EXECUTIVE SUMMARY

During the period of summer training I tried to know the truth that leads the FMCG
sector. FMCG sector is the core of running society, as it is the consumer who regularly
needs these products for consumption. There are many factors that influence the
availability of the product. Marketing is especially important for a business in retail
industry because there is no other person on whom the retailer can rely in this industry for
penetration in the market or diversification.

Marketing is a very crucial activity in every business organization. Every product

produced within an industry has to be marketed otherwise it will remain as unsold stock,
which will be of no value. I have realized this fact after completion of my summer
training project. Despite of various difficulties and limitations faced during my summer
training project on the topic “Supply Chain Management Network used by Procter &
Gamble.” I have tried my level best to find out the most relevant information for the
organization to complete the assignment that was given to me. After completion of my
summer training project I have gained several experiences in the field of sales and
marketing. I have got the opportunity to meet various people, which fluctuate in different
situation and time. This summer training project has given me the opportunity to have
first experience in the corporate world.

Theoretical knowledge of a person remains dormant until it is used and tested in the
practical life. The training has given to me the chance to apply my theoretical knowledge
that I have acquired in my classroom to the real business world.. In spite of few
limitations and hindrance in the summer training project I found that the work was
challenging but fruitful. It gives enough knowledge about the operation in market and the
growth process adopted by an organization. This summer training project has enabled my
capability in order to manage business effectively and in my career in future
CHAPTER-1: INTRODUCTION

About FMCG:
FMCG industry is alternatively called as CPG (Consumer packaged goods) industry. It
primarily deals with the production, distribution and marketing of consumer packaged
goods. The Fast Moving Consumer Goods (FMCG) are those consumables which are
normally consumed by the consumers at a regular interval. Some of the prime activities
of FMCG industry are selling, marketing, financing, purchasing, etc. The industry also
engaged in operations, supply chain, production and general management
Some common FMCG product categories include food and dairy products, glassware,
paper products, pharmaceuticals, consumer electronics, packaged food products, plastic
goods, printing and stationery, household products, photography, drinks etc. and some of
the examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts,
detergents, tobacco and cigarettes, watches, soaps etc. Examples of FMCG also includes
a wide range of frequently purchased consumer products such as toiletries, soap,
cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-
durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG
may also include pharmaceuticals, consumer electronics, packaged food products, soft
drinks, tissue paper, and chocolate bars.

FMCG industry provides a wide range of consumables and accordingly the amount of
money circulated against FMCG products is also very high. The competition among
FMCG manufacturers is also growing and as a result of this, investment in FMCG
industry is also increasing, specifically in India, where FMCG industry is regarded as the
fourth largest sector with total market size of US$13.1 billion. In 2005, the Rs. 48,000-
crore FMCG segment was one of the fast growing industries in India. FMCG Sector in
India is estimated to grow 60% by 2010. FMCG industry is regarded as the largest sector
in New Zealand which accounts for 5% of Gross Domestic Product (GDP). Some of the
merits of FMCG industry, which made this industry as a potential one, are low

operational cost, strong distribution networks, presence of renowned FMCG companies.

Population growth is another factor which is responsible behind the success of this
industry. FMCG industry creates a wide range of job opportunities. This industry is a
stable, diverse, challenging and high profile industry providing a wide range of job
categories like sales, supply chain, finance, marketing, operations, purchasing, human
resources, product development, general management.
Some of the well known FMCG companies are Procter & Gamble, Sara Lee, Nestlé,
Reckitt Benckiser, Unilever, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.
FMCG sector generates 5% of total factory employment in the country and is creating
employment for three million people, especially in small towns and rural India.
Well-established distribution networks, as well as intense competition between the
organized and unorganized segments are the characteristics of this sector. FMCG in India
has a strong and competitive MNC presence across the entire value chain. It has been
predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion
11.6 in 2003. The middle class and the rural segments of the Indian population are the
most promising market for FMCG, and give brand makers the opportunity to convert
them to branded products. Most of the product categories like jams, toothpaste, skin care,
shampoos, etc, in India, have low per capita consumption as well as low penetration
level, but the potential for growth is huge. The Indian Economy is surging ahead by leaps
and bounds, keeping pace with rapid urbanization, increased literacy levels, and rising
per capita income.
The big firms are growing bigger and small-time companies are catching up as well.
According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by
MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands,
and 27 of these are owned by Hindustan Lever. Pepsi is at number three followed by
Thums Up. Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola
(8) and Parle (9). These are figures the soft drink and cigarette companies have always
shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest
categories in FMCG. Between them, they account for 35 of the top 100 brands.
THE TOP 10 COMPANIES IN FMCG SECTOR

