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needed something, creating an out-of-stock situation. The policy that required customers order bigger quantities helped the logistics just fine by cutting transportation costs - but it penalized other parts of the supply chain.
The research showed that if P&G allowed customers to order in more timely ways and relaxed its constraint about full truckloads just a little, it would make a startling difference. P&G would not have to run trucks only half full, which would increase transportation costs considerably, but allowing 95 percent capacity would reduce the overall volatility of the system by as much as 30 percent. The P&G modeling work turned by 180 degrees the company's thinking on this issue, from demanding 100 percent fully loaded trucks to recognizing the benefits of vehicles that are not fully loaded.
Another area analyzed was Late Stage Distribution. In this process, a store looks at its inventories every night and transmits requirements to headquarters on a daily basis. If early in the week a manager sees that three bottles of Pantene have been sold, he would then send an order to headquarters, which would forward the order to P&G - but it would be seven to 10 days before that product makes it back through the distribution system.
Many retailers, when the product comes to the distribution centers, will ship exactly what the store ordered. But by then, the data could be 10 days old, and the store might be in a completely different stock s
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