Sustainable Supply Chain At P&G: An Analysis

You should write an Business report on your chosen topic in relation to the case study organization which:

-Explains the topic – what it is (introduction)
-Considers who says what about it (theoretical positions)
-Discusses the framework for evaluation/analysis (theoretical frameworks)
-Explores the role of Government – barrier /enabler (if relevant)
-Offers a comparison with others in sector (benchmarks, league tables, comparison of your own applied theory, secondary views on company performance (vs. competitors if available)
-Draws conclusions (summary of key findings) 

Sustainable Supply Chain

This report will reflect the sustainable supply chain by taking P&G Company. The Baby Care operation of this company will be mentioned in relation to sustainable supply chain. The application of the theories and frameworks to P&G will be described with the support of evidence. The role of the government in the products of P&G is huge as the products contribute to the development of the country. The products of this company are sold in more than 180 countries and territories all over the world. The community of P&G involves operations in around70 countries globally and around 110,000 employees. It has the nature of the public traded company. Environmental and social responsibility is part of everyone’s job at P&G. This company has engaged in various areas such as preservation of resources, worth from waste, social programs, and renewable resources. It has made vital progress in the efforts to bring change in the climate in a positive manner. However, there are various competitors of this company that are able to compete but the sustainability chain of this company has strengthened which help to gain competitive advantages. The company has taken several steps to reduce green house gas emission influence climate change.

A sustainable supply chain is an effective approach that facilitates the management of environmental, economic and social influences, and the motivation of effective governance practices, all through the lifecycle of products and services. The major aim of supply chain sustainability is to make, prevent and develop long-term environmental, economic and social value for entire stakeholders included in developing services and products to market. Companies can proceed with corporate sustainability by incorporating the UN Global Compact into the relationship of the supply chain.  It is vital for the organization to consider the various business drivers for supply chain sustainability such as managing business risks, realizing efficiencies and developing the sustainable projects (Mota, Gomes, Carvalho  & Barbosa-Povoa, 2015).

 

Figure 1: Business Drivers

Source: (Sisco, Chorn and Pruzan-Jorgensen, 2011).

There are various reasons behind starting a supply chain sustainability journey by companies. Companies are progressively more taking actions that outcome in effective social, environmental and economic impacts due to society expects. In the context of P&G Company, sustainable sourcing is one of the priorities of P&G. The baby care operation of P&G Company is engaged in sustainable supply chain and more proactive in not reducing the wastage (Esty, Mayfield and Lane, 2016). It has provided a higher quality of products so that the trust of people on baby care products would remain same. It has been found that P&G is well known and established sustainability player that received a number of certifications by an independent organization in the area of corporate sustainability. Moreover, it is performing towards its long-term 2020 vision and practicing noteworthy initiatives to concentrate on environmental and social issues (P&G, 2018). Babies’ skin is sensitive so it is essential for the company to produce the products for baby care by considering their skin.  The baby operation of P&G Company is effective as it produces baby products such as pamper, wipes, Luves and paper towels with full of protection so that baby could not face health regarding issues.

Sustainable Supply Chain overviews and theoretical positions

The concepts of sustainability have been introduced in a number of fields such as technology, management, and supply chain. The supply chain overviews and theoretical positions of sustainable supply chain can be elaborated by considering three constituent concepts such as managing material flows, relationship management and managing information flows.

Managing material flows

Managing material flows is the concept that includes conceptualization of green supply, green purchasing strategies and supply management capabilities in the execution of green supply. In the context of conceptualization of green supply, it is vital to ensure sustainability of purchased products, manufacturing processes and develop well-functioning relationship with suppliers. The role of P&G Company in implementation of supply chain capabilities involve liaison between purchasing and other business units, details of purchasing policies and technical competence of purchasing professionals (McElroy, et. al., 2014). P&G Company is connected with the principles of Corporate Renewable Energy Buyers for delivering more affordable and clean energy to the users. The company has signed the American Business Act on Climate change to encourage others to take action against climate change. 

Relationship management

It is the major concept of the sustainable supply chain management as it develops the efficient knowledge regarding issues of collaboration and its benefits. It entails the concept of power and trust and the relationship framework. The power concept defines the understanding of power situations between buyers and suppliers in the context of business specific. The relationship of P&G Company with other buyers is strong. The concept of trust is referred as the collaborative paradigm (Shaharudin, Govindan, Zailani and Tan, 2015). These concepts are interlinked by the idea that communications between companies facilitate them to attain resources of inter-organizational that makes sustainable competitive advantage over rivals.