S. Companies
NO.
1. Hindustan Unilever Ltd.
2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (PROCTER
&GAMBLE)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and
Health Care
10. Marico Industrie
The companies mentioned in the table, are the leaders in their respective sectors. The
personal care category has the largest number of brands, i.e., 21, inclusive of Lux,
Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21,
aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes account for
17% of the top 100 FMCG sales, and just below the personal care category. ITC alone
accounts for 60% volume market share and 70% by value of all filter cigarettes in India.
The foods category in FMCG is gaining popularity with a swing of launches by HLL,
ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore.
Nestle and Procter & Gamble slug it out in the powders segment. The food category has
also seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by
HLL and pizzas by both GCMMF and Godrej Pillsbury. This category seems to have
faster development than the stagnating personal care category. Procter & Gamble, India's
largest foods company, has a good presence in the food category with its ice-creams
curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands,
dominates the biscuits category and has launched a series of products at various prices.

In the household care category (like mosquito repellents), Godrej and Reckitt are two
players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's
Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to
the top 100, although P&G's Head and Shoulders and Pantene are also trying hard to be
positioned on top. Clinic is nearly double the size of Sunsilk.

Dabur is among the top five FMCG companies in India and is a herbal specialist. With a
turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like
Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a
formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East,
South Pacific, Caribbean, Africa and Europe. Asian Paints is India's largest paint
company, with a turnover of Rs.22.6 billion (around USD 513 million). Forbes Global
magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the World

Cadbury India is the market leader in the chocolate confectionery market with a 70%
market share and is ranked number two in the total food drinks market. Its popular brands
include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380
Million) Marico is a leading Indian group in consumer products and services in the
Global Beauty and Wellness space

Growth Prospects of FMCG :

With the presence of 12.2% of the world population in the villages of India, the Indian
rural FMCG market is something no one can overlook. The increased focus on farm
sector will boost rural incomes, hence providing better growth prospects to the FMCG
companies. Better infrastructure facilities will improve their supply chain. FMCG sector
is also likely to benefit from growing demand in the market. Because of the low per
capita consumption for almost all the products in the country, FMCG companies have
immense possibilities for growth. And if the companies are able to change the mindset of
the consumers, i.e. if they are able to take the consumers to branded products and offer
new generation products, they would be able to generate higher growth in the near future.
It is expected that the rural income will rise in 2007, boosting purchasing power in the
countryside. However, the demand in urban areas would be the key growth driver over
the long term. Also, increase in the urban population, along with increase in income
levels and the availability of new categories, would help the urban areas maintain their
position in terms of consumption. At present, urban India accounts for 66% of total
FMCG consumption, with rural India accounting for the remaining 34%. However, rural
India accounts for more than 40% consumption in major FMCG categories such as
personal care, fabric care, and hot beverages. In urban areas, home and personal care
category, including skin care, household care and feminine hygiene, will keep growing at
relatively attractive rates. Within the foods segment, it is estimated that processed foods,
bakery, and dairy are long-term growth categories in both rural and urban areas.

Faster growth ahead for FMCG companies:

The abolition of fringe-benefit tax and higher allocation under NREGS would be positive
trigger for consumer sector at large, increase in MAT rate from 10% to 15% would
adversely impact the earnings of Dabur and Godrej Consumer Products.

No change in excise duty structure for cigarettes does provide a much needed booster for
ITC in the near term.

On the other hand, higher allocation towards various agri and irrigation-linked schemes
would propel the micro irrigation business growth, the measures fall short of our
expectations (expecting micro irrigation to be included under mission mode). Sectors like
media, education and aviation were more or less untouched.

