P & G’s Stock Management Of Change
Inventory accumulation on the one hand, other hand out of stock products. Solution: create a flexible, customer-oriented supply chain.
To most companies, the distribution system in a large number of stocks are a headache, because it takes up a huge liquidity. The Procter & Gamble (P & G), this means 3.8 billion cost.
Minor repairs not enough to provide a breakthrough for the stock solution to the problem, for which P & G Consulting BiosGroup help to find a more radical approach, creating a higher flexibility and adaptability to customer as the center of the supply network.
Few years ago, there are two numbers for P & G’s top peace day and night. One is the inventory data: P & G’s distribution system, worth 3.8 billion U.S. dollars in stock. The other is sold off. Retail stores or discount stores in the 2,000 most important commodities, any time 11% of all goods out of stock. P & G’s products in which a considerable proportion. Sometimes customers do not find the goods purchased will be delayed, but many customers will buy other brands or simply not buy anything.
Puzzling is that the system does not reduce the large number of stocks sold off. In fact, the goods often out of stock on the shelves stacked in warehouses. Although the inventory system shows that there are goods, inventory management could not find Crest toothpaste or Charmin tissue of the box. Inventory piling up, and customers often buy P & G products.
Although a lot of work, the company tried countermeasures can not permanently change this contradiction. As a result, P & G’s managers began to explore more radical, breakthrough solutions. P & G set the goal: out of stock without worsening the problem under the premise of one billion U.S. dollars to reduce inventory.
This is the story three years ago. Last year, the cost of P & G’s stock declined and is expected to decline further this year, 600 million U.S. dollars. Moreover, P & G leading to the dynamic production planning and supply system on the road much further away from a goal of adaptive enterprise more and more closer. If P & G in the past to adopt a “batch” process, a long production cycle and causing inventory build, the new P & G is more tend to produce on demand.
Cooperation : For adaptation
Few years ago, P & G Manager Spent three days visiting several companies, access to researchers and consultants, supply chain management for the latest in innovation. One is BiosGroup, this is a use of new technology to solve complex business issues consulting and software development company. Lewis (JohnLewis) is vice president of logistics at Procter & Gamble, he was appreciated BiosGroup co-founder and theoretical biologist Kaufman (StuartKauffman) book “the universe is home,” a book. In this book, Kaufman studied the chaotic state of the biological area “self-organization” of potential principles, and discusses how these principles apply in other areas (from an evolutionary point of view, self-organization is a system of genetic variation and survival of the fittest mechanism, the organizational structure and operational mode of constant self-improvement, so as to continuously improve their ability to adapt to the environment the process — editor’s note).
BiosGroup the supply chain as a complex adaptive system, and in this regard the leading exploration. One of their area of expertise is to create a computer model of how businesses how to mimic nature’s self-organizing, analyzing how various stimuli affect these models and to propose means to enhance the efficiency strategy.
Rapidly changing environment requires the management of P & G to become more agile, fast and efficient, the company realized that to have a more adaptive supply chains. The current approach can not shorten the order to delivery cycle times, reduce unnecessary safety stock (safetyinventory, refers to the company in order to avoid supply shortages remain in the hands of the excess inventory of the quantity ordered), and the rapid flow of distribution
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