management approach used at Procter & Gamble involves maximization of automation in production. For example, automation increases productivity and capacity through higher operational efficiency. The resulting condition contributes to the benefits of economies of scale, which is one of the strengths identifiable in the SWOT analysis of The Procter & Gamble Company . In this strategic decision area of operations management, designs are also based on regular reviews of P&G’s processes. The resulting data allow Procter & Gamble’s operations managers to develop solutions to ensure that the consumer goods business remains highly productive.

4. Location Strategy . Optimal distances from resources and target markets are the operations management objective in this strategic decision area. Procter & Gamble uses an approach that prioritizes proximity to target markets. For example, facilities are located where it is easy to transport P&G’s consumer goods to retailers. In this condition, Procter & Gamble’s operations managers maximize the benefits of high productivity. For instance, high operational productivity in manufacturing and distribution facilities supports effective market reach through retailers.

5. Layout Design and Strategy . The Procter & Gamble Company addresses layout design and strategy through real-time data. The objective in this strategic decision area of operations management is to optimize the flow of resources and information to support the consumer goods business. In this case, Procter & Gamble’s organizational structure (corporate structure) also determines the layout design and strategy. For example, internal business processes are grouped according to the divisions in the corporate structure. Moreover, operations managers are concerned about layouts that suit internal business processes in Procter & Gamble’s corporate offices. The aim is to support P&G employees’ productivity. Understandably, Procter & Gamble’s operations management approach for this strategic decision area adapts to available spaces, considering variations in facilities and regulations.

6. Job Design and Human Resources . Operations managers are involved in efforts to ensure the adequacy of human resources. To address this objective, Procter & Gamble implements employee training programs for innovation and productivity. Employees are among the main stakeholders considered in Procter & Gamble’s corporate social responsibility strategy . The approach used for this strategic decision area also supports leadership and passion for winning to enhance employee morale and career development. Aligned with Procter & Gamble’s organizational culture (company culture) , these factors and operations management efforts ensure effective and adequate human resources. Adequate HR supports consistency and effective capacity in P&G’s consumer goods business. For example, the strategically developed human resources and its culture make it easier for Procter & Gamble’s operations managers to address operational issues.

7. Supply Chain Management . This strategic decision area of operations management has the objective of strategically aligning an effective supply chain that supports Procter & Gamble’s consumer goods business. The condition of the supply chain determines the capabilities of the company in terms of productivity and capacity. In this regard, Procter & Gamble’s operations managers prioritize external and internal factors that significantly influence the supply chain. The company aims to minimize the negative operational effects of these factors on productivity. For example, the PESTLE/PESTEL analysis of The Procter & Gamble Company shows that ecological factors can create challenges in maintaining an adequate supply chain for P&G. Thus, the company uses data on external conditions and internal conditions to address such challenges and to fulfill the operations management objectives in this strategic decision area.

8. Inventory Management . For inventory management, Procter & Gamble’s operations management team focuses on the objective of matching inventory and organizational needs. At the same time, the company considers consumers, suppliers, and business productivity in this strategic decision area. Moreover, Procter & Gamble’s marketing mix (4P) imposes requirements on inventory management activities. For example, the activities of retailers influence P&G’s operations management decisions in this strategic area. The methods that Procter & Gamble applies for inventory management include the periodic method and the first in, first out (FIFO) method. FIFO minimizes spoilage of raw materials and consumer goods. Procter & Gamble’s operations managers also use buffer inventory to address sudden fluctuations in market demand.

9. Scheduling . In this strategic decision area, Procter & Gamble’s objective is to develop and implement short-term and intermediate operational schedules for optimum utilization of resources to support business needs. In this regard, the approach to OM involves fixed schedules for most of P&G’s corporate offices, and rotating variable schedules in some facilities. For example, Procter & Gamble’s corporate office employees adhere to their fixed schedules for data processing and analysis. On the other hand, operations managers apply rotating schedules for manufacturing processes. Some of these rotating schedules are variable to enable Procter & Gamble to correspondingly vary its productivity as a way of addressing changes in market demand for consumer goods.

10. Maintenance . P&G has the objective of maintaining effective and adequate processes in this strategic decision area of operations management, in consideration of productivity and capacity, demand, and resources. Procter & Gamble’s operations managers maintain dedicated personnel for each process. For example, for problems involving the supply chain, the company has a dedicated team that specializes in supply chain management. This operational approach ensures continuity in Procter & Gamble’s operations management policies and strategies, leading to consistency in productivity and output of the consumer goods business.