With government continuing to focus on 'higher disposable income' in the hands of rural
India and 'inclusive growth', it has increased the budget allocation towards National Rural
Employment Guarantee Scheme by 144% at Rs 39,100 crore. This would propel
consumption spends in the economy and thereby help volume growth for FMCG
companies at large. We could see faster growth in the coming quarters. Government has
also abolished fringe benefit tax (FBT), thereby aiding a 1-1.5% improvement in earnings
per share for most of the FMCG players barring Godrej Consumer. While all the FMCG
companies would tend to gain from this, GCPL and Dabur are adversely impacted by 5%
increase in MAT rates (from 10% to 15%). This would result in 2.5-3% drop in EPS of
Dabur and GCPL, net of the gains from savings on FBT.

Ciggarretes:With fiscal deficit being the biggest concern for the government and post the
increase in sales tax on cigarettes in Delhi and Maharashtra (up from 12.5% to 20%), we
were expecting tax increase on cigarettes, either in the form of excise duty increase or
VAT increase. Increase in taxation at over 5% would have impacted our volume growth
estimates for ITC. However, cigarettes excise rates have been left untouched. This would
have a positive impact on the cigarettes business, as after a span on 2 years the sector gets
relief from price increases (VAT implementation in FY08 and higher taxation on non-
filters in FY09) and thereby will see no disruption in volumes (saw 1.5% volume decline
in FY08 and 3% in FY09). We are expecting 3% volume growth for ITC's cigarettes
portfolio for the next couple of years.

Media: The government has made no changes to the foreign ownership rules pertaining to
media, news media in particular. While the sector remains largely neglected, government
has extended the stimulus for print media by 6 months, besides imposing 5% customs
duty on set-top boxes. We believe neither of the two measures would have any material
impact on media sector.
Education: While lot was expected from the budget for the education sector --- in terms
of higher budgetary allocation, opening up of the sector for more private participation and
more public private partnership projects, the Union Budget has eluded from making any
moves in the direction. Most of the education sector stocks have witnessed a sharp run up
in anticipation of budget, which we feel will see material price correction.

Aviation: Indian aviation sector, highly indebted and making losses of $1 billion
annually, was expecting government to open up the sector to FDI. This would have
helped the players in the ailing sector to deleverage the balance sheet as also fund the capex.
However, government has made no such announcement, extending the pain period for the aviation
sector

Exchanges: The government has announced abolition of commodity transaction tax,

which was proposed in the interim budget. While it does not have any bearing on the
financials (as it was not yet implemented), abolition clears the overhang. We remain
positive on the exchange sector and Financial Technologies

Removal of Quantitative Restrictions and Reservation Policy:

The Indian government has abolished licensing for almost all food and agro-processing
industries except for some items like alcohol, cane sugar, hydrogenated animal fats and
oils etc., and items reserved for the exclusive manufacture in the small scale industry
(SSI) sector. Quantitative restrictions were removed in 2001 and Union Budget 2004-05
further identified 85 items that would be taken out of the reserved list. This has resulted
in a boom in the FMCG market through market expansion and greater product
opportunities.

Central and state initiatives :

Various states governments like Himachal Pradesh, Uttaranchal and Jammu & Kashmir
have encouraged companies to set up manufacturing facilities in their regions through a
package of fiscal incentives. Jammu and Kashmir offers incentives such as allotment of
land at concessional rates, 100 per cent subsidy on project reports and 30 per cent capital
investment subsidy on fixed capital investment upto US$ 63,000. The Himachal Pradesh
government offers sales tax and power concessions, capital subsidies and other
incentives for setting up a plant in its tax free zones. Five-year tax holiday for new food
processing units in fruits and vegetable processing have also been extended in the Union
Budget 2004-05. Wide-ranging fiscal policy changes have been introduced progressively.
Excise and import duty rates have been reduced substantially. Many processed food items
are totally exempt from excise duty. Customs duties have been substantially reduced on
plant and equipment, as well as on raw materials and intermediates, especially for export
production. Capital goods are also freely importable, including second hand ones in the
food-processing sector.
Food laws :
Consumer protection against adulterated food has been brought to the fore by "The
Prevention of Food Adulteration Act (PFA), 1954", which applies to domestic and
imported food commodities, encompassing food colour and preservatives, pesticide
residues, packaging, labelling and regulation of sales.
Critical operating rules in Indian FMCG sector
• Heavy launch costs on new products on launch advertisements, free samples and
product promotions.
• Majority of the product classes require very low investment in fixed assets
• Existence of contract manufacturing
• Marketing assumes a significant place in the brand building process
• Extensive distribution networks and logistics are key to achieving a high level of
penetration in both the urban and rural markets
• Factors like low entry barriers in terms of low capital investment, fiscal incentives from
government and low brand awareness in rural areas have led to the mushrooming of the
unorganized sector
• Providing good price points is the key to success

