Operations Management

Operations Management case study (20 Marks) Procter & Gamble (P&G), the world's leading producer of household products, markets over 300 brands to 5 billion people around the world. P&G's products fall under three broad categories, namely, beauty care ; health, baby, and family care ; and household care. In the early 1990s P&G faced a problem of extreme demand variations for one of its bestselling brands Pampers diapers. The logistics executives at P&G examined the order rates for Pampers across the supply chain. Though the purchase rate remained more or less steady at the consumer end, the logistics executives found that the variation of orders increased from the retailer level to the distributor level up the supply chain.

Increase in production due to the uncertainty in demand is the concept of the bullwhip effect. The reasons that led P&G to shelve its old supply chain model were explored and the supply chain efficiencies were revamped. Their after the company took various initiatives to increase accuracy of demand forecasts. P&G also provided up to date information to suppliers so that they could plan their production and deliver materials on a just in time basis.

Answer the following question. Q1. What steps did P&G take to reduce the impact of the bullwhip effect? In what other ways, according to you, can P&G reduce the bullwhip effect across its supply chain? Q2. Coordination between the various stages of the supply chain increases overall profits and moderates the bullwhip effect. What are the basic obstacles in supply chain coordination and how can P&G ensure this coordination?