ATLANTA -- Procter & Gamble has looked up and down the supply stream in its search for greater efficiencies.
Now the Cincinnati-based brand marketer is pointing to two continuous replenishment successes with its own suppliers as models of the benefits of information-sharing throughout the supply system. "We now ship about 30% of our total volume in the U.S. via continuous replenishment," Gary Breissinger, P&G vice president of sales, told the GMA/NeoTrends conference here last month.
With at least two product lines, Pert shampoo, and Tide liquid laundry detergent, P&G has made "significant progress attacking this opportunity with our suppliers," he said.
In the case of Pert shampoo, P&G has historically maintained an in-house finished-product inventory of about six-weeks' supply, Breissinger said. On average it took 41 weeks from the time a Pert package was first printed at its supplier until the same package went through a retail checkout.
"What is really frightening is the fact that during this 10-month period we add all the value that ever gets added to the product in less than 10 minutes on our production line," he said.
The rest is referred to internally as "dwell time," which robs cash flow and raises costs for suppliers, for P&G, its customers and the consumer.
P&G attacked Pert's dwell time by sharing demand information with its suppliers to manage better their mutual production capacity. With other measures, such as improved levels of reliability and customer service, the effort has so far driven the time Pert stays in the pipeline down to 29 weeks.
"And we have set a mutual goal with our suppliers to get it down to four weeks within the next year," Breissinger said. "That's about a 90% reduction."
At the Lima, Ohio, plant where P&G makes its Tide and Downy liquid laundry products, a prototype system where cross-trained technicians run the plant has provided an environment to attack dwell time in innovative ways.
All orders placed by 4:30 in the afternoon are scheduled by midnight for production runs the following day, he said. This demand information is then electronically transmitted to P&G's raw material and packaging suppliers, who are responsible for managing P&G's inventories on their goods.
Said Breissinger, "In the case of our [plastic] bottle supplier, they actually make the bottles we'll need for tomorrow's production overnight, and deliver just in time to meet the next day's manufacturing requirements. They arrive about 6:30 in the morning on a rail car."
This just-in-time supply method virtually eliminates dwell time on empty bottles, and allows P&G and its suppliers to maximize the efficiency of material and finished product inventory.
"The key principle in both these examples is that sharing demand information and working together with our suppliers is the only way we could improve both our efficiencies and drive unproductive inventory out of the system," Breissinger said.
P&G expects that as a result of disseminating its proprietary software through its license to IBM, it will by 1995 reach a point where 50% of its volume is shipped on continuous replenishment, he said.