Indian Competitiveness and Comparison with the World Markets :

The FMCG sector is among the largest employers in India and livelihood of 13 million
people associated with it across 8 million Kiranas are directly depended on it. while
talking about potential of the sector. Indirectly, 25 million more people employed at
wholesalers, distributors, stockists, etc are also affected with well-being of sector. The
FMCG sector is also one of the major contributor to the exchequer as it contributes Rs
31,000 crore ($6.5 billion) though direct and indirect taxes

The following factors make India a competitive player in FMCG sector:

1. Availability of raw materials
Because of the diverse agro-climatic conditions in India, there is a large raw material
base suitable for food processing industries. India is the largest producer of livestock,
milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice,
wheat and fruits &vegetables. India also produces caustic soda and soda ash, which are
required for the production of soaps and detergents. The availability of these raw
materials gives India the location advantage.India is the largest producer of livestock,
milk, sugarcane, coconut, spices and cashew and is the second largest producer of rice,
wheat and fruits & vegetables. India also has an ample supply of caustic soda and soda
ash, the raw materials in the production of soaps and detergents – India produced 1.6
million tonnes of caustic soda in 2003-04. Tata Chemicals, one of the largest producers
of synthetic soda ash in the world is located in India. The availability of these raw
materials gives India the location advantage.

2. Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost is amongst the
lowest in the world, after China & Indonesia. Low labor costs give the advantage of low
cost of production. Many MNC's have established their plants in India to outsource for
domestic and export markets.

3. Presence across value chain

Indian companies have their presence across the value chain of FMCG sector, right from
the supply of raw materials to packaged goods in the food-processing sector. This brings
India a more cost competitive advantage. For example, Procter & Gamble supplies milk
as well as dairy products like cheese, butter, etc.

4. Large domestic market

India is one of the largest emerging markets, with a population of over one billion. India
is one of the largest economies in the world in terms of purchasing power and has a
strong middle class base of 300 million. Around 70 per cent of the total households in
India (188 million) resides in the rural areas. The total number of rural households is
expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents
the largest potential market in the world. The annual size of the rural FMCG market was
estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural
and the urban level, the market potential is expected to expand further.

5. INDIA-a large consumer goods spender:

An average Indian spends around 40 per cent of his income on grocery and 8 per cent on
personal care products. The large share of fast moving consumer goods (FMCG) in total
individual spending along with the large population base is another factor that makes
India one of the largest FMCG markets. Even on an international scale, total consumer
expenditure on food in India at US$ 120 billion is amongst the largest in the emerging
markets, next only to China.

6. Presence across value chain:

Indian firms also have a presence across the entire value chain of the FMCG industry
from supply of raw material to final processed and packaged goods, both in the personal
care products and in the food processing sector. For instance, Indian firm Amul's
product portfolio includes supply of milk as well as the supply of processed dairy
products like cheese and butter. This makes the firms located in India more cost
competitive.

