Procter & Gamble Internal Audit

Introduction

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Procter & Gamble is a company that manufactures a variety of consumer goods ranging from beauty products, health and well-being products and household care products. Out of the 6.5 billion people in the world today, Procter & Gamble serves 4.2 billion, and the company aims at increasing the quality of life for all of its customers. Since the companys inception, Procter & Gamble has been accredited with many industry innovations such as brand management.

This paper highlights six components of Procter & Gambles supply chain while examining the potential problems related to each of the components described. The paper will also address the importance of quality management and measurement and provide control charts to compare global operational processes of the organization. Conclusively, the paper will emphasize the importance of implementing an enterprise resource planning system and draw attention to the major concerns that need to be addressed.

Supply Chain

The supply chain system at Procter & Gamble involves a linkage between the companys sales and supply processes, both inside and outside the organization, to improve availability of products to consumers. Just like other companies, six components of Procter & Gambles supply chain promote the flow of products downstream from raw materials to the end consumer and upstream from the consumer to the supplier. The six components include production, supply, inventory, location, transportation and Information.

Production

The first stage in the development of supply chain agility in Procter & Gamble takes into consideration the products to be produced. This component considers parts or components to be produced at which parts or outsourced to capable suppliers. The decisions at this level focus on the quality, capacity and volume of goods keeping in mind customer satisfaction.

Supply

Procter & Gamble also determines what their facilities are able to produce, both economically and efficiently, while keeping the quality high. However, the company cannot maintain first-rate performance with all the manufactured products. Therefore the company looks into other alternatives for maintaining the supply of quality goods (Mentzer et al., 2001). Therefore Procter & Gambles settling on outsourcing is the best option for the manufacture of products that cannot be produced efficiently by P&G plants. The company has recently signed outsourcing deals with BT and Jones Lang Lasalle.

Inventory

Further supply chain strategies of Procter & Gamble focus on inventory and number of products stored in-house, which has been an issue in the companys supply chain management in the recent years. An insubstantial steadiness exists amid too much inventory, which can cost a percent of the product value, and having too little inventory to meet demands of the products. Procter & Gamble aims at preserving optimal levels of stock at each location to ensure customer satisfaction as the market demands fluctuate. The company has developed control policies aimed at determining accurate levels of supplies at order and reorder points, which are critical in keeping customer satisfaction levels high.

Location

In terms of location P&G focuses on the appointment of production plants, as well as distribution and stocking facilities. The company has managed to place these facilities in principal localities in the different markets served. Decisions concerning location also consider tax and tariff issues, especially since the company is involved in global distribution.

Transportation

For Procter & Gamble transportation as a component of supply chain is closely related to inventory, over and above meeting consumer demands. The company keeps in mind the fact that 32% of the cost of any of their products includes transportation. Above all, Procter & Gamble recognizes that customer satisfaction must be achieved, and it often establishes the means of transport used.

Information

Lastly, Procter & Gamble recognizes that successful supply chain entails attaining information from the end users and linking this information throughout the supply chain. Linking information through systems and streamlining the flow of information consolidates data and information about each product. It, in turn, facilitates speed of product delivery. Global communication and enterprise resource planning systems are key components of effective supply chain management strategy.

Quality Management

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Being a global company, Procter & Gamble establishes principles that ensure quality of the companys products and services. Through quality management, Procter & Gamble produces products that perform in accordance to their purpose of increasing the quality of life for its consumers. It ensures that the products the company provides for everyday use by customers globally will preserve good performance, reliability, and durability. Quality management also ensures customer satisfaction. It is especially so since Procter & Gamble is known for the size and strength of its portfolio of trusted brands. Based on the company statistics, we see that customers are exposed to the company brands more times than any other product globally. Since most of the company products are used in the day-to-day lives of consumers globally, Procter & Gamble embraces quality management for identification of the qualities important to the customers therefore shaping their products in such a way as to meet the needs of the customers. Through customer satisfaction, Procter & Gamble manages to maintain good reputation in the global market therefore increasing the companys revenues. Through quality management, Procter & Gamble has also managed to remove any inefficient processes within their production system. It in turn improves the inner organizational processes hence capacity in strategic aim accomplishment. Through quality management, Procter & Gamble has reduced the risks associated with product failure through breaking of promises made to the consumers (Dyer, Frederick & Rowena, 2004).

Control Chart

To identify the global operation processes of Procter & Gamble, a control chart is necessary to monitor the extent to which the company products meet the demands of its consumers (Cianfrani & West, 2009). The chart below gives an illustration of whether Procter & Gamble is in a state of statistical control over the quality of its products. The chart provides data collected from the company in the last 35 years. The chart can therefore be used for decision making with regards to control of the process, including whether or not to modify process control variables.

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Enterprise Resource Planning System

Enterprise resource planning systems are software systems, which help a company or organization in integration of their information flow as well as business processes. These systems support different departments in any organization and use a sole database to collect data and store them at real time (King, 2005). Procter & Gamble will most certainly benefit from the employment of enterprise resource planning system to deal with the expanding markets, increasing competition, and rising customer expectations. During the past decades, Procter & Gambles business has changed drastically but the delivery of products to the retail stores have been lacking. Overpowering paper flow and incongruent computer systems are intolerable in today's cutthroat, business industry. Additionally, fostering creativity requires superb links of information which are enabled through ERPs. Therefore, implementation of an enterprise resource planning system will facilitate streamline operations and efficiencies between operating departments for Procter & Gamble.

Chief Concerns

The most notable areas of concern with Procter & Gamble arise from problems with inventory, where the company may fail to deliver its products to the customers in time. In the past, Procter & Gamble maintained a push system of ensuring that products moved out of each store but the problem of retailers having empty shelves was still abundant. Therefore, the companys goal in recent years is to maintain a demand-driven system of supplying products to its customers at the exact time that the product is needed.

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