Productivity at Procter & Gamble

As a global consumer goods business, the Procter & Gamble Company uses an array of measures or criteria for evaluating productivity. Operations management uses the results of such evaluation to support P&G’s processes. The following are notable criteria used to determine productivity in different areas of Procter & Gamble’s operations:

• Batches per hour (Procter & Gamble’s manufacturing productivity)
• Tickets per day (Customer service productivity)
• Variant tests per month (R&D productivity)
• Chan, F. T., & Ding, K. (2023). Industrial intelligence-driven production and operations management. International Journal of Production Research, 61 (13), 4215-4219.
• P&G History .
• The Procter & Gamble Company – Form 10-K .
• The Procter & Gamble Company – Global Sourcing Principles .
• The Procter & Gamble Company – Innovation .
• Copyright by Panmore Institute - All rights reserved.
• This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s.
• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

• Harvard Business School →
• Faculty & Research →
• May 2016 (Revised May 2017)
• HBS Case Collection

Supply Chain Finance at Procter & Gamble

• Format: Print
• | Language: English
• | Pages: 16

About The Authors

Benjamin C. Esty

E. Scott Mayfield

Related work.

• Faculty Research

Supply Chain Finance at Procter & Gamble Spreadsheet Supplement

• October 2016

Supply Chain Finance at Procter & Gamble

• Supply Chain Finance at Procter & Gamble Spreadsheet Supplement  By: Benjamin C. Esty, Scott Mayfield and David Lane
• Supply Chain Finance at Procter & Gamble  By: Benjamin C. Esty and E. Scott Mayfield
• Supply Chain Finance at Procter & Gamble  By: Benjamin C. Esty, E. Scott Mayfield and David Lane

Doing the Right Thing with Our Supply Chain

Over the last four years of doing our annual Supplier Citizenship Survey, we have grown the response rate tremendously. In 2020, we had more than 760 suppliers provide data and information on all Citizenship areas, which represents approximately 50% of P&G's global supplier spending. We have seen more suppliers improve in the areas of Environmental, Social and Governance (ESG), with 72% indicating they publish a sustainability or Citizenship report. And we continue to drive inspiration and action across the Citizenship areas. In April 2021, we had our first Global Virtual Supplier Summit which was viewed by more the 1,500 external participants and internal stakeholders. Through this two-hour event, we heard from P&G leaders, including Ana Elena Marziano – Chief Purchasing Officer, Shelly McNamara – Chief Equality & Inclusion Officer and Virginie Helias – Chief Sustainability Officer, about P&G's response to the pandemic and our focus areas going forward. The Summit was followed by a series of 11 workshops through which P&G and our partners shared tools and ideas on how our suppliers can join the journey on Equality & Inclusion, Sustainability and Supplier Diversity. We continue to believe in the importance of sharing P&G strategies and action plans with our key partners, so together we can have significant positive impact on the people in our supply chains, communities and planet.

Supplier Diversity

When our supplier ecosystem reflects the diversity of our consumers, our business grows and the communities in which we live and operate thrive. P&G’s Supplier Diversity program in the U.S. aims to spend with businesses owned by minorities, women, LGBTQ+, people with disabilities and U.S. veterans. Now with the expansion of Supplier Diversity, we are tracking spend with women-owned and women-led suppliers globally, too. We are proud to have spent almost $3 billion with this group of diverse suppliers in fiscal year 20/21, across first and second tiers. Supplier diversity is a competitive advantage for us, and we are committed to drive economic empowerment across our end-to-end supply chain. Therefore, it is important that we recognize and highlight the valuable diverse owned suppliers currently adding value every day to P&G’s business. We share some of their success stories and videos here .

Supplier Diversity Success Story: DSI Mask Distribution

As the COVID-19 pandemic swept our country, the team at North America Market Operations Purchases was on a mission to provide safety equipment to P&G employees. We made an intentional decision to partner with a minority-owned supplier to source and distribute masks to P&G operations. We selected DSI as our partner due to our long relationship and the company’s ability to be creative and nimble. While P&G provided a guarantee for their first order, DSI worked with P&G connections — equipment suppliers and carriers — to quickly build inventory. They subsequently shipped into all our U.S. sites and are qualified to ship to Canada. DSI has built relationships with our sites, which is leading to other opportunities for business growth beyond masks. For P&G, this was a successful partnership because DSI leveraged their expertise to make and distribute masks at a cost lower than what we could do ourselves.

Supplier Diversity in South Africa

Building sustainable supply chains also means it is also important to invest in the future pipeline of diverse-owned suppliers, so we partner with many organizations to build capabilities of diverse small business owners and startups. This has come to life in a meaningful way with the hard work of our P&G team in South Africa. We currently work with more than 175 local suppliers that are Broad-based Black Economic Empowerment (BBBEE) compliant. We also partner with WEConnect International to develop local diverse-owned businesses by leveraging the experience and know-how of local P&G employees, sharing best practices and tools with entrepreneurs in the country. Learn more here .

