Reengineering the Business Process at Procter & Gamble

CASE STUDY : 2

International Case : Reengineering the Business Process at Procter & Gamble

Procter & Gamble (P&G), a multinational corporation known for products such as diapers, shampoo, soap, and

toothpaste, was committed to improving value to the customer. Its products were sold through various

channels, such as grocery retailers, wholesalers, mass merchandisers, and club stores. The flow of goods in the

retail grocery channel was from the factory's warehouse to the distributors' warehouses before going to the

grocery stores where customers selected the merchandise from the shelves.

The improvement-driven company was not satisfied with its performance and developed a variety of programs

to improve its service and the efficiency of its operation. One such program was electronic data interchange,

which provided daily information from the retail stores to P&G. The installation of the system resulted in

better service, reduced inventory levels, and labor-cost savings. Another approach, the continuous

replenishment program, provided additional benefits for P&G as well as for its retailer customers. Eventually,

the entire ordering system was redesigned, with the result of dramatic performance improvements. The

reengineering efforts also required restructuring of the organization. P&G had been known for its brand

management for more than 50 years. But in the late 1980s and early 1990s, the brand management approach

pioneered by the company in the 1930s required rethinking and restructuring. In a drive to improve efficiency

and coordination, several brands were combined with authority and responsibility given to category managers.

Such a manager would determine overall pricing and product policies. Moreover, the category managers had

the authority to withdraw weak brands, thus avoiding conflict between similar brands. They were also held

responsible for the profit of the product category they were managing. The switch to category management

required not only new skills but also a new attitude.

Questions:

1) The reengineering efforts of P&G focused on the business process system. Do you think other processes,