Wal-Mart - Procter & Gamble

Souh Group

David Drendel Erik Peterson

Tom Heil James Douglass

                                                                   

Issues

1988 Wal-Mart / P&G relationship was broken P&G - 12 different product divisions Different sales manager for each division The divisions never worked with each other In 1985 – Sam W tried to award the vendor of

the year award to P&G, but never got through

Can two companies work together, share information and both become more profitable?

Wal-Mart - Procter & Gamble

Before Channel partnership Adversarial relationship: Wal-Mart did not like doing

business with P&G Transactional focus – day to day selling, ignored

customer wants Fragmented processes – relationship was defined by

buying and selling only.

P&G Wal-Mart P&G Wal-Mart

Before After

Wal-MartData

P&GData

Data delivery Highway

CategoryAnalysis Shelf Mgt. Marketing Profitability

Datasharing

Replenish-ment

Activity based costing

Marketinganalysis

The data highway for the Manufacturing/Retailing Integration

How Did They Do It?

How Did They Do It?

Joint score card Reporting sale of P&G products at Walmart, margin and profit resuslts, inventory turns, financial logistic measurement-> allow partnership to focus on the end customer and used combined data to measure joint progress

Replenishment (CRP) P&G replenished Walmart’s inventory based on inventory data received from Walmart’s distribution center

How Did They Do It?

EDI Electronic transmission of purchasing orders, invoices, advanced shipment notification, financial payment

Customer table checking

PG linked into Wal-Mart’s item file of PG products and compared them to the pricing and product specifications in PG’s item file-> good purchase order-invoice match rate

Category management

Providing insight into consumer trends and a perspective on growing consumer needs

Impact of New Processes

Changes in company cultures Sales growth $375M to over $4,000M Each increased profitability Reduction of inventories Improved information flow Increased knowledge of consumers Identification of “slow movers”

Continuous Replenishment Process Information sharing between manufacturer and

retailer Use of inventory data to manage shipments Reduction of inventory Reduction in order cycle time

P&G uses CRP through the following: Actual warehouse on-hand and on-order

quantities and the projected store sales data

                                                                                                        

Supply Chains "A supply chain is a network of facilities and

distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distirbution of these finished products to customers."

From Ganeshan and Harrison, Supply Chain Management

Supply-chain management is a generic term that encompasses the coordination of order generation, order taking, and offer fulfillment/distribution of products, services, or information

Collaborative SCM

SCM – Supply Chain Management Types of Collaboration

Vertical collaboration Horizontal collaboration

CustomerCustomerRetailerRetailerDistributorDistributorManufacturerManufacturerSupplierSupplier

CustomerCustomerRetailerRetailerDistributorDistributorManufacturerManufacturerSupplierSupplier

Horizontal

VerticalRetailerRetailer

Collaboration Situations

Collaboration, Planning, Forecast, Replenishment

Collaboration agreement

Joint business plan Sales forecast Exceptions to forecast

Resolve exceptions Order forecast Exceptions to order Resolve exceptions Generate order

CPFR – website www.CPFR.org

9 step process model

P & G Today

What we do:As a member of P&G's IT community, you will join a global team of IT specialists who play a leading role in multi functional business teams worldwide. You will have the opportunity to work across a wide range of business areas, doing projects covering many crucial disciplines; including business re-engineering, Business to Business collaboration (B2B), Business to Consumer relationship management (B2C / CRM), global SAP implementation, knowledge management and business analysis. We'll provide you with a strong training program to enable you to succeed and you'll have daily access to coaching and mentoring from experienced colleagues.

Transora.comFrom raw material to store shelf, our aim is to free companies from reactive inventory practices and allow them to focus on strategic activities that drive market performance.

Wal-Mart Today

Goal – sell products before invoice is paid to suppliers

P&G items Product in Wal-Mart warehouse - < 8 hours Ships to store and on shelf - < 4hours Sold to consumer - < 24 hours

Power of Wal-Mart

Power over suppliers - Mars, Inc 3 separate divisions that owners wanted to

keep separate Wal-Mart demanded that Mars must have one

sales manager for all brands 2002 - Mars, Inc created Masterfoods USA a

division of Mars, Inc M&M/Mars, KalKan, Uncle Bens

Sales office in Bentonville, AR