Case Study Channel partnership

between Walmart and P&G

Made By:
Group 4
Key issues
&
Learnings
Sales Driven business approach
1. P&G was a highly diversified company with 12 product divisions but with a very
Fragmented sales approach.
2. In 80s , P&G was obsessed with pushing its sales numbers higher without any
consideration for what the consumers are actually demanding.
3. Each product division had their own sales targets and they separately pushed for
the same without taking the responsibility for the company as a whole.
4. A remedy to rectify such personally driven sales approaches could be conceived by
doing away with the incentivisation of individual sales managers work and instead
focus on sales strategy that is in harmony with the overall brand.
5. The main factor which led to a positive change in the relationship was
communication.
6. A paradigm shift in the sales approach of P&G Walmart was achieved with the use
of extensive data sharing and proper research . The approach shifted to a bottom to
top approach where the final consumers were treated as the King.
Sales Driven Business Approach
7. It was highly important that products now built were consumer centric rather than
manufacturer driven or sales driven.

8. Information technology has played a significant role in achieving to create a
platform where both the business giants effectively shared their data which led to
synergy of operations.
9. It was important that before sharing such crucial information , the businesses had
complete trust in each other and were sure to go forward for the benefit of the
industry as a whole and not solely themselves.
10. The importance of conducting operations honestly can be understood by the fact
that any such critical information once shared can expose the company to multiple
forms of exploitation. For instance :- to increase their bargaining power against each
other, they could use such information. Also , potential sharing of the data with other
industry competitors.
Non-cordial relations between
Walmart and P&G
P&G organizations were too complicated and inflexible.
P&Gs quantitative approach created a point of friction
between the two companies
The lack of use of IT resulted in lesser exchange of data.
P&Gs non-popular products occupied unnecessary shelf
space on Walmart.
The relationship was obsessed with short-term
transactions ignoring long-term transactions
If P&G had thought of Walmart as an extension of its own,
rather than an independent company the relationship
would have been more successful.
Data Delivery Highway Optimization
Data delivery highway
Shelf space requirements were reduced
Insights about customer choices by P&G
Customer requirements identified by Walmart
The degree to which intermediary parties were involved was
reduced- increased savings, improved relations.
A better data flow resulted in better forecast for product
requirement.



Non-cordial relations between
Walmart and P&G
Electronic Data Interchange
Facilitates an automated process of
purchase orders
Invoices
advanced shipment notification
financial payment
Pricing areas were corrected through customer table checking tool.
P&Gs purchase order invoice-match rate went from 15% to 95%.
Non-cordial relations between
Walmart and P&G
Infrastructure development in IT
P&G felt the need to track the sales by customers in the 12
product divisions
P&G had data from the suppliers side ignoring the value of a
single customer and other retailing details like volumes and
margins
Wal-Mart being a retailer, had no link with the supply chain of
P&G
A consolidated data bank is created where both front end and
back information was shared
Rigidity gave way for flexibility after the information sharing
Various optimised support applications like Joint Business
Scorecard, Replenishment, EDI came into the picture for
smooth flow of information
P&G and Wal-Mart aligned the values using this applications
which allowed them to work together towards end consumer
using the combined data
The main point here was the consumer was also benefitting
because of the lowered costs due to the optimized supply
chain information sharing


Infrastructure development in IT
Even after developing some new applications it was found
that some billing systems were not coherent from both sides
So continues development was done in creating new tools to
smoothen the problematic operations, in this case, Customer
Table Checking Tool was built
Another application which made the process efficient was CRP
Continuous Replenishment Process which helps the
Manufacturer to reduce the inventory and do the shipments
in time
In our case, P&G reduced the cycle time by 3 to 4 days
Which enabled Wal-Mart to reach higher financial goals
Infrastructure development in IT
Benefits of Collaboration
1. Reduced Average Inventory
With the sales at Walmart getting executed in less than 24 hours of the product
delivery to their shelf, the average inventory maintained by Walmart as well as
P&G was reduced. This helped to optimize the use of cash in hand with the
groups.
2. Increased Sales/Revenue
Due to synergy benefits between the two groups, there was an increased sales of
32.5% to the final customers.
3. Industrial Growth
Due to the unique mutual partnership approach followed by P&G Walmart, it not
only helped them individually but also led to the growth of the industry . A
example of it can be clearly seen from the increase in sales from $375Mn to a $4
Billion .
SIMILAR CASE IN INDIAN CONTEXT
In the Indian context, companies like Maruti Udyog Ltd have taken full advantage
of such data exchange and information sharing systems technology.
Maruti Udyog in the 1980s and 1990s introduced the concept of Vendor Managed
Inventory (VMI).
Under such an arrangement, Maruti asked its principal vendors to manage the
inventories within its plants.
The vendors representative is allowed to access not only the sales data, but is also
informed of seasonal demand characteristics, upcoming marketing and advertising
activity, and any other information which may affect the sales of Maruti.
The vendor, with this data, could manage the inventory in a leaner and a better
manner. The inventory carrying costs as well as ordering costs reduced
significantly.
This resulted in a mutually beneficial relationship. The vendor could reduce
inventories and this profit was passed on to Maruti, thus resulting in significant
cost reduction and a shift from a push based system to a pull based system.