Supplier management P&G

1. Introduction, Product Line & Product, Supplier Evaluation &
Selection Process, Strategic Sourcing, Key Supplier Evaluation
Criteria, Supplier Evaluation & Selection Scorecard, Financial
Stability, Payment Terms & Policy and Supplier Portal

3.  One of the largest and amongst the fastest growing consumer goods companies in
India
 Established in 1964,now serves over 650 million consumers across India
 Its presence pans across the Beauty & Grooming segment, the Household Care
segment as well as the Health & Well Being segment
 5 plants and over 9 contract manufacturing sites
 The Chief Purchasing Officer for P&G is Stew Atkinson
 Initiatives like Collaborative Planning Forecasting & Replenishment (CPFR),
Consumer driven Supply Network (CDSN) and Control Tower Program
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4. 4

5.  Product line- Laundry Care
 Product- Tide
 Tide was launched in 1946
 Regarded as the biggest innovation in the detergent Industry
 World’s first compact detergent; first detergent to break carbohydrate and protein
stains
 Every hour, P&G produces over 400,000 pounds of Tide
 Tide entered India in the year 2000. 5

7.  There are two major types of laundry care detergents—alkaline and near neutral
 Alkaline detergents have a high pH formulation, which is effective in removing body
soils, grease
 Alkaline detergents are also corrosive, cause safety concerns in handling among
employees, and cause linens to retain mineral encrustation (creating stiff, rough-
feeling fabrics) resulting in greater wear and tear, which leads to more frequent
linen replacement needs and costs
 Cleaning products that are phosphate-free with a near neutral pH formula extend
linen life and make fabrics noticeably softer to the touch. With a near-neutral pH
detergent, there is no need for pH correction through use of an acid, there’s less
wear and tear on fabrics, and it is noncorrosive and safer for employees to handle
 There were no phosphate free detergents, this is when P&G realized the need for a
new product which needed new suppliers and this is when they came up with Tide
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8. P&G’s supplier selection criteria as described by Bob McDonald, Chairman of the
board, President and CEO in general are:-
 Determine Internal Business Needs (Best Total Value).
 Best Total Value Criteria:
 Innovation
 Price
 Technical capability & Technology evolution
 Deliver on required timing
 Supplier Diversity spending opportunities
 Supplier Relationships
 Supply Chain
 Review Industry Analysis of the Supply Base.
 Determine the supply base that best matches the internal business needs.
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9.  Use energy-saving equipment and features. Create a routine plan to ensure
equipment is running at optimum levels, and remember that preventative
maintenance is a must.
 Empower employees. Labor accounts for nearly half of laundry operational costs.
Employee training does not start and end with the hire. Effective, continual
education on following proper procedures is the key to achieving productivity them,
their families.
 Major employers of women and minorities.
 Touch and improve the lives of men and women who work in these companies and
through them, their families and the communities in which they live and work.
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10. Tide Naturals being the low cost washing powder, in order to reduce cost, these are
some of the questions P&G asked its suppliers:-
 As we (Suppliers and P&G) keep growing the Naturals business, what is your
(suppliers) recommendation so that you (suppliers) help reduce/ maintain the Total
Cost for Tide Naturals?
 What is the Production Innovation needs/requirements (Packaging design, features,
performance etc.) to ensure lower costs?
 How will you (suppliers) do the supply planning so as to ensure that the demand
forecast is serviced effectively?
 Does the Supply Network design facilitate the agility needs (Plant-DC-Depot-
Customer-Retailer Shopper-Consumer)? What Capacity to Demand ratio would we
(Suppliers and P&G) maintain?
 What is the ideal inventory you (suppliers) would maintain at retailer, depot, and
distributor points? 10