Diversity in Marketing

We also have focused efforts in our Marketing space to ensure we are growing the diversity of talent behind and in front of the camera. All of this work is to build a more diverse and inclusive supply chain through which P&G can deliver superior products to our diverse consumers around the world.

Recognition for Our Hard Work

Supplier inclusion in our Citizenship work is a clear business imperative because we know that having a diverse supplier ecosystem delivers a more resilient supply chain, allowing us to respond to evolving consumer and customer needs. We are proud that the following external organizations have recognized the hard work of so many P&G employees on our Supplier Diversity growth over the years:

• CEO of the Year: Awarded by the National Minority Supplier Development Council (NMSDC) • Top Corporation: Awarded by Women’s Business Enterprise National Council (WBENC) • Top Global Champions for SD&I: Awarded by WEConnect International

Responsible Sourcing

At P&G, we aspire to be a company that extends our PVPs throughout our supply chains in partnership with suppliers. We have increased investment in the foundational work of assessing and monitoring human rights and environmental risks in our supply chains. A corporate cross-functional team is working to refresh policies and processes to evaluate, identify and remediate risks by collaborating with our business units and suppliers. This includes deepening our understanding of our supplier locations and materials and services that would benefit from audits and other due diligence tools. These due diligence tools support our efforts to engage with partners with high ethical standards, in line with P&G Responsible Sourcing Expectations for External business Partners.

• Community impact
• Sustainability

Don't miss tomorrow's supply chain industry news

Let Supply Chain Dive's free newsletter keep you informed, straight from your inbox.

• Daily Dive M-F
• Operations Weekly Every Tuesday
• Procurement Weekly Every Thursday
• Logistics Weekly Every Wednesday

P&G shifts suppliers, product formulas to avoid supply chain issues

Dive Brief:

• Procter & Gamble is using alternate suppliers and reformulating products as it combats rising inflation and works to keep shelves stocked, CFO Andre Schulten said in an earnings call Tuesday .
• The consumer products giant has been relying on back-up suppliers over the last few months in the case of shortages or when shipping delays prevent materials from making it to their destinations on time. Schulten said the move to reformulate some products will not affect "the superiority of the product" or have "any noticeable impact to the consumer."
• P&G will continue to shift suppliers going forward as it's allowed the company to "optimize costs to a degree," Schulten said. But the maker of Olay and Crest hasn't been completely immune to supply chain disruption, announcing new price hikes in categories like oral and skin care to combat rising inflation.

Dive Insight:

A global supplier base has allowed companies to quickly respond to supply chain disruptions while minimizing the impact to their bottom lines. P&G has avoided the effects of the current energy crisis in China , for example, because of its ability to rely on alternate suppliers.

"When you think about our ability to potentially source from other regions for a period of time, most of our factories are able to run formula carts and run products for other regions, which gives us flexibility on our footprint to overcome short-term challenges," said Schulten.

Other companies say maintaining relationships with suppliers from around the globe have been instrumental in avoiding shortages and insulating themselves from rising costs of materials. Levi's sourcing spans 24 countries and the retailer doesn't source more than 20% of a product in one country, CEO Chip Bergh said on an earnings call this month .

Levi's also cross-sources key products. More than 50% of its jeans volume is approved for production with suppliers in at least two different source companies, according to Bergh.

"We did this to avoid concentrations to be less exposed to bottlenecks in production capacity," Bergh said on earnings call this month. The moves have allowed them to be less exposed to recent factory shutdowns in Vietnam that sent other retailers scrambling for alternative suppliers. Under Armour, which sources a third of its product from Vietnam, experienced product delays in the wake of shutdowns.

Maintaining a global supplier base, however, requires an incredible amount of visibility into supplier operations to anticipate potential disruptions ahead of time. P&G, for example, "looks around the corner, anticipates potential bottlenecks, and then chooses to build inventory," Schulten said.

Still, companies relying on multiple suppliers have a certain amount of flexibility when supply chain breakdowns do happen. That's allowed them to better shield themselves from the impacts of COVID-19 outbreaks, extreme weather events and other supply disruptions happening throughout the world.

"The strength of our supply chains is mainly driven by the flexibility that we can create within those supply chains," said Schulten.

