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Global supply chain and value creation

Discuss about the Forecasting Practices In Supply Chain Management.

The Procter and Gamble Company are implementing the biggest supply chain that would assist in redesigning of history of company. Ability of organization to achieve cost targets and meet the needs of customers is dependent upon the ability of maintaining supply and manufacturing arrangements. This involves simplification of supply chain and in this area; the company is in the midst of cost savings and productivity (Barua and Saha 2015).

Colgate on other hand is actively engaged in building supply chain and they have strong presence of financial supply chain that intends to improve operating margin. The global supply chain of Colgate is managed using forty five manufacturing sites around the world. In earlier years, there was regional organizing of value chain in accordance with a system of continuous improvement in manufacturing.  Operations of supply chain of Colgate has been transformed using the strategy of smart manufacturing that intends to improve end to end execution and planning,  designing of more agile supply chains, achieving operational excellence and making greater use of analytics for addressing complex issues. Aim of creating sustainable supply chain is to be even more customer focused that helps in driving profitable and sustainable growth (Schmidgall and DeFranco 2016).

Significant progress has been witnessed on automation, integration and digitization of operations of global supply chain. A control system such as In touch, Wonderware Inbatch and historian is employed organization. Function of supply chain of Colgate moves forward with the efforts of analytics and automatics. Improved visibility and alignment has been experienced in the operations of global supply chain due to digitization efforts taken by organization. In current scenario, the focus of Colgate is on building capabilities and implementation of system by preparing its workforce.

Transportation- For the transportation of goods, Colgate has their own fleet but the decision concerning third party logistics is decided based on distributor budget, terms and conditions. Efficient efforts have been taken by Colgate for improving system of transport management, development of customer cost and updating the program of logistics efficiency.

In order to make the method of transportation, P & G has taken efforts to optimize the efficiency in the logistic stage of supply chain. Some of the inefficiencies relating to transportation such as rush transport, unloading and loading delays and product line stops.

Warehousing- For the warehouses, Colgate has taken operating leases and there is a description of arrangements concerning significant operating leases. A cost to serve model has been developed by company that helps in tracking statistics such as cost of warehousing and customer ship to location. The efficient transportation system indicates an improved environmental profile and the optimization program of logistics helps in efficient and seamless management of finished products, pack and raw materials (Manders et al. 2016).

Procurement

Six distribution warehouse sis operated by crest Toothpaste brand that helps in regularly sending high volume of goods to the customers. The contract provider of warehouse management is achieved by operational synergies.

Distribution- The aim of supply chain is to upgrade the performance of supply chain worldwide and this is done by employment of fully globalized supply chain that is build around inventory of vendor management that replaces regional source model. Inventory managed by inventory include the key accounts such as cross border sourcing, key accounts and collaborative downstream subsidiaries planning (Albarune and Habib 2015).

The distribution operation of P & G is conducted in such a way that it leads to savings in costs (Colgateinvestors.co.in 2018). This reduced cost is attributable to requirement of management and requirement of reduced labor on warehouse floor. The need of extra people to move the product to and from packaging area is eliminated by rising the task interleaving.

The supply chain of P & G is one of the best in the world; however, it is perceived that they are not able to utilize the global optimization opportunities. The logistics of supply chain is managed by control towers which are a part of its distribution strategy that helps in serving emerging market (Pg.com 2018).

Demand management- The potential suppliers of Colgate is expected to create high focus on customer service. True customer demand is addressed by the product replenishment application based on pull strategies.

Order management- Supply chain of Colgate starting with vendors and concluding with customers helps in addressing total movement of products and materials.

Customer services- The process of supply chain of Colgate helps in improving the customer service and the openness of organization to improvement helps in serving customers in better way.

For P & G, the synchronization of demand and supply is improved making retailer data for enabling supply chain collaboration. A strategy called demand signal management is employed by organization for creating value of process of transformation. The critical foundation of project is the retail solution for managing signal demand (Stelk et al. 2016).

The operations of supply chain of Colgate is done by building a transparent global supply chain that requires meeting some criteria such as reduction of green house emissions and clearing land without using fire and no deforestation in high conservation value areas.

The models of supply chain efficiency of P & G is leveraged for bringing together analytics, multiple data points and visualization in a manner that resulted in savings of ten million dollars of inventory (Bansal et al. 2016).

