Procter and Gamble (NYSE:PG) is the world's leading producer and marketer of consumer packaged goods (CPG), healthcare products and healthcare services globally. In its latest full fiscal year, P&G generated $82.5B in Sales and attained a Net Income of $11.7B. The company's products are sold in 180 countries through a variety of multichannel-based strategies that include mass merchandising, grocery, and membership club stores. It's command of the retailing markets are formidable given the strength and depth of its global supply chain and continual new product development processes (Chen-Lung, Sheu, 2007). The company is organized into two Global Business Units (GBU), the first being Beauty and Grooming and the second being Household Care. P&G is also considered to be one of the best brand management companies globally with 27 of the best-selling brands in the CPG industry part of their portfolio. On average 15% of total sales are from Wal-Mart in any given year and the company is a leader in collaborative planning forecasting and replenishment (CPFR) and adoption fo the Radio Frequency Identification (RFID) pilots WalMart has created with its top 100 suppliers (Chen-Lung, Sheu, 2007).
Proctor & Gamble Sustainable Business
Procter & Gamble: Sustainable Business Development
Through Best Practices in Supply Chain Management
Procter and Gamble (NYSE:PG) is the world's leading producer and marketer of consumer packaged goods (CPG), healthcare products and healthcare services globally. In its latest full fiscal year, P&G generated $82.5B in Sales and attained a Net Income of $11.7B. The company's products are sold in 180 countries through a variety of multichannel-based strategies that include mass merchandising, grocery, and membership club stores. it's command of the retailing markets are formidable given the strength and depth of its global supply chain and continual new product development processes (Chen-Lung, Sheu, 2007). The company is organized into two Global Business Units (GBU), the first being Beauty and Grooming and the second being Household Care. P&G is also considered to be one of the best brand management companies globally with 27 of the best-selling brands in the CPG industry part of their portfolio. On average 15% of total sales are from Wal-Mart in any given year and the company is a leader in collaborative planning forecasting and replenishment (CPFR) and adoption fo the Radio Frequency Identification (RFID) pilots WalMart has created with its top 100 suppliers (Chen-Lung, Sheu, 2007).
Orchestrating the World's Most Sustainable Supply Chain
Based on all of these factors, P&G has embarked on an aggressive strategy of creating a world-class sustainable supply chain, incorporating metrics and key performance indicators (KPIs) into a specialized series of analytics used for evaluating their suppliers. This approach to defining a sustainable supply chain is unique in that it stretches well beyond just the initial tier of suppliers, encompassing suppliers several layers deep into the supply chain (Meehan, Bryde, 2011). P&G has gone so far as to offer the too in open source software so that other companies can evaluate its effectiveness and value. The location fo the site online can be found at www.pgsupplier.com.
P&G has found that tailoring the best possible combinations of metrics and KPIs can lead to exceptionally strong increases in the performance if its suppliers on key sustainability initiatives (Found, Hines, Griffiths, Harrison, 2008). A case in point is how effective the sustainability program at P&G has been on measuring greenhouse emissions throughout its supply chain and logistics processes, then devising strategies to minimize them will also dropping fuel consumption and waste (Segran, 2009). P&G is so committed to this level of results in their supply chains that they are sponsoring competitions to see which supplier in a given industry can deliver the most significant results.
As part of the 2011 Annual Sustainability Report P&G publishes every year the company comments on the progress of this scorecard adoption and use by industry within their supplier base.
Figure 1: P&G Sustainability Scorecard Analysis
Source: http://www.pg.com/en_US/downloads/sustainability/reports/PG_2011_Sustainability_Report.pdf page 35
Using this scorecard analysis, P&G has also been able to manage their supply chains to much more effective levels of accuracy and cost reduction while also attaining challenging sustainability objectives over the long-term. The strategy P&G deliberately took was to bring greater sustainability into their supplier management processes to the product and process level while also concentrating on cost reduction and supplier efficiency. This strategy paid off very well in European markets where sustainability standards and requirements are exceptionally high and more stringent compared to the United States (Neto, Walther, Bloemhof, van Nunen, Spengler, 2010). When these benefits are taken over the long-term, they being to also influence product development and lead to even more aggressive goals being set and achieved. P&G has specifically focused on using its supply chain to fuel the development of Sustainable Innovation Products (SIP). Figure 2 from the latest Sustainability Report shows how successful this strategy continues to be for nurturing new innovation.
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