Recommended Reading

• After years of 'Made in China,' supply chains consider alternatives By Shefali Kapadia • Oct. 14, 2021
• How can managers make their supply chains more agile? 4 experts weigh in. By Shefali Kapadia • Aug. 13, 2020

Supply Chain Dive news delivered to your inbox

Get the free daily newsletter read by industry experts

• Select Newsletter: Daily Dive M-F
• Select Newsletter: Operations Weekly Every Tuesday
• Select Newsletter: Procurement Weekly Every Thursday
• Select Newsletter: Logistics Weekly Every Wednesday
• Select user consent: By signing up to receive our newsletter, you agree to our Terms of Use and Privacy Policy . You can unsubscribe at anytime.

Editors' picks

Ocean rates skyrocket, reflecting cautionary market

Shippers are grappling with the ongoing Red Sea conflict and pending East Coast labor contract renewal as demand is poised for growth at U.S. ports.

AutoZone ups availability with growing distribution network

The auto parts retailer is leveraging its existing network to carry more inventory while nearing completion of additional facilities.

Company Announcements

• Canadian National to resume operations, CPKC stoppage continues By Larry Avila
• What to know about supply chain resiliency and uncertainty in 2024 By Kelly Stroh
• Economic confidence in North America plummets By David McCann
• Inflation slows to three-year low, clearing way for Fed rate cut By Jim Tyson

Complimentary Case Study

P&g case study creating a sustainable supply chain through innovative partnerships.

The overarching goal of the partnership between Procter & Gamble and Domtar was clear: developing an increased supply of FSC-certified wood pulp fiber in the southeast U.S. to create sustainable consumer products. Domtar and P&G formed a unique, corporate-to-corporate partnership based on a common objective — developing a strategy to create their own supply of FSC-certified fiber when there was not enough supply. Domtar and P&G created their own supply by seeking out individual landowners in the southern United States and convincing them to seek FSC certification for their lands. This case study will explore the nature of the partnership, the relationships with the landowners and the incentives to certify their land, as well as challenges, successes, and lessons learned from this successful and on-going program.

What You Will Learn:

• How did a unique corporate partnership help increase the supply of Forest Stewardship Council® certified wood fiber in a mutually beneficial way?
• How did two organizations collaborate to engage landowners and build trust?
• How did two organizations connect all elements of the supply chain?
• Three key lessons to create effective and efficient ongoing partnerships

Share this with your network:

Fill out the form below to download:

Experience in Sustainability: Select Less than 2 years 2 - 6 years 7 - 10 years More than 10 years

*What does your role fit best? Sustainability/CSR Marketing Communications & PR Design & Innovation Finance & Investment Supply Chain Management Human Resources Education (educator, administrator, other) NGO/Non-Profit Student Consultant Business/Brand Strategy President/CEO Legal Other

What organizational level does your role fit in?

Company Size

Phone Number

Send me updates about events near me

• Digital Marketing
• Facebook Marketing
• Instagram Marketing
• Ecommerce Marketing
• Content Marketing
• Data Science Certification
• Machine Learning
• Artificial Intelligence
• Data Analytics
• Graphic Design
• Adobe Illustrator
• Web Designing
• UX UI Design
• Interior Design
• Front End Development
• Back End Development Courses
• Business Analytics
• Entrepreneurship
• Supply Chain
• Financial Modeling
• Corporate Finance
• Project Finance
• Harvard University
• Stanford University
• Yale University
• Princeton University
• Duke University
• UC Berkeley
• Harvard University Executive Programs
• MIT Executive Programs
• Stanford University Executive Programs
• Oxford University Executive Programs
• Cambridge University Executive Programs
• Yale University Executive Programs
• Kellog Executive Programs
• CMU Executive Programs
• 45000+ Free Courses
• Free Certification Courses
• Free DigitalDefynd Certificate
• Free Harvard University Courses
• Free MIT Courses
• Free Excel Courses
• Free Google Courses
• Free Finance Courses
• Free Coding Courses
• Free Digital Marketing Courses

5 Digital Transformation in FMCG Case Studies [2024]

In the rapidly evolving, Fast-Moving Consumer Goods (FMCG) sector, digital transformation has become a pivotal strategy for companies aiming to enhance operational efficiencies, boost consumer engagement, and foster innovation. Integrating digital technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and advanced analytics has revolutionized traditional business models, enabling FMCG companies to adapt to altering consumer preferences and market dynamics. This paper presents five case studies—Nestlé, Procter & Gamble, Unilever, Coca-Cola, and PepsiCo—that illustrate implementing digital strategies in the FMCG sector. Each case study highlights the objectives, implementations, results, and lessons learned from the digital transformation journeys of these industry giants, providing valuable insights into the challenges and opportunities presented by digital innovations.

