‘We have to get the basics right and that means getting the product on the shelf when it is needed – and that means you need to collaborate up and down the supply chain,’ says Lisa Dowding, head of logistics, UK and Ireland at Proctor & Gamble. ‘And if you get that right, you have the leverage to obtain value, in time, in cost, in sales, for you and for your partners.’
‘Right product on the shelf when needed’ has been a mantra for P&G for many years but Dowding suggests that in the past four years there has been a step change in its ability to deliver on this promise.
‘We’ve created collaboration in our internal supply chain which we’ve driven down through internal interfaces. We’ve developed the physical infrastructure,’ she says. ‘Our distribution centres now allow more frequent deliveries of smaller volumes which is what our customers want. But we have a challenge – delivering this in the face of a much more differentiated business. And we have our own goal of doubling our business by 2010 – another challenge.
‘The starting point has to be understanding our customers’ expectations and goals, given that our aim is to be their preferred supplier. Then we can develop plans to meet the needs of retailers.
‘Central to this has to be the idea of demand visibility – sharing more information upfront, joint planning against big issues such as product launches and promotions. Above all, we have to take surprises out of the process,’ says Dowding. ‘We have made progress with our customers. We do at least talk about the concepts of joint forecasting, of having regular meetings, of talking about how we can plan together.’
And sometimes this yields results. For a recent big product launch, P&G was able to start planning the whole logistics chain some 12 months ahead and, as Dowding notes, ‘We didn’t ship trucks until a minute past midnight on launch day and our first sales were recorded at 7.12 am. You can’t do that without working together. But that was a major launch and hence an extreme
example If we could apply this across the board, think how much value we could create.’
It is not a ‘given’ that current or future demand data will be shared and even if it is, from EPOS systems for example, ‘Do we have the capability to distil this huge amount of data into useful information?’ asks Dowding. ‘We’ve talked for years about demand-driven supply chains and that has to be the aim, but it still can feel as if we are as far away as ever.’
However, P&G has procedures and processes in place to move it towards that destination.
‘We have logistics experts tasked with relationship management who work with customers to develop practical joint scorecards which are reviewed and on which priorities are agreed,’ says Dowding.
‘Actually, that’s the way P&G has worked internally for years – applying the ideas to external customers has been more problematic and has only really been extended to retailers in the past three years. Retailers each have their perceived needs and priorities they want to apply across their manufacturers. We want to be seen as a preferred supplier, be engaged early in any project and lead the way. But it doesn’t always happen like that.’
UK retailers are some of the most sophisticated in the world and what happens in the UK tends to lead what happens across Europe.
‘We need to be aware of developments such as retail-ready packaging that retailers are demanding. Obviously, although the UK is a leader we are looking for solutions that will work across our European manufacturing and customers so we can leverage economies of scale.’
Packaging and other environmental and social issues can impact variously on the supply chain, says Dowding.
‘We can let them get in the way or we can use them as a catalyst for change, an opportunity for us to think about how we do things,’ she says. ‘The concept of reducing miles travelled by products is becoming a big one for retailers, but it is one that P&G has been addressing for quite a while. We have consolidated our UK DCs into just two and we can shift smaller volumes more regularly on fewer, fuller trailers. We think we’ve eliminated some 300,000 truck miles a year’.
Equally, the split between the northern and southern DCs is automatically reviewed on a coninuing basis, and Dowding suggests atht it now makes sense to consider collaboration not just with retailers but also with other suppliers or their logistics providers.
‘It’s important we ensure we are eliminating costs, not just moving them from one fleet to another’ says Dowding.’But we have the performanceindicators to help us montior that effectively. There are great opportunities for collaboration.
‘ However, it still boils down to relationships and trust.’.