Procter & Gamble (P&G) is one of the most successful consumer packaged goods company in the world ($40 billion in sales revenue) that runs most of its core business processes on SAP applications. P&G started using the enterprise resource planning system (ERP) which was implemented by SAP. It implemented a centralized ERP and supply chain base that delivers significant economies of scale while still being able to support the company’s business plans. All this was done by adopting SAP applications, with a thought-leading approach to master data integration.
The problem P&G faced was that it was a large global enterprise. Its business model was based on global brand management with global business units and a go-to-market approach of geography based market development operations. This would be a great challenge to SAP to provide an ERP system capable of adjusting to the demands of P&G. P&G wanted to stay close to all consumers, by having a balance between delivery of consistent globally aligned business processes and providing flexibility to the needs of local geographies.
The goals behind implementing a global SAP project were:
1) To fully deploy harmonized business processes for financial management, HR and the supply chain, in order to leverage scale globally.
2) To make the company internet based to enable an integrated, consumer-driven supply chain.
3) To build in upfront flexibility for P&G’s future business plans by enabling both robust, large-scale ERP operation and streamlined execution of future business mergers, acquisitions and divestitures.
Finance systems (Transaction systems) which handle the closing of the books across all operations, but production costing is deployed at plant level, to define standard costs by plant.
SAP Human Resource system which handles all employees that work for P&G. Some payroll for plant operations is still handled through local systems. However, P&G will pay all staff for 10 key countries (including the United States) through its shared service center using SAP Payroll within one year, and has plans to progressively move the other countries to this model.
SAP Supply Chain systems are one of the most crucial systems in P&G. They are organized either by business unit or geography. Around 80% of order management is handled separately by two large in-house-developed mainframe applications that are linked to the SAP systems.
SAP Application Linking Enabling (ALE) middleware was selected to drive master data synchronization, but at the time this was very much a new technology. Master data integration happen at regular intervals of 10 minutes, 1 hour or 1 day according to business need (Batch processing).
SAP Production Systems (based on Oracle and Unix database) operate on a range of different service-level agreements, according to individual business unit requirements. All hardware is located in three regional data center hubs. Each year there are two technical and one full business integrity disaster recovery rehearsals.
Internet website this was basically brought forth to help customers fulfil their transactions and buying experiences online. It serves as a customer-to-company interface, and helped the company increase its revenues significantly.
In conclusion P&G has achieved what many other large-scale enterprises have failed to do: a standardized global ERP deployment with a centralized infrastructure that is flexible enough to support its global business plans. This has been achieved through a sound business strategy coupled with innovative deployment initiatives, leading to the realization of tactical and strategic benefits. Enterprises seeking to maximize their ROI in ERP deployment should carefully review P&G’s strategies and critical success factors to help define their own optimization strategy. Such enterprises will need to strike a careful balance between central governance and local choice in all aspects of their ERP deployment or optimization strategies.