11.  P&G’s original sourcing strategy was to simplify the process by limiting the scope of
auction events
 P&G’s sourcing managers created groups of products for suppliers to bid on, limiting
the amount and type of input suppliers could provide in a sourcing event
 The effect was forcing suppliers to squeeze their margins instead of enabling them
to bid competitively with their own cost efficiencies
 The system made it difficult for P&G to balance price considerations with such “side
constraints” as product quality, supplier reliability and delivery schedules..
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12.  P&G tapped an optimization-based, two-sided purchasing system known as
“expressive competition.”
 Sellers bid on self-constructed packages of items instead of being limited to bidding
on predetermined lots
 Suppliers can make creative proposals including bundled offers, conditional volume
discounts and innovative alternative item specifications to exploit cost efficiencies.
 They also can incorporate a wide variety of constraints, such as delivery time
options, colors and other variables
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13.  P&G can specify that a particular percentage of purchases be allocated to minority
contractors, or give an existing supplier a specified degree of advantage over new,
untested suppliers, or limit the number of suppliers from a particular geographic
region
 The system is designed for users without any expertise in optimization techniques.
Users can express allocation preferences using language like “I don’t want any one
supplier to win more than 15%” (to maintain a diverse supply chain). In addition, the
system allows P&G’s purchasers to quantify the cost of such preferences
 The application also enabled P&G to achieve benefits, including improved supplier
relationships, reduced exposure to the risk of non-performance by suppliers, and
expanding its supplier network. In addition, the optimization system has enabled
P&G to understand the quantitative impact of various trade-offs used in its
purchasing decisions, thereby helping to align all the stakeholders in P&G’s
purchasing decisions
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14. A method of managing procurement processes for an organization in which
the procedures, methods, and sources are constantly re-evaluated to
optimize value to the organization

15.  The five principles establish foundation for the discipline and act as guidelines to
interact with the external suppliers are:-
Best Total Value
Honest, Ethical and Fair Dealings
Externally Linked Supply Solutions
Competition and Collaboration
Supplier Incumbency
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16.  Strategic point of view in sourcing is dependent on the requirement of the
customers, regulations laid down by the authority, competitive advantage and
holistic approach maintaining quality standards
 Scenario# 1:- Cleaning tools, such as scouring pads, brushes, mops and scrapers,
can be sources of cross-contamination. Thus special care for the cleaning tools to
prevent regrowth of the germs for long time protection. Phosphate-free Cleaning
products with a near neutral pH formula extend linen life and make fabrics
noticeably softer to the touch. With a near-neutral pH detergent, there is no need
for pH correction through use of an acid, there’s less wear and tear on fabrics, and
it is noncorrosive and safer for employees to handle. Extending linen life also results
in greater cost savings as linen replacement needs decrease. Thus, The quality of
care in a long term care facility is always the first priority, of course, but the need
to manage costs is a reality as well
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17.  P&G conduct business in compliance with all applicable laws and regulations
wherever they operate and believe that buyers and suppliers optimize their working
relationship when there is a foundation of trust
 P&G do this not only because they believe it is right, but also because it makes
working with P&G attractive to current and potential suppliers
 Scenario# 1:- If new product R&D revenue targets are missed, and costs have
already been streamlined, then the only way to improve EPS (and executive
bonuses) is to reduce shares outstanding via a stock buyback – and that requires
cash. Thus, to liberate the cash without undue dipping into cash on hand, P&G
turned to DPO since it had already been a historical top performer in DSO and DIO
 Scenario# 2:- &G introduced a new system for paying suppliers to maintain their
financial stability but also maintained their cash reserve high by introducing 15 day
payment to invoice by bank, then repaying the amount of invoice to bank on 75th
day
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18.  P&G deliver solutions that meet their business needs by bringing the Company's
deep supply and market knowledge and access to supplier competencies, resources,
and relationships around the globe
 Scenario# 1:- Tide Liquid Detergent when Bottle quality presents a source of risk to
the supply chain. The plastic molds used to make bottles and caps are expensive to
replace if they break or are damaged. This risk is mitigated by developing and
maintaining close relationships with suppliers and by locating production facilities
next to suppliers. As packaging is about 20 percent of the total production costs,
thus collaborating with suppliers resources is done to develop packaging materials
with new technology and closer to packaging units
Raw materials- New Jersey, Pennsylvania, Texas, and Missouri
Packaging- Ohio, Alabama, Pennsylvania, Maryland, Missouri, Indiana, and Louisiana
Table : Tide Liquid Strategic Sourcing Done by P&G
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19.  The choice to emphasize competition or collaboration or blend the
two is driven by business circumstances, supply market dynamics,
supplier capability, supplier compatibility with P&G, and the level
of interdependency necessary between P&G and the supplier to
deliver best value
 Scenario# 1:- DuPont and Procter & Gamble (P&G) have announced
a collaboration to use cellulosic ethanol in North American Tide®
laundry detergent. The substitution of the current corn-based
ethanol with cellulosic is the latest innovation in the companies’ 30-
year partnership, making it easier for consumers to make
sustainable choices in their everyday lives. With this collaboration,
DuPont is also taking the first step to diversify its markets for
cellulosic ethanol beyond fuels. As P&G build on their integrated
science capabilities, they will continue to seek out new
opportunities and new collaborations to transform value chains with
more sustainable solutions
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20.  P&G seek to balance stability in their supply base and orderly shifts of business with
the need to seek out new suppliers who offer superior value
 Incumbency is applied to each specific situation considering elements that includes
P&G business needs, past performance and future potential of a supplier, impact of
business shifts on overall marketplace competitiveness and long-term
buyer/supplier relationships, and costs for start-up, qualification, and/or shut-down
 Scenario# 1:- Dow chemical is a supplier of a chemical for the laundry care product
tide. The Dow chemical is being evaluated based on its past and present
performance based on the sustainability scorecard of supplier and rating the
supplier so as to know whether they achieve the acceptable level. Dow chemical
was accepted as per their efficiency in energy usage for 15years and also saving $9
billion of money and thus P&G agreed to take them as their supplier based on the
sustainability scorecard energy usage criteria
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21.  P&G uses CombineNet’s Advanced Sourcing Application Platform (ASAP) to improve
its sourcing strategies and includes the use of its new RFxpress Sourcing Solution, for
online bidding and request-for-proposal (RFP) sourcing events
 CombineNet ASAP is expected to provide advanced sourcing and optimization
technologies that help organizations reduce costs while ensuring that sourcing
decisions meet enterprise-wide goals for value, quality and service
 RFxpress offers buyers a way to create online bidding events within the ASAP
platform and aims to enable every buyer to create online bidding events and RFP's
for strategic sourcing activities
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22. P&G has focused on the business strategy of supplier diversity since the mid-1970s.
When they invest with diverse suppliers, it not only strengthens their innovation
and go to market capabilities but it also improves the lives of the workers in the
firm.
P&G has two types of suppliers: Domestic and International Suppliers.

