P&G – Being where future customers are

In December 2008, Procter & Gamble Co. (P&G), announced an aggressive expansion plan to build 19 production plants to cater to future consumers in developing countries (where the GDP has grown quickly and which have vast populations). By 2010, P&G wants to reach an additional 1 billion consumers. Presently, it caters to 3.5 billion people out of 6.5 billion globally.

Being cost-effective in hard-to-reach and hard-to-serve environments

P&G already has its presence in around 80 countries where it has 145 facilities. As per the new plan 18 new facilities will be built in developing countries like Malaysia, Romania, India and Pakistan. Competitors Unilever and Colgate-Palmolive already have a presence in emerging markets. Therefore, expansion is one thing, but doing so cost-effectively becomes paramount for P&G. Economic crisis and corruption pose additional pressures.

Exhibit: P&G’s target markets (future consumers) in developing countries

P&G’s strategy to be cost-effective

Extending competitive advantage

• Enter markets with products with less competition
• Establish state-of-the-art facilities (In most cases by providing P&G technology to low-cost machine builders instead of buying a complete production unit)
• Produce more affordable goods for low-income consumers.
• Leave competition far behind

This case study/article, titled P&G – Building a future supply chain in emerging markets, was originally published at Casestudyinc.com.

The focus of this case study is the supply chain of the world’s largest retailer, Wal-Mart. Wal-Mart in recent years has struggled with its supply chain. The big question is: Will Wal-Mart be able to revive the competitive advantage it had in the past with its efficient supply chain? This case discusses the supply chain management practices of Wal-Mart over the years. A brief of Wal-Mart’s past distribution, logistics and inventory management processes is covered. The use of innovative Information Technology (IT) practices to enable the supply chain is discussed and highlighted. The benefits or competitive advantage Wal-Mart derived over the years from its supply chain management practices is also covered.

Table of Contents

1. Introduction – Can Wal-Mart sustain its Supply Chain Advantage?
2. Wal-Mart in US Retail Market
3. Wal-Mart – Company Background
4. Wal-Mart – Timeline



5. Wal-Mart: Quick Facts (Revenues, Total Employees and Stores, Competitors, Major Brands/Labels, Business/Growth Strategy)
6. MANAGING THE SUPPLY CHAIN – THE WAL-MART WAY
7. Pricing and Procurement Strategy
8. Supply Chain Integration through Product/Process Knowledge Sharing
9. Supply Chain Partnerships
10. Distribution Strategy
11. Logistics Management
12. Cross Docking
13. Inventory Management
14. Store Formats
15. Wal-Mart – International operating formats
16. Related Reading
17. Questions for discussion
18. View sample pages of this case study

Case Study Keywords: Wal-Mart, Supply Chain Management, Retailing Strategy Case Study, Logistics and Distribution, IT enabled supply chain, Information Technology, Supply Chain Partnerships, supply chain integration, information sharing, inventory management, retail store formats, cross docking, pricing and procurement, Sam Walton, discount stores, walmart.com.

Case Questions for Discussion

1. Wal-Mart’s focus on supply chain management is responsible for its leadership in the retail industry. Discuss the distribution and logistics practices adopted by Wal-Mart. How far has Wal-Mart’s supply chain contributed to its competitive advantage? Explain.
2. Companies that have significant buyer power and are very focused on exerting price pressure on their suppliers rather than seeking increased profitability through business process innovations. Support this statement with examples/best practices from your own field.
3. Wal-Mart has always used innovative information technology tools to supplement its supply chain. In a few words, explain how use of IT tools/enabled processes have benefited Wal-Mart. How has IT impacted you/your department?
4. What steps can Wal-Mart take in order to revive/sustain its supply chain advantage?
5. Wal-Mart invited its major suppliers to develop profitable supply chain partnerships. Discuss how good/bad is sharing knowledge/critical information with vendors/suppliers or even customers?
6. “It’s not a sale; it’s a great price you can count on every day to make your dollar go further at Wal-Mart.”, as quoted in the article, “Pricing Philosophy,” posted on www.walmart.com. Comment.