Role of logistics in supply chain value creation

Financial analysis of companies is analyzed by evaluating the statement of financial position, statement of changes in net assets, statement of changes in income statement. The financial data has been selected for the period of three years from the annual report of the respective companies. Furthermore, financial positions of companies are analyzed by the computation of solvency ratio, efficiency ratio, liquidity ratio and profitability ratio (Penman 2015).  The debt ratio of Colgate has decreased year on year but the value is comparatively lower than P & G in current year. This is indicative of the fact that Colgate has lower proportion of debt in their capital structure as against P & G Company.

Profitability position of P & G Company is better compared to Colgate as indicated by figures of different ratio. Gross profit margin, return on capital employed and return on equity of P & G Company is significantly higher than Colgate. However, return on equity for P & G has increased significantly in year 2017 compared as against Colgate that has experienced a decrease in value. Liquidity ratio of P & G Company is more than Colgate in recent years. Current ratio of P & G is more than current ratio of Colgate which is indicative of the fact that former company has sufficient current assets to pay off their short term obligations.

The challenges faced by Colgate are related to increase in warehouse throughput and improving the performance intensive environment by separation of warehouse from operations of enterprise resource planning. P & G faces the challenge in its supply chain concerning how the organization integrate the phase of product innovation in end to end model for meeting the customers individual needs. They are required to tale efforts in floating the transformation in light of constantly evolving digital technology (Manders et al. 2016).

References list:

Albarune, A.R.B. and Habib, D.M.M., 2015. A study of forecasting practices in supply chain management. International Journal of Supply Chain Management, 4(2).

Arora, R., Haleem, A. and Farooquie, J.A., 2018, March. Barriers affecting successful technology enablement of supply chain: An Indian perspective. In IOP Conference Series: Materials Science and Engineering (Vol. 330, No. 1, p. 012101). IOP Publishing.

Bansal, S., Parmanik, P., Mukherje, S., Pandit, N. and Singh, R.K., 2016. Prioritization of Supply Chain Flexibility Dimensions Using Topsis: A Case Study of Indian FMCG Sector. International Journal of Innovative Research and Development, 5(2).

Barua, S. and Saha, A.K., 2015. Traditional Ratios vs. Cash Flow based Ratios: Which One is Better Performance Indicator?. Advances in Economics and Business, 3(6), pp.232-251.

Brigham, E.F., Ehrhardt, M.C., Nason, R.R. and Gessaroli, J., 2016. Financial Managment: Theory And Practice, Canadian Edition. Nelson Education.

Camerinelli, E., 2016. Measuring the value of the supply chain: linking financial performance and supply chain decisions. Routledge.

Colgateinvestors.co.in. (2018). [online] Available at: https://www.colgateinvestors.co.in/media/1609/annual-report-2015-16.pdf [Accessed 9 Jul. 2018].

Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of Corporate Financial and Environmental Reporting: A Semiotic Analysis of Corporate Financial and Environmental Reporting. Routledge.

Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson Higher Education AU.

Johri, S. and Maheshwari, T., 2015. An empirical study on the practical efficacy of ideal financial ratios. Pranjana, 18(1), p.41.

Manders, J.H., Caniëls, M.C. and Paul, W.T., 2016. Exploring supply chain flexibility in a FMCG food supply chain. Journal of Purchasing and Supply Management, 22(3), pp.181-195.

Mayes, T.R., 2014. Financial Analysis with Microsoft Excel. Nelson Education.

Penman, S.H., 2015. Financial Ratios and Equity Valuation. Wiley Encyclopedia of Management, pp.1-7.

Pg.com. (2018). [online] Available at: https://www.pg.com/en_IN/downloads/investor_relations/pghh/annual_reports/annual_report_2016.pdf [Accessed 9 Jul. 2018].

Schmidgall, R.S. and DeFranco, A., 2016. How to best use financial ratios in benchmarking and decision making in clubs: Review of the decade 2003–2012. International Journal of Hospitality & Tourism Administration, 17(2), pp.179-197.

Singh, K. and Misra, S., 2018. Theory of Constraints for Managing Downstream Supply Chain in Indian FMCG Sector: A Literature Review. Journal of Supply Chain Management Systems, 7(1).

Skippari, M., Laukkanen, M. and Salo, J., 2017. Cognitive barriers to collaborative innovation generation in supply chain relationships. Industrial Marketing Management, 62, pp.108-117.

Stelk, S., Park, S.H., Medcalfe, S. and Dugan, M.T., 2017. An additional analysis of estimation techniques for the degree of financial leverage. Review of Financial Economics.

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