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However, that policy had major drawbacks. P&G customers often held back orders until they could fill a truck 100 percent, even at the risk of running out of stock. And alternatively, P&G never relaxed the rules to allow a price break at anything less than full capacity. In the long run P&G realized that its rigidity was actually hurting both P&G and its customers.So BiosGroup analyzed what would happen if P&G relaxed its flexibility in its trucking requirements. And what became clear was that when customers work within rigid rules - that is, having to order fully loaded trucks - they carry more inventory than they want to because they tend to "round up" the order quantity. This excess inventory causes two main problems.
One is product obsolescence: If too much inventory is in the pipeline, it must be reclaimed from the retailers at the end of the marketing cycle. And the increased product handling results in higher levels of damaged goods. In addition, contrary to logic, the excess inventory actually creates product availability problems because retailers have finite storage space, and products are even harder to find when they are buried in a crowded warehouse.
BiosGroup also investigated the notion that every time a customer like Walgreens or Safeway had to round up its order quantities to fill a truck, P&G lost some important data. The company was blind to true demand. In addition, customers might defer an order until they really
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