Managing information flows

In sustainable supply chain management, information can be accessed in terms of social or environmental impacts from the life cycle stages of products. It is vital for the company to evaluate the entire factors before the purchase that being the cause of potential danger of an incoming material to potential customers as well as natural environment. P&G Company is working with suppliers to make sure that they are able to meet the traceability and no-deforestation requirements (Gustafsson, Kristensson and Witell, 2012).

Theories and Framework 

There is an evidence of an enhancing interest in addressing sustainability strategies that is why it is required to gather and summarize the strategies of SSCM. These strategies are included eleven steps SSCM framework that facilitates organizations in enhancing SSCM. Initially, the regulations of government facilitate in evaluating organization to have the least level of enhancing environment-friendly practices. In the second step, it is vital for the organization to recognize the benefits for the business of executing sustainability initiatives and make a strategy that facilitates in enhancing effective SSCM and appealing in sustainability process (Halldórsson, Hsuan and Kotzab, 2015). P&G Company’s baby operation is committed to safety and remains industrious in certifying the safety by constantly investigating latest information about scientific and regulatory agencies and collaborating with external scientists on new safety methods. The company complies with United States federal as well as state laws by involving the Lobbying Disclosure Act and Open Government Act. The framework of SSCM suggests that raising awareness among suppliers and customers is vital to attain the benefits of executing SSCM.

Managing material flows

 

Figure 2: Framework of SSCM

Source: (Touboulic and Walker, 2015).

The programs of assessment and monitoring will facilitate the company in correcting their practices in attaining SSCM and facilitates them to encourage and inform their plans. There is a program of Global Business Continuity Program in P&G that ensures that entire critical sites and work processes of the operation of baby care evaluate their risk mitigation programs and exposure to the events regarding catastrophic at the sites of P&G (Jalalvand, Teimoury,Makui, Aryanezhad and Jolai,  2011). Business Continuity Plans of P&G are audited in a continuous manner and a report of this program’s status is created periodically to the Audit Committee. 

It is essential for the company to maintain the sustainable image within the organization. There are various models and strategies that facilitate to the organization in maintaining the sustainability image.

It has been examined by Pagell &Wu that the chain its whole, through unambiguously evaluating both environmental and social results of the supply chain activities. The case analysis of this framework recognizes that the organizational capability to make affirmative management orientation towards sustainability is ancestors to sustainable supply chain management (Halldorsson, Kotzab, Mikkola and Skjøtt-Larsen, 2007). It ridged the manager’s actions that performed in sustainable supply chains such as they work together with non-traditional members included regulators, competitors, NGOs and community members. The main focus of the managers is on sourcing side activities like supplier certification that involve social criteria in supplier selection.

 

Figure 3: A Model for SSCM Practices

Source: (Pagell & Wu, 2009).

The sustainability objective of P&G is to make industry-leading value by keeping consideration of customer-preferred products and services while conserving resources, preventing the environment and developing the conditions of social for those who need it most. The company has main focus on supply base continuity such as traceability, transparency, supplier certification and decommodization. NGO, competitors, academic experts, and other stakeholders are in the supply chain of P&G Company. The company is linking with and enabling suppliers to meet no-deforestation, traceability, and PO procurement requirements. It has been found in the context of traceability that the company is in active form and as of June 30, 2015, approx 90% of company’s PO and PKO volume was followed to the PKO mill and PO mill level (Pagell & Wu, 2009). It is essential for the company to work with its suppliers to understand the impact of current policies.

Relationship management

ABC Analysis is considered as an inherent part of supply chain management and helps to categorize its products into groups divided by their spend volume. ABC analysis is considered as the ABC Classifications that refers to the three categories used in the system (Alexander, Walker and Naim, 2014). The first A is referred to the category for items that are significant vital or critical. The second B is the diversification of items of middling importance. The category C is considered as the designation for regarding irrelevant items. In the term of control scheme, each class must be handled in a different manner. The product of Pamper of P&G is made up of cotton, cloth-like polyester fibers and skin friendly compounds such as Vitamin E and aloe and Super-absorbent Gel. Cotton is a cheap product but covers huge space that is why it would be considered under “C” Category. Cloth like polyester fiber comes under “B” Category due to medium value and can be adjusted in less space. On the other hand skin, friendly components such as Vitamin E, aloe and Super-absorbent Gel is categorized under “A” Category because it is a very important component to making diapers as it absorbs liquid 

The government legislation has influenced P&G Company and its Baby care operations. However, it has been analyzed that this company is proactive in following the government rules and policies which maintain its image good in the view of outsiders. In UK under the Sale of Goods Act 1979, it is necessary that the product description should be matched with the mentioned details and it must be fit for aim with satisfactory quality. It shows that the products of the company are able to fulfill the aim of the customers. The government legislation can be an enabler for the company and sometimes it reacts like barrier due to amendments in the policies.