5 Digital Transformation in FMCG Case Studies

Case study 1: nestlé’s digital transformation journey.

Nestlé, a global leader in nutrition and wellness, embarked on a digital transformation to maintain its competitive edge amid evolving consumer demands and technological advancements. The company focused on boosting operational efficiency and customer engagement while fostering innovation by integrating advanced digital tools. These tools were strategically deployed to streamline processes, enhance interactions, and drive new developments. This included adopting cloud-based data management and collaboration solutions, AI for demand forecasting and customer personalization, and IoT technologies to optimize manufacturing and supply chains. These initiatives aimed to streamline operations, boost market responsiveness, and encourage a culture of continuous innovation, aligning Nestlé with the digital age’s demands.

a. Enhance Supply Chain Transparency: Implement a more transparent supply chain system to ensure faster and more reliable delivery of products.

b. Boost Consumer Engagement: Leverage digital platforms to enhance customer interaction and personalize consumer experiences.

c. Drive Innovation: Foster a culture of innovation using advanced technologies such as AI and IoT.

Implementation

a. Cloud Computing: Nestlé moved a significant portion of its data operations to the cloud, allowing for more scalable data management and improved collaboration across global teams.

b. AI and Analytics: The company leveraged AI to analyze consumer data and market trends, facilitating the use of predictive analytics for accurate demand forecasting. This data-driven approach also enabled the development of personalized marketing strategies, tailoring offerings to consumer preferences.

c. IoT in Manufacturing: Implemented IoT sensors in manufacturing plants to monitor equipment performance and enhance predictive maintenance, reducing downtime and increasing production efficiency.

d. Digital Marketing: Developed a digital-first marketing strategy focusing on social media platforms and real-time customer feedback to improve engagement and brand loyalty.

a. Supply Chain Efficiency: Enhanced visibility and faster response times in the supply chain, reducing waste and improving delivery timelines.

b. Increased Sales: Targeted marketing campaigns and personalized promotions effectively boosted sales and enhanced customer satisfaction. These tailored strategies resonated with consumers, leading to increased loyalty and revenue.

c. Innovation Leadership: Established a new digital innovation team responsible for ongoing projects in AI, resulting in several successful pilot projects that promise to transform various aspects of their operations.

Lessons Learned

a. Employee Training: Initial challenges in employee adaptation to new digital tools were mitigated through comprehensive training programs.

b. Partnerships: Collaborations with tech startups and digital innovators accelerated the digital transformation, bringing fresh perspectives and expertise.

Future Steps

Nestlé plans to continue its digital expansion, focusing on sustainability and eco-friendly innovations to achieve a waste-free future. More AI-driven tools will be developed to personalize consumer experiences further and automate production processes. This case study demonstrates how embracing digital transformation can substantially improve efficiency, engagement, and innovation within the FMCG industry.

Related: Digital Transformation Case Studies

Case Study 2: Procter & Gamble’s Digital Transformation Strategy

Procter & Gamble (P&G), a leading multinational consumer goods corporation, recognized the necessity of adopting digital solutions to remain competitive. The company focused on streamlining operations, enhancing consumer insights, and innovating product development to achieve this. Key initiatives included deploying smart factories with advanced robotics and automation, utilizing big data for in-depth market and consumer analysis, and implementing sustainable technologies to minimize environmental impact. These efforts aimed to optimize efficiency, improve product relevance through targeted innovations, and deepen consumer engagement, securing P&G’s market position in the digital era.

a. Operational Excellence: Improve operational efficiencies by digitizing the supply chain and production processes.

b. Consumer Insights: The company aimed to enhance its data analytics capabilities to understand consumer behavior and preferences deeply. This improvement would provide valuable insights to drive more targeted and effective business strategies.

c. Sustainable Practices: Implement technologies to promote sustainability in manufacturing and distribution.

a. Smart Factories: P&G launched a series of “smart factories,” incorporating advanced robotics, automation, and real-time data analytics to optimize manufacturing processes.

b. Big Data and Analytics: Utilized big data technologies to analyze vast consumer data, enhancing marketing strategies and product development.

c. Sustainability Tech: The company adopted advanced water recycling and renewable energy technologies to minimize its environmental impact and reduce operational costs. These sustainable practices supported environmental goals and improved efficiency and profitability.

d. E-Commerce Optimization: Strengthened e-commerce platforms by integrating AI-driven recommendations and virtual try-on features to enhance online shopping experiences.

a. Increased Efficiency: Production time and costs decreased significantly due to automation and improved logistics.

b. Enhanced Consumer Engagement: Personalized marketing campaigns and product offerings based on consumer data analytics led to higher customer satisfaction and brand loyalty.

c. Sustainability Goals: Achieved significant water use and carbon emissions reductions, aligning with global sustainability objectives.

a. Cultural Adaptation: Emphasizing the importance of a digital-first culture was crucial, necessitating ongoing training and development for employees.

b. Continuous Innovation: Establishing partnerships with technology companies proved vital in staying current with emerging technologies and continuously innovating.