Other Case Studies on Wal-Mart

• Organization Culture at Wal-Mart
• Wal-Mart in Japan
• Tesco takes on US Wal-Mart

Case Updates/Snippets

• Wal-Mart’s new slogan – In September 2007, Wal-mart changed its slogan to “Save Money. Live Better.” Wal-Mart's earlier slogan for 19 years was “Always Low Prices.”
• Benefits of shopping at Wal-Mart – According to a study by research firm Global Insight, Wal-Mart saves American families $2,500 each year. This figure rose from $2,329 in 2004 by 7.3 percent.
• Wal-Mart’s new slogan in 2011: Wal-Mart’s latest tagline is “Low Prices. Every Day. On Everything.”
• Wal-Mart Online – Wal-Mart has 10,000 stores globally with annual revenues of more than $400 billion and 200 million weekly shoppers. According to Internet Retailer, it ranks six as in the largest Internet retailer list. Wal-Mart trails Amazon.com Inc, Staples Inc, Apple Inc, Dell Inc and Office Depot Inc. Wal-Mart does online business in United States, the UK, Canada and Brazil and does not reveal the percentage of online sales. Its digital technology unit called @WalmartLabs targets smartphones and social networking audience.

This case study/article, titled Wal-Mart’s Supply Chain Management Practices, was originally published at Casestudyinc.com.

1. Introduction
2. Dell – Company Overview
3. Dell Products and Services
4. Dell – Key Facts – Key Employees, Top Competitors, Revenues, Manufacturing Facilities
5. Dell Timeline
6. Dell – Business Segment Information
7. Dell’s Evolving Supply Chain Strategy
8. Typical Working of Dell’s Supply Chain
9. Five key strategies in Dell’s successful Direct Model
10. A supply chain with old technology is of little value
11. Restructuring at Dell
12. New Distribution Channels – Direct Model and Retail Strategy
13. Integrating the Supply Chain
14. Related Reading
15. View sample pages of this case study

Case Study Abstract

The focus of this case study is the supply chain management practices of Dell. Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage.

Can Dell regain its market leader position from HP?

In 2006 however, Dell faced several problems. Many customers complained about long delays in supplies. Recall of Sony battery cells in its laptops brought undesirable media hype to the company. Increasing discontent of customers led to a slowdown in sales. Consequently, Dell lost its market leadership to Hewlett-Packard Co. (HP). Industry analysts felt that, with Dell’s competitors also improving their supply chains and matching Dell’s direct model, the company had been losing its competitive edge. Dell will have to bear additional costs with its foray into retail distribution thereby minimizing its cost advantage. Besides, profit margins of Dell will drop further since it will have to offer incentives to compete with HP in retail stores. Though Dell spruced up its product design and range but Apple is clearly far ahead of it. Many experts feel that such new initiatives will only distract Dell from its supply chain operations.

This case study covers the following issues:

• Examine and analyze Dell’s Direct model, its basic working, success and future challenges
• Typical Working of Dell’s Supply Chain and future supply chain challenges
• Highlights Dell’s evolving Supply Chain practices and strategy and steps being taken by it to recapture its lost market leader position

Case Study Keywords: Dell, Direct model, Supply Chain Management, Supply Chain Strategies, Build-to-order model, Inventory optimization, PC Manufacturing, Retail Distribution Channel, HP, Notebook computers, Desktop personal computers, Competitive Business Strategies, Sustaining competitive advantage, Michael Dell, Distribution Strategy, Supply Chain Case Study

Case Snippets/Update

Dell’s market share in U.S. and Worldwide (in Q1 2009) compared to other top PC makers

• In year 2010, PC sales are expected to rise 12.6 percent, according to research firm Gartner.

