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Question 2 : How important are the new information technologies in Procter & Gamble efforts?

The new information technologies brought many benefits to P & G efforts in improving channel efficiency and service. The introduction of electronic data interchange (EDI) and continuous replenishment process (CRP) is likely to improve the supply logistics and reduce channel inventory. EDI is process of using computers to interchange business documentation. Using the EDI it will be less costly compare to when business using handling paper base order. When dealing with computers process the document in EDI, it will reduce the number of human mistake. Other benefits from EDI are helping business have faster transaction process; it will occur when the processing time between the shipment order and shipper sends it off can take only ten days from two weeks. Meantime, EDI also contribute business have better warehouse space and efficient inventory stock out. An important role for EDI in this case, is to provide an efficient platform for CRP operations. EDI enable CRP to have error free interchange of large data automatically between the retailers and P & G.

EDI is a critical part of P & G strategy to increase the efficiency of the business ordering and delivering process. The CRP implementation will get benefits by having more inter connection and greater inter organizational links from the new IT. The ordering and billing system will be updated to better satisfy the customer needs. In addition to that, P & G retailer will get benefits in the form of inventory reduction, service level improvement and labor savings. The retailer will also be able to cut buyer position to optimize the ordering and delivering processes. Meanwhile, the large mass merchandiser will also obtain benefits by reducing retail stockouts, reduce product acquisition cost and optimize total inventories.

It is believed that the lower cost can be translated into higher sales. P & G will be allowed to use the daily warehouse shipment data to decide on the warehouse replenishment volume. The new IT will also aid the company in redesigning their ordering process by combining the system and business elements in a more tightly integrated environment. The new IT will allow P & G to do radical restructuring of pricing at the same time the company will also be able to have better prototyping of the new net pricing term. The new IT such as ordering system billing (OSB) will allow P & G to have improvement in billing accuracy and reduction in invoice deductions. From SKUs perspective. Other than that. This is important when they can eliminate variable discounts and promotions in order to remove incentives for forward buying. It is believed that CRP will be a logistic innovation as they are able to give mutual benefits to retailers and manufacturers. the new IT will enable P & G to redesign of the ordering process by changes in its structure. Both P & G and the retailer will then be able to cut the operating cost and boost the revenue. The new IT is likely to be a good catalyst for the SKUs to change their channel ordering and logistics by using a new technique called CRP. The new IT will help P & G customers team to concentrate on providing better service and marketing new products instead of spending time resolving billing problems. P & G is likely to use the new IT to get data to manipulate warehouse orders. reduced stockouts and expanded retail stores. policies and systems and get benefit from cost reduction and quality improvement. .Besides. higher product availability and better customer service. P & G may also reap benefits from the new IT through lower prices.

Further. beside that IT will help P & G to reduce product development cycle and to increase sales through faster inquiry response. and better standard for future development application. better content intergration and costs reduction.The use of the new IT also allows P & G to have improve access to internal information to sharpen their market focus. . better resource utilization. P & G will also get other benefits such as higher productivity. the use of data in IT also can be information that will help P & G to make decision making such as from low sales on fast moving item. stock out on a SKUs and it will make P & G as a powerful business competitor to others.

Question 3: To what extent has P & G changed its strategy to take advantage of Efficient Consumer Respond (ECR) CRP was an important element of the efficient consumer response (ECR). . In this case. Given that. P & G has make significant changes in their strategies to fully utilise ECR programme. P & G made a substantial change from brand management to category management structure to improve coordination and efficiency. Through this strategic changes . P & G will be able to standardize operation and product line. P & G also meet changes to their manufacturing strategies by shiffting to a more stable environment so that they can negotiate more attractive price with more suppliers. they will be able to eliminate uncessary SKUs. Various brand were intergrated into several type of product categories under supervision of category manager. Firstly. fast and consumer driven system which all link work together in order to satisfy consumer need with the lowers possible costs. This will provide consumer with greater choice that meet their need and expectation. rationalized product line and dramatic improvement in process reliability. The strategies changes also allows them to have sufficient access product capacity to eliminate unnecessary product plants. ECR is a realization of a simple. This approach were give them more flexiblelity in restructuring the product line. The efficiency gain from this stable environment allows them to have value pricing. category manager will have geater responsibility in overall product pricing and policies.

P & G customer teams will be able to use solid economic analysis to better satisfy their customers expectation. P & G will outsource their support and operations of their CRP system to ISSC. This implementation of the CRP and ECR in the strategies will allow P & G and its customers to improve internal processes and reduce costs by providing the best product to the customer at the lowest cost through the channel.ECR also have play most important role in the P & G strategies when the retailers shift from buyers to category managers. ECR STRATEGIES Efficient Store Assortments Efficient Replenishment Efficient Promotions ECR OBJECTIVES Optimize productivity of retail space and inventory Optimize time and cost in the ordering process . P & G will replace their buyers with cagetory managers who can focus more on both profit and meeting consumer need which require new skill and capabilities. This changes represented a new mind set for both individual in the role and overall organization. P & G category managers are better positioned to estimated the true costs and profit generated for each product. The diagram below shows how is ECR strategies are translated to their respective operational objective. In this case. The aggrement with IBM will reduce the P& G’s cost of operating the CRP system since the IBM service contract cost was less than the cost of operating the system using P & G’s internal staff and systems. P & G has made decision to sell of their CRP system to IBM’s Intergrated Systems Solutions Corporation (ISSC) subsidiary. This strategy will offer benefits for both companies and this will provide the credibility of a third party platform offering and attractive CRP in this industries. In this case.

Maximize total system efficiency of promotions Efficient Product Introductions Maximize effectiveness of new product development Figure 1 : The ECR vision – A continuous channel process .