Process
Essays

As the leading provider of consumer, commercial and institutional soap, cleansers, and packaged goods, Procter & Gamble (P&G) (NYSE:PG) has chosen to take a global leadership position in the areas of sustainability and environmental effectiveness. The cornerstone of the strategic initiatives is the development of a thorough methodology for assessing, analyzing, measuring, and reporting corporate-wide performance to sustainability goals and guidelines. P&G has isolated the greatest potential risks to their sustainability objectives as being in their globally-based supply chain (Warner, 2008). To gain greater insights into how they can alleviate the significant risk associated with suppliers, who if not well managed could jeopardize the entire series of strategic initiatives surrounding sustainability, P&G created the Supplier Environmental Sustainability Scorecard (P&G, 2010a). The methodology behind this scorecard form the basis of measurement, assessment and reporting systems within P&G today and have since been emulated by other suppliers as well, as their results are quantifiable (Richardson, 2005). Previous to the scorecard being defined, P&G often relied on a wide range of metrics, scorecards and analytics platforms that were never in sync with one another, often causing less-than-optimal levels of quality to be attained (P&G, 2010). There was also a significant level of siloed operations going on, as P&G operates across more than 130 counties and dominates the top-of-mind awareness levels in each national and global market those choose to compete in. While P&G is best known for its marketing prowess, its supply chain and quality management operations, and now its sustainability initiatives, have gained it significant traction in global markets (Joseph, 2010). According to the latest annual reports from P&G, the global soap and cleaning compound manufacturing industry is valued at $54.7B in 2011, growing at a relative flat 3.7% compound annual growth rate through 2012. P&G holds a commanding share in this industry globally, challenged by well-known brands including Colgate-Palmolive, Ecolab and S.C. Johnson, in addition to a few more dozen smaller competitors scattered across geographic regions. P&G competes across many sub-segments of the consumer and commercial cleaning markets, personal care, personal and commercial soap in addition to consumer packaged goods. Of their many lines of business however, P&G faces the toughest challenges in the areas of government regulation and continued government monitoring of environmental performance in the chemically-based production processes it has. Of the several agencies that routinely monitor and at times even fine P&G if they do not comply with government requirements, the Food and Drug Administration (FDA) is often the most rigorous and thorough in their assessments (Joseph, 2010). The costs of non-compliance for P&G can be in the tens of millions of dollars and can also significantly slow down a new product introduction process as well (Warner, 2008). A lack of quality management is such a significant risk for the company that they have chosen to attack it as an opportunity to gain greater lean manufacturing and process workflows into their company. This more aggressive stance on quality management has helped to save the company literally millions of dollars in fines while also setting the foundation for greater performance gains through its green and sustainability-based initiatives globally (P&G, 2010). P&G has also appointed a Vice President of SustainAbility who has the primary role of ensuring all sustainability initiatives and programs are coordinated and work towards the strategic objectives the company has (Joseph, 2010). Not satisfied with the role being within a functional area, P&G has elevated this position to report directly to the CEO, creating a position that has oversight of nearly 75,000 suppliers globally. P&G has also given this person direct accountability for the performance of each product division and brand to the Supplier Environmental Sustainability Scorecards mentioned in this analysis. The integration of metrics, key performance indicators (KPIs) and the use of corporate-wide and by-division Supplier Environmental Sustainability Scorecards has helped P&G surpass even its own expectations and led to sustainability objectives being achieved (Warner, 2008). The remainder of this analysis includes an assessment of the progress P&G is making on their sustainable business objectives, an analysis of the measurement methods they are using and reporting including the Supplier Environmental Sustainability Scorecard, in addition to a series of recommendations and a conclusion.

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