P&G is actively exploring new digital initiatives, including AI for predictive maintenance to enhance equipment reliability and efficiency. Additionally, the company is integrating blockchain for transparent supply chain operations and AR/VR to create interactive and immersive consumer experiences. The organization remains committed to leveraging technology to improve its business operations and consumer interactions. This case study highlights P&G’s strategic approach to digital transformation, focusing on operational efficiency, consumer insights, and sustainable growth, showcasing significant gains in adapting to digital advancements.

Related: Influence of Digital Transformation on Manufacturing Industry

Case Study 3: Unilever’s Digital and Sustainable Business Model

Unilever, a global leader in Beauty & Personal Care, Home Care, and Foods & Refreshment products, aimed to harness digital technology to foster sustainable growth and enhance operational efficiencies worldwide. The company focused on integrating AI for product development, deploying digital twins in manufacturing for resource optimization, and using blockchain for supply chain transparency. These digital strategies were designed to streamline processes and reinforce Unilever’s commitment to sustainability and innovation.

a. Sustainability Initiatives: Implement digital tools to achieve sustainability targets, particularly in reducing carbon footprint and enhancing the lifecycle of products.

b. Consumer Engagement: Use digital channels to deepen consumer relationships and tailor experiences.

c. Supply Chain Optimization: Utilize advanced digital systems to streamline the supply chain and reduce costs.

a. AI-driven R&D: Integrated AI to accelerate product development and testing, reducing time-to-market and enabling rapid prototyping and customization.

b. Digital Twin Technology: Deployed digital twin technology in manufacturing to simulate processes and optimize energy use, reducing waste and energy consumption.

c. Blockchain for Traceability: Initiated a blockchain project to better transparency and traceability in the supply chain, particularly for sourcing sustainable raw materials.

d. Direct-to-Consumer Platforms: Expanded digital sales channels, including personalized subscription services and loyalty programs powered by AI analytics.

a. Sustainability Milestones: The company achieved substantial reductions in plastic use and greenhouse gas emissions, aligning its operations with global sustainability commitments. These environmental achievements reflect a successful commitment to eco-friendly practices and responsibility.

b. Enhanced Customer Loyalty: Improved customer engagement and loyalty through personalized marketing and responsive direct-to-consumer interfaces.

c. Supply Chain Resilience: Increased supply chain agility and resilience, leading to cost savings and improved service levels during global disruptions.

a. Integration Challenges: Integrating digital technologies across diverse markets presented challenges; solutions tailored to local market conditions were essential.

b. Employee Engagement: Successful digital transformation requires robust change management strategies to engage employees across all levels of the organization.

Unilever is planning to increase its investments in AI and machine learning to enhance its capabilities in predictive analytics and facilitate more effective real-time decision-making. Simultaneously, the company is dedicated to exploring and implementing innovative packaging solutions to minimize environmental impact. This initiative responds to the increasing consumer demand for sustainable products, ensuring that Unilever continues to lead in both technological advancement and environmental stewardship in the FMCG sector. This case study illustrates Unilever’s proactive approach to digital transformation to enhance operational efficiencies and consumer engagement and solidify its commitment to sustainability.

Related: Digital Transformation in Hotels Case Studies

Case Study 4: Coca-Cola’s Digital Transformation for Market Adaptation

Coca-Cola, a globally renowned beverage company, revamped its digital infrastructure to adapt to market conditions and consumer preferences. The initiative prioritized enhancing digital engagement, boosting operational agility, and fostering data-driven decision-making by implementing advanced analytics and IoT in operations and enhancing digital marketing. Coca-Cola aimed to optimize processes and deepen consumer connections, ensuring agility and responsiveness in a dynamic market environment.

a. Digital Engagement: Enhance customer and consumer engagement through digital channels to improve brand loyalty and market reach.

b. Operational Agility: The company is leveraging digital technologies to enhance the flexibility and efficiency of its production and distribution processes. This integration aims to streamline operations and improve overall business performance.

c. Data-Driven Marketing: The company utilizes consumer data to customize marketing initiatives and product development, targeting specific demographics and preferences. This data-driven approach allows for more precise and effective engagement with their target audience.