This case study/article, titled Dell’s Supply Chain Management Strategy, was originally published at Casestudyinc.com.

Michael Dell’s return and turnaround plans were paying off as the world’s No. 2 personal computer maker, posted higher-than-expected quarterly profit aided by strong demand from consumers and foreign markets and cost cuts. Last year, Dell had lost its spot as top PC maker to Hewlett-Packard (HP) and was struggling to regain momentum. In January 2007, Michael Dell had returned to the chief executive post. In May 2008, Michael Dell selected Brian T. Gladden (working with General Electric, GE), to take over as chief financial officer (CFO) at the troubled PC maker. Dell aims to shave $3 billion of its operational costs. Dell also announced plans to cut 8,900 jobs to reduce costs, but Asia would see more job growth as it formed a large part of it’s supply chain. Meanwhile, Dell’s supply chain ranked third in the fifth-annual “Supply Chain Top 25″ list released by AMR Research in May 2008 behind Apple and Nokia. Dell’s supply chain was acknowledged for its outstanding inventory turns and high marks from peers.

Dell’s strong International Growth

Dell believes that in around five years time its sales outside the U.S. could account for two-thirds of total revenues. Its sales in international regions topped U.S. revenues as corporate customers in the United States were uncertain about buying given the current and future economic outlook. Brazil, Russia, India and China (BRIC) led the way with 73 percent shipment growth in the quarter ended May 2008. Americas revenue rose 1 percent in the quarter.

Related Reading
Download Pdf file of management case study on Dell’s Supply Chain Management Practices

This case study/article, titled Michael Dell’s Turnaround plan working, was originally published at Casestudyinc.com.

Supply chains have improved drastically in the past ten to fifteen years. The revolution can be attributed to companies’ shift in focus to efficiency. This applies both to the supply and manufacturing operations. GlaxoSmithKline is an example in case. Its efforts in improving production processes and packaging and enhanced supply to meet demand better are proof enough. This article highlights some of the challenges GlaxoSmithKline faced and how it overcame them.

GlaxoSmithKline – The Company

GlaxoSmithKline (GSK) is the world’s second largest pharmaceutical, biologicals and healthcare company (as per 2004 figures). Its sales touched GBP 20 billion yielding a profit of GBP 6 billion approximately. It employs around 100,000 people worldwide, with over 40,000 in the sales and marketing teams. Primarily headquartered in London, with dual US headquarters in Philadelphia and Research Triangle Park. GSK’s prime activities include creation, discovery, development, manufacture, and marketing pharmaceutical and consumer health-related products the world over.

GSK operates largely in two segments, Pharmaceuticals and Consumer Healthcare. GSK has more than 36,000 SKU’s manufactured across over 80 manufacturing plants worldwide. GSK has a market share of seven percent in the pharmaceutical business.

Year Merger/Acquisition New Company Name
1989
Beecham merged with SmithKline Beckman SmithKline Beecham
1995
Glaxo acquires Burroughs Wellcome & Co. Glaxo Wellcome
2000
Glaxo Wellcome merged with SmithKline Beecham GlaxoSmithKline
2001 GlaxoSmithKline acquires consumer health care company Block Drug Co. GlaxoSmithKline
Exhibit 1: Merger and Acquisition activity at GSK

The Challenges

Post merger Integration Issues
With the spate of mergers and acquisitions, GSK faces three major integration challenges:

* Integrating the separate identities
* Integrating different strategies and
* Integrating the packaging and manufacturing operations of Glaxo, Burroughs Wellcome, Beecham, SmithKline Beckman and Block Drug Co.

Complex product portfolio
Market dynamics and short life expectancy of patients have tilted the demand in favour of specialised drugs. GSK, like its competitors has to combat the need for specialised drugs continuously and reaping quick rewards. Such market forces alongside a changing industry make creative marketing and innovative products crucial.