23. Criterion Description
Technology and Process Capabilities P&G expects suppliers to have standard technology, design
capability, methods used, and equipment. Current vs. future
capabilities (cross check with the past and present data as
mentioned in the scorecard).Resources committed to R&D.
Human Rights/ child worker P&G respects internationally recognized human rights as defined
by the Universal Declaration of Human Rights and Associated
Covenants, and the International Labor Organization (ILO)
Declaration. P&G prohibits assigning young workers (under 18).
Legal Compliance Suppliers and their employees must ensure they understand how
the standards and the law apply to their work on behalf of P&G.
Planning and Control Systems P&G ensures supplier has well-developed systems for planning
material, personnel, and capacity needs, throughput time, quality
and costs, etc
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24. Criterion Description
Wages and hours P&G expects suppliers to comply with all applicable wage and hour
laws, including minimum wage, overtime, maximum hour rules,
meal and rest periods, and to provide legally mandated benefits.
Health & Safety Suppliers must comply with all applicable health and safety laws,
rules, regulations and industry standards. P&G representatives are
allotted by the company.
Environmental Safety Suppliers are expected to share P&G’s commitments and maximize
the value and quality of their products by using resources
responsibly, preserving the environment and reducing the
environmental footprint of their operations. Use scorecard for
notifying the suppliers
Gifts, entertainments & Gratuities P&G’s policy prohibits receiving gifts, entertainment or other
gratuities from people with whom P&G does business.
Employee and Data Privacy P&G makes sure suppliers train the sub contractors and know the
privacy rules of P&G- ‘They do not trade, sell or lease personal
information’
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25.  Suppliers require specific chemical products to which there are no substitutes,
meaning they are reliant on suppliers, who are few in number which gives supplier
more power over the market players.
 Following are some of the key criterions considered:
Criterion Description
Keeps inventory levels up to par Inventory levels that are too low result in linens being
washed too frequently, causing fading and wear and tear
at a more rapid pace
Use energy-saving equipment and
features
The supplier has a plan in place to ensure equipment are
running at optimum levels, and remember that
preventative, routine maintenance is a must.
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26. Criterion Description
Empower employees and technical
know-how
Labor accounts for nearly half of operational costs. P&G
expects its suppliers to provide effective, continual
education on following the proper procedures as important
to achieving productivity
Ensure ideal wash conditions The suppliers are motivated to create and utilize proper
procedures by following linen guidelines, sorting laundry and
treating soiled items keeping in mind rewash rates and
appropriate temperature.
Select the right detergents Linen life can be extended by using a phosphate-free, near-
neutral pH laundry detergent, such as Tide
Professional® which helps maintain fiber strength and
longevity, and keeps linens whiter and stronger for longer.
Eco friendly measure P&G believes ‘Green begins with clean’
Planning & Control Systems Planning and control systems include those systems that
release, schedule, and control the flow of work in
an organization
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28.  P&G has worked on improving the environmental sustainability of products and
operations.
 Industry standard tool to encourage our external business partners to build
capability, measure in a common way, and improve on key environmental
sustainability measures.
 Why not Use third-party Carbon Disclosure Project (CDP) ?
 CDP report does not address all P&G scorecard areas, nor does it provide a year-on-year
progress report or detail initiative support.
 By making this tool publicly available, P&G hopes to enable other companies to
more purposefully focus on improving their environmental footprint without
investing in the development of analysis software.
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29.  Annual External Business Partner Sustainability Performance Ratings (Primary Use)
 Business Award Decisions
 Foundation for non-measured partners to develop their sustainability program
 Calculate Environmental impact of particular Supply Chain on P&G.
 External business partners are also encouraged to use the scorecard throughout
their supply chain to further improve total supply chain environmental sustainability
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30. 30
 The scorecard workbook contains 4 tabs.
1. Purpose
Provides an overview of the scorecard and explains its primary and potential uses.
2. Instructions
Contains general instructions on how to complete the scorecard as well as the name, unit and
definition for each measure requested.
3. Scorecard
Contains the scorecard template to be completed by each requested partner.
4. Rating Criteria
Describes the rating criteria for the Sustainability Key Performance Indicator (KPI) of P&G’s annual
external business partner rating and feedback process.

