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he way to having produce-to-demand systems on its biggest volume SKUs.
Relaxing the rules. As for the less-than-full truckloads, P&G management decided to adjust the 100-percent fully loaded rule by up to 10 percent. This policy change was very counterintuitive for P&Gers, and the company has been testing it on the West Coast with one customer warehouse - delivering case-quantities with no penalty in terms of costs and monitoring the effects. With the change so far, the overall system volatility is decreasing.
It all flows together: Less but more accessible inventory reduces out of stocks, and better information about customer demand data results in better product flow with reduced inventory. Several P&G managers had suspected that produce-to-demand was the answer to their supply chain problems, but they couldn't get past the cost hurdles of the company's internally created paradigms that historically called for manufacturing in long production runs. With the results of the BiosGroup modeling, senior executives were swayed. For P&G, this represents a monumental change: making quicker changeovers in manufacturing to do shorter runs involves serious capital investment.
In total, P&G has about 75 projects of this type under way with retail customers in the United States and plans to partner with BiosGroup again. Before this project is fully executed, the consumer products giant expects to start the modeling for the next generation.
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