Procter & Gamble (P&G) was a multinational corporation that focused on enhancing customer value through its range of products including diapers, shampoo, soap, and toothpaste. P&G sold its products through different channels including grocery retailers, wholesalers, mass merchandisers, and club stores. In the retail grocery channel, goods were transported from the factory's warehouse to the distributors' warehouses, and then to the grocery stores where customers could choose the products they wanted from the shelves.
The company, driven by a desire for improvement, was unsatisfied with its performance and implemented various programs to enhance its service and operational efficiency. Among these programs was electronic data interchange, which allowed for daily retail store information to be transmitted to P&G. The implementation of this system led to improved service, decreased inventory levels, and savings in labor costs. Another program, known
...as the continuous replenishment program, offered additional advantages for both P&G and its retailer customers.
The entire ordering system was eventually redesigned, resulting in significant performance improvements. This reengineering effort also necessitated the restructuring of the organization. For over 50 years, P&G had been recognized for its brand management. However, in the late 1980s and early 1990s, it became evident that the brand management approach pioneered by the company in the 1930s needed reevaluation and restructuring.
In order to enhance efficiency and coordination, multiple brands were merged under the control and accountability of category managers. These managers were empowered to establish comprehensive pricing and product policies while also having the ability to eliminate underperforming brands, thereby preventing competition between similar brands. Additionally, they were held accountable for the profitability of the specifi
product category they oversaw. The transition to category management necessitated the acquisition of new skills as well as a fresh mindset.
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