31. The Purpose
Tab
The Purpose tab
provides an overview of
the scorecard and
explains its primary and
potential uses.
It also outlines the
measures and comments
related to each use of the
scorecard.
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32. The Instructions
Tab
The Instructions tab contains
general instructions on how
to complete the scorecard as
well as the name, unit and
definition for each measure
requested.
The Instructions tab is divided
into 3 sections:
• General Instructions,
• Core Measures
• Optional Measures.
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33. The Instructions
Tab
Core Measures:
The Core Measures section
shows a list of required
measures.
Optional Measures:
The Optional Measures
section contains a list of
“test” measures. These are
measures we consider
important but they are less
commonly tracked
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34. Score Card Tab
The Scorecard tab contains the
scorecard template to be completed
by each external business partner.
Key elements include:
• Submission Details
• Measures (Core and Optional)
• Unit of Measure
• Scope Code & Annual Data
• Comments
• Improvement Status (I Status) and
Interim/Final Rating.
Partners should fill in all applicable
light green shaded cells/boxes;
others cells are optional
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35. 35
Regardless of use, the normal desired trend for each measure, in isolation, is listed below:
Measure Unit
Desired Trend (from
previous year to current year)
(Electric) Energy Usage Giga-Joules or GJ / Unit of Output  Down
(Fuel) Energy Usage Giga-Joules or GJ / Unit of Output  Down
(Input / Withdrawal) Water Usage Cubic Meters or M3 / Unit of Output  Down*
(Output / Discharge) Water Usage Cubic Meters or M3/ Unit of Output  Down*
Hazardous Waste Disposal Metric Tons or MT / Unit of Output  Down
Non-Hazardous Waste Disposal Metric Tons or MT / Unit of Output  Down
Kyoto Greenhouse Gas Emissions
Direct (Scope 1)
Metric Tons of CO2 Equivalent or MT of
CO2e / Unit of Output
 Down
Kyoto Greenhouse Gas Emissions
Indirect (Scope 2)
Metric Tons of CO2 Equivalent or MT of
CO2e / Unit of Output
 Down
Fines & Sanctions USD and #  Down
Environmental Mgt. System Yes, Partial or No No –> Partial –> Yes
Renewable Energy Giga-Joules or GJ / Unit of Output  Up or  Down **
Kyoto Greenhouse Gas Emissions
Indirect (Scope 3)
Metric Tons of CO2 Equivalent or MT of
CO2e / Unit of Output
 Down
Potential Waste Material Recycled,
Reused, Recovered
Metric Tons or MT / Unit of Output  Up or  Down **
Transportation Fuel Efficiency Grams of CO2 / ton-km  Down

36.  Incomplete data
 A core measure is considered “reported” only when the unit of measure and current year
scope and data are entered. The scorecard will not count the measure as “reported” if
any one of the three elements is missing.
 Incorrect use of “NAs” and “blanks”
 The scorecard counts “blank” cells as not reported! Scope, Data and/or Unit of Measure
Cells should only be left blank if a measure is applicable but the external business partner
does not have data, or chooses not to report it.
 Scope NA (Not Applicable) should only be used when a measure does not apply to a
specific industry (e.g., hazardous waste is usually not applicable for an Advertising agency)
 Inconsistent data methodology/scope for current year and past year within a
measure
 If a change is made in the current year, the previous year data should be adjusted to
match if at all possible—unless improving to a narrower scope
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37. It provides relevant and useful information to their current and potential
suppliers, including how we conduct business with our suppliers, purchase
order management, and invoice and payment information