Analysis of FMCG Sector in India:

Strengths:
1. Low operational costs
2. Presence of established distribution networks in both urban and rural areas
3. Presence of well-known brands in FMCG sector

Weaknesses:
1. Lower scope of investing in technology and achieving economies of scale, especially
in small sectors
2. Low exports levels
3. "Me-too" products, which illegally mimic the labels of the established brands. These
products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:
1. Untapped rural market
2. Rising income levels, i.e. increase in purchasing power of consumers
3. Large domestic market- a population of over one billion.
4. Export potential
5. High consumer goods spending

Threats:
1. Removal of import restrictions resulting in replacing of domestic brands
2. Slowdown in rural demand
3. Tax and regulatory structure

LEADING FMCG COMPANY PROCTER & GAMBLE:

William Procter, a candle maker, and James Gamble, a soap maker, formed this global
and Fortune 500 Corporation in 1837. Procter and Gamble (P&G) is headquartered in
Cincinnati, Ohio. These two entrepreneurs and inventors were immigrants from England
and Ireland respectively; who have chosen for some reason to settle in the Cincinnati
area. The company manufactures a wide variety of consumer goods including beauty,
household, health and wellness products. In the early parts of 2007, P&G was the 25th
largest U.S Company by revenue, 18th largest by profit, and 10th in Fortune’s Most
Admired Companies list. “Touching Lives, Improving Life” is the corporate motto which is
exemplified in the 138,000 employees and loyal customers worldwide. The worldwide demand for
P&G’ s products and services has forced management to focus on
global marketing and innovation. This worldwide marketing and innovation success was
achieved by making sure that what P&G produce is of highest quality and most
importantly is what customers need. P&G is very adaptable to changing customer
demands by carefully and clearly defining its innovative strategies;

The management of P&G had planned to create a more nimble organization and to
increase the speed and quality of innovation. P&G also focused on improving the speed
of commercialization of new products. In addition, P&G wanted to move the company’s
focus to higher growth, higher margin businesses such as health care and personal care.

Another innovative play-to-win strategy is that P&G management had adopted was the
acquisition of its domestic and foreign competitors. P&G acquired a number of other
companies that helped diversified its product line and increased profits significantly. In
order to foster this aggressive strategy, management had integrated and reorganized all
the manufacturing processes of the companies they acquired. Manufacturing processes of
companies like Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks,
Noxell, Shulton’s Old Spice, and many others.
P&G has demonstrated that its success depends on its customers, people, and innovation.
Each and every employee is brought together by the company’s common culture, values,
and goals. The company recognizes its diversity as a unique characteristic and strength
and it’s been able to maximize the talents and creativity from these people. P&G has also
demonstrated that it is not just in business to maximize shareholders wealth but it’s also a
social responsible company. This is illustrated in its summer camp program that is open
to community youth. “We developed our Summer Camp program as a way to seek
out the best and brightest. But, it's also a way for us to give these candidates a head start,
not only on their schooling, but also their careers.” Understanding customer needs and
building lasting relationships are important in helping an organization innovate.
Businesses innovate through unmet customer needs. Customers express their needs that
have not been met and organizations innovate to meet those needs. This is why P&G is
still leading the domestic product industry because, it listens to customers unmet needs
and innovates aggressively to meet those needs. For instance, when babies were wearing
cloth diapers, they were very leaky and labor intensive to wash; at that time, mothers
needed an innovative product on the market to help fix the labor intensive part of
washing the cloth diapers as well as the leakage. P&G answered this innovative call by
introducing a revolutionary product called “Pampers” into the market.

Pampers helped simplified the diapering process by resolving the leakage and the labor
intensive washing. Innovation means change and to change you must know why you are
changing, that is to say you must understand the pros and cons of the change process. In
addition, you must understand the characteristics of innovation or change and its
implication organization wide.

P&G has been successful in implementing communication strategy corporate wide. The
company ensures that the length and breadth of all its units understand the impact of any
change mostly at the professional level. Management ensures that everyone involved is
interested in the change process. The more employees are interested in the change
process the greater the success of the change or innovation. The most important element
here is motivation. Management must let employees see a win-win situation in the
change process.