a. Consumer Apps and Platforms: Developed mobile applications and loyalty programs that provide personalized content and rewards, enhancing customer interaction and retention.

b. IoT and Automation: Deployed IoT sensors and automation technology in bottling and distribution centers to improve efficiency and reduce downtime.

c. Advanced Analytics: The company harnessed big data and advanced analytics to gain deeper insights into consumer behavior, enhancing the effectiveness of marketing campaigns and improving inventory management.

d. Sustainability Tech: Implemented technologies to reduce water usage and increase energy efficiency in production facilities, supporting sustainability goals.

a. Increased Consumer Engagement: The new digital platforms substantially increased consumer interaction and data collection, providing valuable insights for future strategies.

b. Operational Improvements: Automation and IoT implementation resulted in significant cost savings and faster response times in production and distribution.

c. Enhanced Market Understanding: Data analytics tools helped Coca-Cola better comprehend and react to market trends and consumer needs, resulting in more targeted and successful marketing initiatives.

a Technology Integration: Seamless integration of trending technologies into existing systems was challenging but essential for success.

b. Stakeholder Buy-in: Ensuring buy-in from all stakeholders, including bottling partners and distributors, was crucial for effectively implementing digital strategies.

Coca-Cola plans to expand its digital capabilities, including exploring AI for predictive analytics and virtual reality for immersive consumer experiences. The company is also looking to enhance its e-commerce presence to adapt to the growing trend of online shopping. This case study underscores how Coca-Cola’s digital transformation initiatives enhanced operational efficiencies and market adaptability, significantly boosting consumer engagement and sustainability efforts.

Related: Reasons to Learn Digital Transformation

Case Study 5: L’Oréal’s Digital Innovation for Consumer Engagement

L’Oréal, a top player in the global cosmetics industry, acknowledged the critical role of digital innovation in maintaining its market lead. The company focused on utilizing digital tools to boost consumer engagement and personalize customer experiences. Initiatives included deploying AR for virtual try-ons, leveraging AI for tailored marketing strategies, and integrating advanced analytics for supply chain optimization. These digital efforts aimed to enhance the consumer journey, streamline operations, and deliver more responsive and customized services, ensuring L’Oréal remains at the forefront of the competitive beauty market.

a. Enhanced Consumer Interaction: Improve consumer interaction and personalization through digital channels.

b. Agile Supply Chain: The company is employing digital technologies to enhance the responsiveness and efficiency of its supply chain. This strategic use of technology aims to optimize operations and streamline logistics.

c. Data-Driven Decisions: Leverage big data and AI for better marketing and product development decision-making processes.

a. Virtual Try-On Technology: Deployed AR-powered virtual try-on tools on its website and in mobile apps, allowing consumers to visualize makeup and hair colors on themselves before purchasing.

b. AI for Trend Prediction: Utilized AI to analyze global beauty trends and consumer feedback, helping to predict future product demand and inform new product development.

c. Sustainable Operations Tech: Implemented IoT and AI to optimize resource use in manufacturing, aiming to reduce waste and increase efficiency.

d. Digital Marketing Strategies: Enhanced digital marketing through personalized ads and content driven by consumer data analytics.

a. Increased Sales and Engagement: The virtual try-on tools led to higher online engagement rates and a boost in sales as consumers could experiment with products virtually.

b. Improved Supply Chain Dynamics: AI and IoT integration led to more efficient inventory management and reduced operational costs.

c. Data-Driven Product Innovation: Faster and more accurate trend analysis helped L’Oréal to stay ahead of market trends and rapidly bring innovative products to market.

a. Consumer Privacy Concerns: Handling large volumes of consumer data requires robust data protection measures to maintain consumer trust.

b. Cross-Department Collaboration: Effective digital transformation requires close collaboration between IT, marketing, and product development teams.

L’Oréal plans to expand its use of AI across all business areas, from customer service chatbots to advanced analytics for all marketing campaigns. Furthermore, the company is investigating the potential of blockchain technology to boost transparency within its supply chain. This exploration aims to build greater consumer trust by providing a clear view of the product journey from source to store. By enhancing transparency, the company seeks to ensure product integrity and reinforce consumer confidence in its brand. This initiative is part of a broader strategy to incorporate advanced technologies that support more secure and efficient supply chain operations. This case study demonstrates L’Oréal’s strategic use of digital technology to improve customer engagement and satisfaction and drive efficiency and innovation.