Multi faceted US Markets
The US market mainly comprises of chain pharmacy stores, more traditional mom and pop stores and high-end deliveries. Such diverse markets have diverse needs. Catering to different customers brings forth the challenge of managing small volumes of niche packages.

Regulatory and operational challenges
Frequent merger and acquisition activity implies complicated paper work (re-registration and labelling) compliance with regulatory frameworks of different countries. With over 250 legal entities across the world, printing and other associated challenges emerge with different names that have to appear on different products distributed in different countries. The complexity increased manifold with the mergers owing to labelling changes. Moreover, different markets have different schedules on when GSK must incorporate the labelling changes.

Different departments could always make different packaging design changes. Communicating packaging specifications, graphics and artwork changes across the entire pharmaceutical organization was challenging if not an insurmountable task.

Outsourcing/supplier challenges
One of GSK’s products, Aquafresh Floss‘N’Cap (AFNC) is symbolic of the typical outsourcing challenges. AFNC has a flip top containing dental floss and toothpaste in the tube. AFNC had three custom designed sub assemblies outsourced to three different suppliers. The suppliers worked in sequence on the custom designed cap. Once the package reaches GSK, only filling of the tube with toothpaste remained. Coordinating with these three cross Atlantic suppliers, especially outside GSK’s manufacturing facilities was a challenging task.

Finding alternate/multiple suppliers
GSK had a bad experience early on with supply disruptions from a single source supplier. Almost a decade ago, one of its sole resin supplier’s plants exploded. It had no alternate suppliers and consequently had to lose market share not to mention customer goodwill, as customers have to do without critical drugs or life saving devices. GSK wanted to eliminate such situations. The challenge was not only to find alternate suppliers but ones who complied with the FDA regulations and supplied in time.

On the major machinery and equipment side, GSK’s goals were different though. It wanted to limit the number of machinery suppliers to better familiarise with the manufacturer’s equipment and establish partnerships with machine suppliers who offered total packages when compared to independent system integrators.

Operational/production challenges
The foremost challenge in production operations was synchronising with different manufacturing locations and multiple suppliers. With different packaging and assembly lines, implementing automation and advanced technology or process improvement programmes was a huge challenge. Other considerations were quick machine setup, minimum production stoppages, better equipment availability and flexibility besides handling innumerable design changes.

Technological Challenges
Technologies, for example RFID in anti-counterfeiting are largely untested or simply not the best. GSK has RFID supply chain projects planned but faces a tough test with respect to being the first mover in investing huge sums into the technology or adopt a wait and watch policy. GSK may lose out in both cases owing to failure of the relatively new technology or lose out to competitors who can gain significantly by adopting the technology faster

* Originally published by me in TMM

Glaxo Smithkline (GSK) spends about GBP 800 million to develop a drug. Its efforts and money will go waste unless its customers get the product in time without any defects and have no difficulty in handling the package. In other words, every facet of GSK’s supply chain should be up to the mark. This article (Glaxo Smithkline Supply Chain Challenges –Part I) highlighted some of the supply chain challenges GSK faces. Part II of this article (Glaxo Smithkline Supply Chain Challenges –Part II)illustrates GSK’s response to those supply chain challenges.

This case study/article, titled GlaxoSmithKline – Supply Chain Challenges, was originally published at Casestudyinc.com.

Outsourcing supply chain functions can enhance:

• Cost reduction (10-20%)
• Efficiency
• Customer satisfaction
• Revenues and
• Competitiveness.

One manufacturer was able to reduce its inventories by USD 1 billion, cut down on inventory holding costs by USD 124 million and reduce delivery times to dealers by 26%.

Major areas where supply chain costs need to be reduced are:

• Order management costs: By combining order management and parcel traceable programs
• Material purchasing costs: Reverse Auctions
• Inventory holding costs: Less than 10 percent of total supply chain costs
• Overall supply chain costs including Supply chain planning costs, and supply chain IT savings

This case study/article, titled Supply Chain Strategies to save costs, was originally published at Casestudyinc.com.