preview

Procter & Gamble : Competitive Advantage

Good Essays

Procter & Gamble is one of the largest manufacturing firms in the world, providing a wide variety of different products for over 50 internationally leading brands. On top of this, they are a prime example of a company that is able to both successfully innovate and implement change in order to gain a meaningful and sustainable competitive advantage. In addition, Procter & Gamble 's innovations have an impact on not just the firm, but the entire distribution channel. Their primary strategy in the design process has been to maximize the value provided to the customer by eliminating all of the activities that do not contribute any value to the end product and user experience. To achieve the goal of maximized value, Procter & Gamble realized …show more content…

To combat these problems, Procter & Gamble proposed a new replenishment process in which the retailer keeps inventory in their distribution warehouse, provides daily data to Procter & Gamble about warehouse orders received from the stores, and then Procter & Gamble determines warehouse replenishment volumes needed. This process, presented in Figure 1, became known as the continuous replenishment program (CRP), and enabled lower retail pricing through decreased product acquisition costs and truckload volume purchases.
Figure 1. CRP Structure

Another key decision made by Procter & Gamble in regards to the distribution channel was a project to revise the ordering and billing system to improve the quality of ordering and service for customers. Procter & Gamble decided to move away from the inefficient and ineffective batch processing system and developed an ordering, shipping, and billing system that integrated all the systems involved in servicing channel customers. Integrating functions like pricing, ordering, shipping, invoicing, and credit systems improved consistency and service levels for Procter & Gamble.
Another piece of the revised system involved revising pricing policies and practices that were too complex. The objective was to improve customer loyalty. The need for this was made apparent by the increasing concern that the value of

Get Access