Enabler

P&G Company is engaged in the political process through giving financial support to chosen state ballot initiatives and concern advocacy campaigns that have direct influence on the ability to the company to improve the lives of customers. The involvement of this company in these campaigns is looked by P&G’s Public Policy Team, public policy, corporate communications, legal and other activities regarding the certain issue under consideration. The good image of the company all over the world put effective influence over the UK legislations and baby care products are allowed to provide in the UK by P&G Company. The company entails all other factors of political involvement which is instructed by company’s values, purposes and principles. These factors are entirely reported as per the governing laws. It shows that the government has a good impact on the company which enables it to develop more products by keeping consideration of sustainability (Trott, 2012). The company is initiating to reduce the impact of green house gas emission in which government supports it and along with this company provides certain amount of percentage of its profit to the NGOs and needy people which brings the economic stability and development in the country.

Managing information flows

Barrier

Requirement of CE marking is the barrier for P&G Company especially for the baby care operations because in the country of UK, it is vital for the manufacturer in some products to put the CE marking. The companies that fail to follow it have to suffer from prosecution. There are so many laws regarding child safety which should be followed by the company if it wants to sell its product in international marketing. It is the biggest barrier for the company because failures to do so bring huge penalties and bad image to the company. 

P&G Company has various competitors in bay care operation in which Johnson and Johnson is one of them. However, the strategy of P&G Company is effective in comparison to others company but it is required for it to take care of the strategy of Johnson and Johnson to get competitive advantages significantly. There are three different divisions such as medical, consumers and pharmaceuticals devices. The strength of its brands is Band-Aid and Tylenol. Johnson and Johnson require reinvesting in the pipeline of drug and it has hope that few compounds will not be able to reach FDA approval. On the other hand, P&G relies solely on the strength of its brands.

It has been analyzed that the Johnson and Johnson applied behavior theory in its operation regarding baby care products which shows that human beings are interdependent components (Smith Fruehwirth, 1989). It is the practical tool for implementing the all process of nursing that encompasses the feelings desires and need of children. On the other hand, P&G Company has adopted innovation management theory in which company analyses the products and innovation efforts in time (Agafitei and Avasilcai, 2015). However, the baby care products are different from each other as on J&J provides baby care lotion, napkins and complete kit of baby care and P&G provides diapers, wipes and luves. The fixed turnover asset of J&J is in enhancing which shows that less cash is being controlled in the fixed asset for each unit of sales in baby care products, while P&G maintain a continuously fixed asset turnover ratio. It reflects that J&J is more efficient than P&G in this case. With reference to operating cycle, both companies have an upper level of inventory days along with payables day in comparison of receivable day. The products of P&G are produced in lesser time which makes it more advantageous in the context of operating efficiency.

Theories and Framework

 

Figure 4: comparison of both companies

Source: (Kalogeropoulos, 2016).

The company performances of both companies are comparatively efficient as both companies are providing high quality satisfied products to the customers. The performance of P&G is more effective as it involves in the environmental sustainability and focuses on major three areas such as conservation of Resources, Renewable resources and worth from waste. These initiatives are contributing to make the good image of the company in the point of view of government, customers and suppliers.  

Conclusion 

It has been concluded that sustainable supply chain management enables the company to attain the competitive advantages significantly. Procter and Gamble Company are taken to make this assignment in which baby care operation is highlighted of company. Various concepts have been applied to demonstrate the sustainable supply chain management of the company. The company should include its stakeholders in the process of enhancing SSCM because of the role of them in making the success of the process. There are three conditions required to make effective SSCM such as long-term partnership, the reliable volume of operations and reasonable pricing. Pagell &Wu Framework and ABC Analysis have been elaborated to show the role of SSCM in the company. The comparison between Johnson & Johnson and P&G has been made in the context of baby cares products. 

References 

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