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Improved Efficiency and Lower Stock Levels the Key Benefits at Procter & Gamble
March 2005

Procter & GambleProcter & Gamble is perhaps one of the most well known and certainly one of the largest companies in the world. Their portfolio of trusted brands, include Pampers, Tide, Ariel, Always, Pantene, Bounty, Folgers, Pringles, Charmin, Downy, Iams, Crest, Actomel and Olay.

The P&G community consists of nearly 98,000 people working in almost 80 countries. What began as a small, family-operated soap and candle company, now provides products and services of superior quality and value to consumers in 140 countries and recently expanded further by acquiring The Gillette Company.

With more than 50 years experience operating in Latin America, P&G started its production operations in Brazil in 1988 and in 1995 they opened a modern production site in Louveira (São Paulo) where they make some of their Personal (Feminine Protection and Hair Care) and Baby Care products.

In fact, at Louvera there are three separate plants:

  • BabyCare plant with XX production lines and XX different products packs.
  • FemeCare plant with XX production lines and XX different products packs.
  • HairCare plant with XX production lines and XX different products packs.

Here each operates in a “make to stock” mode supplying the Brazilian Distribution Centers (DC) as well as other markets as well.  This adds more complexity as some products will have different packaging depending on the target country.

In the Middle of 2000, Alvaro Abreu (director of TECMARAN) had a very interesting call from Michel Nachbart, the P&G FemeCare scheduler for Louveira. He found TECMARAN while searching the web for something that could help him with his daily challenge of minimizing changeover times while balancing inventories of the many and varied products.

Alvaro commented on this first contact.  “He was desperate to find an easy tool that could replace his sophisticated but limited spreadsheet. Although he already had scheduling from the spreadsheet, the scheduling process took a long time and alternative production scenarios were almost impossible to create”.

Marco Baptista and Rafael Abreu, directors of TECMARAN – the Preactor Master Reseller for South America, worked together on this project to deliver the best scheduling solution for P&G. 

Marco talked about the project.   “After a deep study of their scheduling issues and business needs we realized that a Preactor APS needed to be integrated their SAP ERP system.  Preactor APS would offer them state-of-the-art scheduling solution that could really enable previous investments in some of their SAP modules instead of replacing them”.

“In fact the integration was the easy part of the project and took less then one week but P&G demanded a unique, sophisticated but easy-to-use scheduling rule that could automatically minimize total changeover times across all the production lines based on inventory levels and forecast demand for each product” added Rafael.

The main objectives for P&G project were:

  • To implement an automated scheduling tool to sequence the production orders taking into count the inventory levels and forecast demand and also minimize total changeover time offering different solutions depending on defined parameters such as target stock levels and optimization horizon.
  • To enable rather than overlap existing SAP modules such as Forecasting, DRP, MPS and MRP.
  • To reduce stock levels down to 10 DoH (Days on Hand or Days of Cover).
  • To make it easy to create “What if” scenarios for new products or marketing campaigns.

To meet these objectives a Preactor APS was implemented with a custom scheduling rule to minimize inventory levels for finished products but also optimizing resource utilization by minimizing changeover time. Also the scheduling had to consider secondary constraints such as setup team shifts and specific packing line efficiency.

This table can offer a good view of the process:

Before Preactor After Preactor
Market Planners sends demand via Excel once per week Market Planner sends demand via SAP once per week
Scheduler reviews the demand variation and adjusts the plan Scheduler runs DRP & MPS in SAP and generates the production orders automatically
Scheduler generates the plan in Excel, trying to minimize setups and inventory Scheduler downloads SAP data to Preactor APS and runs scheduling scenarios
Scheduler runs MRP in SAP and it generates the material purchase orders Scheduler uploads Preactor data to SAP
Scheduler runs a macro in Excel to generate production orders and then upload to SAP Scheduler runs MRP in SAP and generates the material purchase orders

Implementation started at the FemeCare plant. Even during implementation stage P&G started to obtain some benefits, but only after a complete review of their procedures, and in particular reconfiguring and correcting data errors held in SAP, could they achieve the full range of benefits that were achieved. After 3 months Michel Nachbar was able to establish the benefits that were emerging.

“Despite the difficulties in the beginning, like the work to improve ERP data quality, just 3 months after the system went live we have realized just how powerful the solution is. The results achieved in such a time were higher than we expected.”

“We were also experiencing a tremendous increase in demand that made the scheduling work even harder and there was also a lot of pressure to reduce inventory from head office”.

“I don’t believe that this would have been possible to handle this new situation and even keep to the same stock levels without Preactor. And probably I would have gone crazy by trying to handle so many items with the spreadsheets”.

“In the end the APS solution delivered us a significant stock reduction of more then 20% on average across all products”.

Since the start of the project Michel had been in no doubt about the success of the project, but even he was surprised at the level of benefits achieved by its end.

“We have improved all of our KPIs and generated real and tangible benefits for P&G, but there were other strong intangible benefits.  For example I used to spend 2 or 3 days creating a new production plan.  Now I am able create one or revise it in just few hours.  I can simulate the production impacts for a new marketing campaign just in a few minutes. And now we really use all SAP features for forecasting and MPS.”

Spreadsheet Solution APS Solution
Supported by Excel only Supported by Preactor APS and SAP
Sequence quality depends on scheduler expertise only Sequences are generated using simple parameters previously defined by experts
SAP not fully used Full utilization of SAP
Took 2-3 days to review and agree the plan 5 minutes to review the plan and 30 minutes to generate a new optimized plan
Time Fence of 90 days used to work with MRP (purchase of material) in SAP Time Fence of only 7 days with full integration with SAP

“The solution was so well designed that we could replicate it to BabyCare and other lines with minimum effort” commented Rafael Abreu.  “We at Tecmaran have built many unique scheduling solutions but really we believe that this was our masterpiece. Each sequence generated is worth more to P&G than their total investment.”

After running the solution for FemeCare P&G have rolled it out for BabyCare in just a few weeks using the same solution.

In 2004, after a global audit, the Louvera plant was awarded the best performance for planning and scheduling from all similar P&G plants around the world and became the benchmark for others to follow.   Other P&G sites, like Vila Mercedes in Argentina, decided to implement the same solution.   This was completed by an Argentinean Preactor partner in 2004 with support from Tecmaran.

Alvaro Abreu is really optimistic about Preactor’s future within P&G.

“I believe that, at the beginning, P&G were not very confident about the results we could deliver, but now we have proven the results and they are evaluating using Preactor as an effective and affordable solution for all others P&G sites around the world. Tecmaran can be really proud of that!”