Related: Predictions About the Future of Digital Transformation

The digital transformation case studies of Nestlé, Procter & Gamble, Unilever, Coca-Cola, and PepsiCo reveal a common theme: embracing digital technology is beneficial and essential for staying competitive in the FMCG industry. These companies have shown that adopting AI, IoT, and blockchain can improve efficiency, customer engagement, and innovation. Moreover, these transformations are not without challenges, including integration difficulties and the need for comprehensive data security measures. However, the benefits—from enhanced operational agility to deeper consumer insights and sustainable practices—far outweigh the hurdles. As the FMCG sector evolves, these case studies serve as a pathway for other organizations seeking to leverage digital innovation to thrive in an increasingly digital marketplace.

• 10 Corporate Crisis Management Case Studies [2024]
• Role of Artificial Intelligence in Performance Management [2024]

Team DigitalDefynd

We help you find the best courses, certifications, and tutorials online. Hundreds of experts come together to handpick these recommendations based on decades of collective experience. So far we have served 4 Million+ satisfied learners and counting.

10 Ways Digital Transformation is Changing Manufacturing Sector [2024]

CFO’s Role in Digital Transformation [2024]

Role of Digital Transformation in Supply Chain Management [2024]

15 Digital Transformation Failure Examples [2024]

Driving Digital Transformation with AR & VR [2024]

Role of Digital Transformation in Marketing Leadership [2024]

Return to Case Studies

Download PDF

Highly Commended Winner

Best supply chain finance solution, adam smith awards 2019, procter & gamble company, how treasury used a massive supplier chain finance programme to deliver huge free cash flow and productivity improvements, the challenge.

Procter & Gamble’s (P&G) treasury team recognised that free cash flow and productivity needed to be improved. External benchmarking of days payable outstanding (DPO) showed that P&G was lagging behind its peers, the company falling into the bottom quartile. The treasury team and purchasing organisation instituted new payment terms with suppliers, mindful that the programme should not result in increased cost of goods.

In the past, term extensions were dictated centrally with little regard to the supplier landscape and lacked a clear strategy. This time, P&G wanted more intentional choices made by a broader multifunctional team to optimise results. The objective was to partner with suppliers in a sustainable way and implement a programme that would empower the businesses to extend payment terms in a way that was most prudent for the industries in which they participate.

The solution

The P&G treasury team began to explore supply chain finance (SCF) programmes as an effective means to achieve its critical objectives regarding payment terms extension. Amongst those objectives, it was imperative that the programme be cash-sufficient, delivering between 90% and 100% cash productivity over multiple years. The programme needed to be sustainable on a global basis and simultaneously available globally. It also needed to be cost-effective for P&G’s suppliers, and be able to meet high stewardship and governance standards. An internal multifunctional team was formed, spanning treasury, purchasing, finance, legal, and shared services with business process and technical experts. The result was P&G’s Cash Acceleration programme, designed to achieve two key business commitments that were made to shareholders: US$10bn productivity improvement, and a US$2bn improvement in incremental free cash flow over three years. P&G partnered with Citi globally and two additional banks regionally to support the programme.

Best practice and innovation

P&G’s Cash Acceleration programme began with a strategic effort to bring stakeholders on board. The treasury team knew that architecting a programme that would not create headwinds from a cost of goods perspective, while delivering payment term extensions, required commitment from management and coordination with procurement.

In the sourcing world, payment terms are less important than price, service, quality and supply chain efficiency. Changing this meant a comprehensive training initiative for P&G’s 1,200 sourcing professionals. A cross-functional approach, including purchasing, finance, treasury, and planning was then adopted, creating a win-win solution for P&G and its suppliers. Suppliers also benefitted from faster visibility on invoice status, leading to earlier issue resolution and lower DSO.

A Cash Acceleration programme was then launched globally, addressing more than 80% of global spend from day one. This required a tremendous amount of manpower to develop a robust solution, yet minimise process change, to transform the source-topay process. The team established centralised command to address issues in real-time.

The third step was a cultural shift, obtaining a top-down leadership mandate to reassure all that the Cash Acceleration programme would be sustainable. It also required establishing the metrics by which performance would be evaluated, as well as metrics around cash and term extensions. A data system and tracking capabilities enabled stewardship of the SCF programme throughout. P&G also leveraged its AA credit rating as part of its long-term strategy.

Key benefits

• More than doubled payments terms to date, translating into several billion in free cash flow contributed to P&G across all industries and all regions.
• Supports over 500 country/currency combinations with approximately 1,900 suppliers, providing several billion in low cost liquidity for P&G’s supply chain, as its suppliers leverage the programme.
• SCF programmes in 55 of 73 countries in which P&G operates, covering about 95% of total business transactions.
• Supported even in regions where SCF has traditionally been challenging to introduce.
• Overachieved goals in select markets, reaching 100% cash productivity.