38.  The main facilities included in the portal are:-
Payments and Invoicing details
General supplier terms and conditions
Remittance and reporting
Payment terms and policy
VAT Tax details
Purchase orders
Environment Sustainability Scorecard
Vendor details management
Online Supplier training material 38

39. Website (no password required) Portal (password required)
General information, including:
• Portal information
• Registration process
• Payment Term Policies
• Invoice Requirements
• Purchase Order Information
Payment information, including:
• My Invoice Search
• My Unpaid Invoice
• My Remittance Report
• My Vendor Data Details
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40. For information on your P&G payments and invoices, click on the tab next to
Home called Payments & Invoicing.
Now you are in the area of the portal that contains training documentation, Supplier Portal contact details,
and access to payments and invoicing reports.
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41. Searches can be made by
Invoice Date.
The Invoice Search button will direct you to the following
screen, where you can search for invoices by invoice date or
invoice number.
Searches can be made by
Invoice Number.
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42. The data can also be
downloaded into excels for
further analysis. Simply click
on the Download to Excel
button.
The Status and Action Required fields will provide the exact status of
the in transit invoices and any next steps required.
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43. NOTE:- Unpaid invoice updates happens every 8 hours while paid invoice updates happen every
24 hours
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44. The Remittance Report provides a breakdown of payments received by P&G. Just enter
the payment month in the field highlighted below.
• P&G’s preferred payment method is Electronic Funds Transfer (EFT)
• It takes approximately 3-5 working days for funds to arrive to the final account
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45. You can expand the payment lines reported in the remittance report to view the breakdown of a specific
payment.
For example, if you received a payment of $10,000 that encompasses 10 different invoices, this useful
functionality will allow you to match the invoices to the relevant payment.
Simply click on the arrow
highlighted to the left to get the
breakdown of a specific
payment.
Alternatively, click on the
Expand option to get the
breakdown of all your payments.
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46.  We can review your contact details for accuracy and trigger any changes (if needed)
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47.  Supplier can register on the portal in two ways:-
• Supplier will need to provide a Supplier Code and
Purchase Order (PO) number found on any of supplier’s
P&G invoices
• If supplier do not have both of these numbers, then you
will need to complete the Manual Registration process
Online
registration
(recommended
option)
• Supplier will need to fill out the form and return it back to
P&G
• Supplier will need to provide a Supplier Code or PO
number
Manual
registration
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48.  Websites:-
 http://www.pgsupplier.com/en/pg-values/global-sourcing-principles.shtml
 https://books.google.co.in/books?id=AUcJAAAAQBAJ&pg=PT313&lpg=PT313&dq=Supplier+Evalua
tion+Criteria+done+by+P%26G&source=bl&ots=NOA7FxmeCV&sig=PMUOQxWfoC59HjqDCAgepQ5L
F-
k&hl=en&sa=X&ei=rOT7VOXvFNO5uAT0yoHIDQ&ved=0CDwQ6AEwBQ#v=onepage&q=Supplier%20E
valuation%20Criteria%20done%20by%20P%26G&f=false
 http://www.pg.com/content/pdf/01_about_pg/01_about_pg_homepage/about_pg_toolbar/dow
nload_report/guidelines_for_supplier_relations.pdf
 http://www.pgsupplier.com/en/pg-values/sustainability.shtml
 http://techcrunch.com/2011/02/28/dowchemical-incentivizing-energy-efficiency/
 http://www.dow.com/news/corporate/2012/20120107a.htm
 http://www.sageworks.com/blog/post/2011/07/11/Four-Steps-to-Evaluating-Suppliers-Before-
Signing-a-Contract.aspx
 http://www.pgsupplier.com/en/current-suppliers/supplier-portal-information.shtml
 http://www.pgpro.com/articles/maintaining-a-hygienic-environment-smart-and-simple-
cleaning-tips-for-any-long-term-care-facility/?tag=Long-term%20Care
 http://www.pgpro.com/articles/laundry-long-term-care/?tag=Laundry
 http://www.pgpro.com/articles/best-practices-for-laundry-care/?tag=Laundry
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49. Group Members:-
134 – Honey Shah
136 – Tejas Shah
140 – Aditi Dayal
436 – Yashu Sitani
353 – Ankit Garg
367 – Bheeshm Nanda
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