Iris Anthonniette N. Sunga PROCTER & GAMBLE TRIES TO OPTIMIZE INVENTORY 1. Why are larger supply chains more difficult to manage? List several reasons. 1. It involves thousands of suppliers, manufacturing facilities and markets. Even the slightest of changes at any part of the supply chain has significant effects on all of the other participants. 2. Inventory optimization, which is critical in cutting costs and increasing revenue, involves all the branches of the chain. The larger the supply chain, the more branches are involved. The more branches that are involved, the chance for any errors or inefficiencies to occur with in the supply chain is high. 2. Why is supply chain management so important at a company such as P&G? P&G’s research has shown that retailers lose 11% of sales due to out-of-stocks, and that samebrand substitutions win back less than 25% of those lost sales for a manufacturer. The objective of the supply chain management therefore is to ensure that shelf inventory would not be zero at any given time in order not to experience these loses. 3. How did inventory optimization impact operations and decision making at P&G? In P&G’s vision of the consumer-driven supply network (CSDN), daily demand updates provide timely warning of changes in product consumption. To make the CDSN work, this information must then be rapidly integrated into replenishment plans, which would then involve all partners and suppliers in the supply chain. 4. Why wouldn’t a small company derive much benefit from multi-echelon inventory optimization as a large company? Explain your answer. Multi echelon and Inventory Optimization are in fact two separate technologies, but they are typically bundled together in MEIO applications. Multi echelon planning answers the question ”where” inventory should be located, and inventory optimization answers the question “how” much should be maintained in order to meet a certain service level target. While small and large company would both benefit from Inventory Optimization, Multi echelon is less applicable to small companies most especially if it has only few suppliers, wherein the “where” can be obviously answered without even processing the array of information.
MIS in action 1. Surf the web for the ingredients of a Procter and Gamble product such as Crest toothpaste or Cover Girl lipstick or look for the list of ingredients on the packaging of these products in retail store. Make a list of ingredients for the product you selected. CREST Toothpaste Ingredients: Sodium Fluoride 0.243% - 0.15% W/V Fluoride Ion, Hydrated Silica , Sorbitol , Glycerin , Tetrapotassium Pyrophosphate , PEG-6 , Disodium Pyrophosphate , Tetrasodium Pyrophosphate , Flavor , Sodium Lauryl Sulfate , Alcohol 1.14% , Xanthan Gum , Sodium Saccaharin , Carbomer 956 , Polysorbate 80 , Sodium Benzoate , Cetylpyridinium Chloride , Benzoic Acid , Domiphen Bromide .0002 wt% , Titanium Dioxide , Blue 1 , Yellow 5 2. Use the web to find the major suppliers for each of these ingredients and their locations Sodium Flouride: Atotech USA, Inc.,1750 Overview Drive Rock Hill SC 29730 USA, Coyne Chemical Co.3015 State Rd Croydon, PA 19021, Westco Chemicals, Inc.12551 Saticoy St. South North Hollywood, Ca, 91605, Hydrated Silica: Liuyang Sanji Chemical Trade Co., Ltd.Hunan, China (Mainland) Shandong Hao Na Import & Export Co., Ltd. Shandong, China (Mainland) Xiamen Mainsource Imp./Exp. Trading Co., Ltd. Fujian, China (Mainland) Sorbitol: Forehigh Trade And Industry Co. Ltd. Shijiazhuang, 050031 Hebei Province China Novus Biologicals Colorado USA Ter France S.A.R.L. France Glycerin: Suriachem SDN. BHD. Pelabuhan, Klang Selangor, Malaysia Zhejiang Jianfeng International Trade Co., Ltd. Zhejiang, China (Mainland) Chemsynergy Asia, Inc. F. Ortigas Jr. Road,Pasig City, Philippines Tetrapotassium Purophospate: Alfa Chem Kings Point, New York 11024, USA Shanghai Mintchem Development Co., Ltd.Changsha, Hunan 410007, China Alpha Chemika Versova Tel Excge Andheri(w), Mumbai, Maharashtra 400053, India Sodium Lauryl Sulfate: MILES Chemical Solutions 3224 Fairfield Drive, Kissimmee, Fl 34743 USA Spectrum Chemical Mfg. Corp. 14422 S. San Pedro St. Gardena, Ca 90248 USA Zhengzhou Cavern Industry And Commerce Co., Ltd. Henan, China (Mainland) Sodium Benzoate: Amresco Inc. 6681 Cochran Road, Solon, OH 44139 USA Alfa Aesar 26 Parkridge Rd Ward Hill, MA 01835 USA Shanghai Sunivo Supply Chain Management Co., Ltd. Shanghai, China
3. What did you learn from your investigations about P&G’s supply chains for these products? What factors would determine price and availability of these products? Crest toothpaste contains ingredients which come from several suppliers all over America and from other parts of the world as well. Sufficient amount of each ingredient must be available at the factory otherwise production of crest toothpaste would not push through. Price of the Crest toothpaste would be based on the cost (CIF) of the ingredients proportionate to the respective amount of use in the manufacture of the product, manufacturing cost, distribution cost and retailers profit.
