PROCTOR & GAMBLE: USING AGENT BASED

MODELLING Presented
& RFID By
Mohnish Singh 29NMP46
Neerja Malik 29NMP47
Harshwardhan 29NMP48
Sanjay Yadav 29NMP50
Jayakumar S 29NMP94
 300 brands 5billion consumers 160 countries
102000 strong work force in more than 80 countries
work every day to provide products of superior quality
and value to the customers worldwide.
Established in 1837 : Made Soap and Candles
Today P&G is recognised leader in development,
distribution and marketing of FMCG
Procter & Gamble Co., also known asP&G, is an
Americanmultinationalconsumer goodscompany
Headquartered indowntown Cincinnati, Ohio, United
States ABOUT P&G
 THAT???
HOW DID THEY DO
From product innovation to supply chain innovation
Optimised supply chain operations
Improving the Dock Loading Throughput
From supply chain to supply network
50% reduction in cycle time and inventory
$300M savings by investing 1%
INNOVATION
P&G AND THE SUPPLY CHAIN
 LOGISTICS..........
ITS ALL ABOUT
Vendor managed inventory
The ofensive terminal point
No one size fts all
RFID
Eliminating human errors
Reengineering and automating site business
processes
Real time recovery of items and insurance
claims
Visibility of information
Agent based modelling of complex adaptive
systems
HOW DID THEY DO THAT???
AGENT BASED
MODELLING
Supply chain at P&G is not actually a
chain, it is a supply network.
Such complex networks has multiple
interactions betwen its elements.
Understanding how overall system
reacts to changes in certain
parameters is important.

SUPPLY CHAIN SUPPLY NETWORK

Agent Based Modelling
Model Model
Software Simulation components
by Nutech
Plant
Software agents represent the individual
component of system- plant, stores, etc.
Behaviour of eachStore
agent is programmed via
Dist.Centr
rules that mimic actual
e behaviour.
Rules were varied during simulations based on
following policies: Store HQ
Plant shipping and store DC order policies
Store DC allocation policies
Lead time between Plant and store DC, Store Store
DC
and stores.
AGENT BASED MODEL
Model used
Actual customer demand profles to
determine daily sales.
Actual promotion frequency with associated
increase in demand at stores for each item.
Supply chain efficiency was gauged by:
Amt. of inventory need to be carried by a
store to avoid stock out
Daily plant shipping variability
WHAT IF ANALYSIS
What if analysis were conducted to
test impact of new logistic rules on 3
metrics:
Inventory levels
Transportation costs
In-store stock-outs
Efects of demand spikes,
promotional events were also
simulated.
TOWARDS A RESPONSIVE SUPPLY
Useful changes CHAIN
were noted &
Product Innovation to Supply
Chain Innovation
P&G used to be a mass marketer .
Mass marketers understand the market
segments.
These segments were defned by demographics
and psychographics.
They adapt/diferentiate their products to ft
these markets.
Supply chain is then organized based on the
product and the segment it serves.
Here, Product Innovation drives the Supply Chain
Innovation.
DOCK LOADING THROUGHPUT-
OPPORTUNITIES
Bottlenecks at the Loading Docks.
No space on the Dock for stacking pallets to be
shipped.
Production Stop .
waste of time and Productivity.
Moving the pallet twice.
Productivity and proft declines

Chaotic Business Processes.

Prone to human Error
AIT-Automatic Identifcation Technology
 Modifcati
on of Data
Potential
Security
Interferen
of Data
ce

Reading CRITE Amount of

Distance RIA Data

Life Span Cost

Standards

Source: Supply Chain Management Study

Material
BENEFITS FROM RFID
Increase the speed of Loading
Loading time reduction by 40%
Better utilization of Space and Personnel
Avoiding the costly Mistakes of loading
Fewer insurance Claims
Fewer out of stock
Increased Product visibility
Increased responsiveness

EFFICIENT SUPPLY CHAIN

RFID CLIP
RENDEZVOUS WITH
WALMART
SCM of P&G underwent a new change due to
its interaction with Wal-Mart.
Earlier P&G used to have arms length
relationship with Wal-Mart.
Focus shifted to
Inter company supply chains
Vendor managed inventory
Wal-Mart's profts increased due to optimum
inventory management support.
P&G became favoured supplier.
CHANGED STRATEGY FOR
OTHER ACCOUNTS
P&G changed its strategy for its
small accounts.
It realized that one size fts all
approach is not appropriate.
While it continued its product
innovation, P&G made another
supply chain innovation.
OFFENSIVE TERMINAL
POINT
Narrower the front, Deeper you can
penetrate the battlefeld.
P&Gs customer engagement front
was very broad.
Hence, its ofensive terminal point
i.e. Its inter-company supply chain
,was shallow.
It decided to develop deep ofensive
terminal point with Big customers.
NEW STRATEGY
Wal-Mart Medium Small
Inter Accounts Accounts
No direct
compan Arms
y Supply length relation.
Relation
chain relations
processe hip through
Master
s
distributors

It is this process of choosing and managing the

development of diferent relationships with diferent
customers that characterizes the Age of Precision Markets
PRODUCT INNOVATION TO
SUPPLY CHAIN INNOVATION
PUSH SUPPLY CHAIN

REPLENISHMENT CYCLE
MANUFACTURING CYCLE Customer
PROCUREMENT CYCLE Order Cycle

PUSH/PULL
BOUNDARY
THE IMPACT

REPLENISHMENT MANUFACTURING
CYCLE CYCLE
IMPACT
Re-stock every 24
Every product
HRS
Relaxation of rigid
Every day
Re-tooling the
rules
Flexibility and manufacturing
Short Runs
adaptability
Reduced Order cycle
time
Reduced Inventory
Reduced in store
stock-out
Culture
 LOGISTICS RELATINSHIPS
TC TR
Logistics

OPTIMU
M
Cost

IMPROVEME
NT
50%
50%
Inventory
Inve
ntor Ti me
COL y Cycle
S
Improved Transportation
service

IMPROVEMENT
IMPACT

Order Cycle Time

STRATEGIC FIT

EF RO
FI N
F

CI TI
RESPONSIVEN

EN ER
CY
ESS

EFFICIENCY
THANK YOU!