Procter & Gamble (P&G) is the world's leading manufacturer of consumer products. P&G, founded

in 1837 by British American William Procter and Irish American James Gamble, is headquartered

in Cincinnati in the United States, and the company has now been built into a $65 billion

conglomerate. Within its portfolio, P&G has 21 billion-dollar brands (e.g., Bounty, Crest, Tide),

operates 130 plants staffed by 95,000 people, has some 70,000 suppliers around the world, and sells

its products in more than 180 countries. By all accounts, P&G has been a giant multinational

corporation for more than a century and will continue to be highly influential in consumer products

for years to come.

At the same time, very few industries are as competitive as consumer packaged goods. Just think

about the options that you now have compared with five years ago. In most cases, we as customers

have numerous more options in every consumer packaged-goods category than we did then. The

global marketplace has a lot to do with this competitive environment. Fragmentation and

specialization in consumer products from more companies have resulted in more products and more

places from which to buy. The infrastructure for developing products, entering markets, and

maintaining customer relationships is more robust than ever, resulting in small- and medium-sized

enterprises (SMEs) being competitive with companies like P&G (which they could not have

competed with just a few years ago).

This market competitiveness has led companies like P&G to constantly assess the efficiencies

and effectiveness of their production, operations, and global supply chains. For a long-standing

industry titan like P&G, this increasingly competitive global environmentsee the figures in

Chapter 1 that show the drastically increased international trade in the last 20 yearshas led to a

newfound sense of urgency for P&G to get closer to both its customers and suppliers to maximize

diminishing margins while selling products at a competitive price. This is not an easy task since

margins in the consumer packaged goods market are already very tight. That led P&G to evaluate

and ultimately remake their global supply chains.

P&G's goal is to replenish at least 80 percent of the retail orders the company receives in less

than a day. To be able , P&G redesigned its distribution network. The company has

improved transparency throughout the end-to-end supply chain, developed even stronger

partnerships with its suppliers, and focused on maximizing synergy throughout the production

cycle. Given this focus on synergy and supplier partnerships, P&G now develops global strategic

supply chain plans jointly with (at least) its core suppliers. This is not to say that all 70,000

suppliers working with P&G are involved but the so-called "strategic suppliers" are very much

entrenched in working together with P&G.

P&G's 70,000 suppliers include chemical companies (e.g., Dow Chemicals, DuPont) that supply

raw materials for cleaning supplies; packaging companies (e.g., Diamond Packaging, VanGenechten Packaging) that supply packaging materials for the company's products; and Page 410

indirect spend providers (e.g., Jones Lang Lasalle) that deliver services such as

warehouse maintenance and janitorial services. With the number and breadth of suppliers, P&G

continuously focuses on maintaining a strong supplier relations program. Guiding its supplier

relations program, P&G has a set of core principles: (1) Best Total Value, (2) Honest, Ethical,

and Fair Dealings, (3) Externally Linked Supply Solutions, (4) Competition and Collaboration, and

(5) Supplier Incumbency.

P&G appears to be in the forefront of continually evaluating and, when needed, remaking its

global supply chains to maintain the titan position in the consumer packaged goods industry.

Despite this success at being able to remake itself so far, one can wonder if P&G, at some point,

will run into difficulties competing with companies like Alibaba and Amazon. Or, will Alibaba and

Amazon simply continue to sell P&G's products (instead of starting to market their own).

Alternatively, will companies like P&G be able to use their sophisticated global supply chains to

expand into new territories similar to what Alibaba and Amazon did not too long ago?

Question 1

What can P&G do to protect its brands from at attack by Amazon and Alibaba private-label products?

QUESTION 2: What should P&G do to move into the e-commerce space occupied by Amazon and Alibaba? Would you sell your P&G products on Amazon and Alibaba?

QUESTION 3: Logistics is a complex process. Major logistics systems include: inbound raw material sourcing; shipping products to intermediate locations (warehousing); shipping to the final customer (end user). Assume that P&Gs major products are included in HS code 34 and 96; and, assume that P&G is serious about one-day delivery to the final customer (household). What countries would you put a warehouse in to ensure that it can get to the final customer in one day?