The P&G Challenge
•To maximize cost efficiencies P&G was purchasing long runs of multiple items.
•Through analysis it was determined that, though there was a low piece price, the costs of carrying inventory was becoming significant.
•Further, P&G was experiencing significant costs in obsolescence as their marketing group was continuing to make changes and improvements to their graphics to maximize their impact on their customers’ “FIRST MOMENT of TRUTH” (at the shelf, impulse buying decisions by consumers).
•Develop a unilateral customized Print-on-Demand (POD) supply model for targeted items reducing print run lengths and lead time from graphic change to delivery to 3 to 5 days.
•Identify other items that were better served by a vendor managed inventory system (VMI) and provide a program establishing minimums to be held at HDC and maximum inventory levels that would be accepted by P&G should an item become obsolete but have the inventory ready and on-hand for immediate delivery.
P&G Case Study Results
•Obsolescence was at least minimized and P&G inventory levels were brought down to less than two weeks of required stock.
•P&G has not provided specific costs savings realized from these programs; however, HDC was awarded the P&G 2009 Corporate Supplier Excellence Award (one of 55 winners out of 85,000 suppliers in P&G’s global supply chain).