The article describes Procter & Gamble's approach to managing effective supply-chains and how they've helped Walmart to dramatically reduce costs and ultimately become what they are today.
Where one could profit, however, lies in targetting small businesses in the form of an association along the lines of something like NASE.
Delivering this kind of supply-chain management to an association of small businesses is certainly feasible. Especially in regards to small business owners in targeted niche markets.
A good idea I had, was to create an Association dedicated to Donut Bakery Supply-Chain Logistics. Allowing independent mom and pop donut bakery shops to organize their sales strategies and supply-chains under one logistics system to compete with larger corporations such as Krispy Kreme, etc... The association would manage the logistics, marketing and management of resources, the mom and pop shop continue doing what they do best, producing a quality product.
Combining the age old power in numbers approach with modern supply-chain management techniques to deliver a powerful and cost effective solution for these small businesses.
Anyway, Here's the P&G example:
Procter & Gamble: The Power of Partnership
Who says you can't please customers and achieve profitable growth from doing so? Certainly not Procter & Gamble. But even this consumer products giant recognizes the need for continuous change in order to enjoy continued success.
Since early in the century, P&G had based its strategy on delivering superior products to consumers. "Sell so that we will be filling the retail shelves as they are empty," said CEO Richard Deupree in 1911. By the late 1970s, this single-minded focus on consumers had earned P&G a reputation among wholesalers and retailers for being inflexible and dictatorial. Perceiving the growing power of these trade customers in the early 1980s, P&G revised its strategy to maintain a constant focus on reinventing the customer interface in pursuit of sustained competitive advantage.
The first step was a series of merchandising and logistics initiatives launched throughout the 1980s under the banner of "total system efficiency." Such efforts as implementing more flexible promotional policies and a damaged goods program signaled a new emphasis on trade customers. These efforts paid off. In 1990, P&G ranked 15th among the Fortune 500, up from 23rd in 1979.
In the early 1990s, P&G took the next big step--a sales reorganization creating multifunctional teams with key customers, notably Wal-Mart, to address issues in such key areas as category management and merchandising, logistics, information technology, and solid waste management. P&G simultaneously developed partnerships with suppliers to reduce cycle times and costs.
The results have been impressive. For example, the Just-in-Tide marketing initiative uses point-of-sale scan data to determine how and when to replenish product. Warehouse inventory turns have almost doubled; factory utilization has grown from 55 percent to more than 80 percent; and overall costs have dropped to 1990-1991 levels.
P&G more recently introduced the Streamlined Logistics program to improve customer service and supply chain efficiency. The first phase consolidated ordering, receipt, and invoicing of multiple brands, harmonized payment terms, and reduced bracket pricing categories. The implications for customers? As Steven David, vice president of sales, explained: "Now they'll be able to mix a load of soap or paper or food products on a full truck to get the best possible pricing. We're going to make available common-quantity pricing brackets across all our sectors. We're going to have multisector ordering for the first time."
To ensure customer satisfaction, P&G instituted a scorecard last year to enable both distributors and vendors to evaluate P&G's efficiency in such key areas as category management, assortment, efficient product introduction, promotion, and replenishment.
In the last six months, P&G has undertaken Streamlined Logistics II to reduce unloading time in food-retailer warehouses. By combining such tools as activity-based costing and Electronic Data Interchange with drop-and-hook programs and elimination of pallet exchanges, P&G expects to remove non-value-added costs and improve consumer value...in the process saving $50 million, which P&G intends to pass on to customers.
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