Most companies are described as first movers into some specific industries and once they
get in, they make it very difficult for others to get in due to a specified or unspecified
characteristic of innovation. This could be innovation in technology, innovation in
financial management (capital acquisition), innovation in customer service and what have
you. One main innovation characteristic of P&G is to move innovation to
commercialization faster than any other competitor in the industry. “Defining the
innovation strategy and the resulting portfolio characteristics (play-to-win or play-not-to-
loose and the associated mix of incremental, semi-radical, and radical innovations) are
the first major responsibility of a company’s leadership”.
Secondly, anything that creates a situation that people had to deal with is a characteristic
of innovation. When innovation is implemented, it changes people’s attitude toward the
new process. It makes people think and act different from the way they used to. It creates
different vision and mission that people have to focus on; and this gives rise to altering
behaviors and attitudes. All this is because of innovation. Whenever P&G introduces a
new product line, it alters situations and behaviors. Anything that creates a problem or
resolves a problem is a characteristic of innovation. When Lesterine mouth wash was
introduced into the market, it solved the problem of bad breath but than people had to
deal with the burning sensation.

Since the beginning of this decade, The Procter & Gamble Company (P&G) has followed
three primary growth strategies:
1) focus on P&G's biggest brands, countries, and retail customers;

2) develop faster-growing, higher-margin businesses such as beauty, health, and home;

3) serve more of the world's consumers by accelerating growth in developing markets.

Each of these strategies has contributed to P&G's ability to deliver top-line growth at or
above the company's targets for the past five consecutive years. And each of these
strategies has implications for P&G's supply chain operations.

But it's the third strategy—growing P&G's business in developing markets—that puts our
supply chain operating strategy to one of its biggest tests. We call this strategy the
“Consumer-Driven Supply Network.” It's based directly on P&G's purpose: to improve
the lives of the world's consumers. And it's tied directly to a deeply held belief at P&G
that “the consumer is boss.”

With the Consumer-Driven Supply Network, we are building and operating P&G's
supply chains “from the shelf back.” Today's consumers have more choices than ever,
and those choices offer a broader range of value. The consumer-goods companies that
win with consumers will be those who perform the best at two critical “moments of
truth.” The first moment of truth is when a consumer stands at the shelf and chooses a
brand to purchase. The second moment of truth is at home, when the consumer uses our
brand and decides whether it lives up to her expectations.

The implications for the supply chain are clear. Historically, our supply chains have been
internally focused on meeting cost and productivity targets. Our external focus was
limited almost entirely to the second moment of truth—we measured how the finished
product design and quality performed with consumers when they used it.

The challenge for today's supply chain leaders is to continue to deliver at the second
moment of truth, while designing supply chains to better meet consumers' and customers'
needs at the first moment of truth. The most important measure of how the supply chain
works is whether our products are always there, always affordable, and always preferred
by the consumer when he or she stands at the shelf and decides what to buy.

Measuring up to this challenge has gotten harder as P&G has gotten larger. In 2005, we
announced the biggest merger in consumer products history. With Gillette, P&G is nearly
a $70 billion company. We have 22 brands each with annual sales over $1 billion. In the
United States, 99 percent of households use a P&G product. Globally, we serve roughly
3.5 billion of the world's consumers with more than 300 brands that touch consumers'
lives nearly 3 billion times a day.

The Consumer-Driven Supply Network :

As P&G has grown, so have our supply chains, with more supply chains in more places
around the world delivering an increasing number of products. Today, we're facing
several competing priorities

• Rising supplier costs vs. the need to meet the consumer value equation.
• Reaping the benefits of global scale vs. the need for local differentiation.
• Meeting the unique challenges of developed and developing markets.
• Serving large, global retailers vs. small, local high-frequency stores.

We're addressing these challenges by building a set of capabilities that create value for
retail customers and consumers and drive growth for P&G's businesses. These
capabilities fall into three areas: reliable service; agile, demand-driven supply; and
affordable differentiation

In terms of reliable service, we want to measure our performance through the eyes of the
consumer as she experiences our products at the first moment of truth. This means getting
the right product at the right place—on the shelf—at the right time. It also means
understanding the quality of the product on the shelf (not just the quality when it left our
manufacturing facility or distribution center) and ensuring products are priced to
represent a good value to the consumer. Consistent, reliable service every day is an
essential building block for any supply network.

With agile, demand-driven supply, we're focusing on reducing end-to-end supply

network time by building a flexible and responsive supply network that is capable of
producing what's actually selling, not what is forecast to sell. We believe we can
dramatically reduce supply network time, which has significant cash benefits for P&G
and retail customers. Furthermore, it translates to speed to shelf for promotional events
and new product initiatives.