Industry analysts note that Procter & Gamble (P&G) has seen its profits fall under double-digits for the past few years and one move to improving the picture is to reduce its asset base. Calling the move “Distribution Reinvention,” the giant consumer goods company will reduce its distribution centers (DCs) from 450 to approximately 225 over the next two years.
Accompanying the slimming down of P&G’s physical infrastructure is a reorganization of its logistics operations through a boost in its product demand velocity. That means increased shipping frequency for some of the company’s faster moving products as well as a new approach for P&G in its transport asset management for some other market offerings. For transportation this will involve creating a better balance in the management of truckload and less than truckload shipments to improve the costs of its transportation and to improve supply chain relationships with retail customers.
Not only is the hope to reduce stock-outs of all its products for retailers, P&G is seeking to create new logistics capabilities for what it deems high-value products with distinctive marketing patterns, most notably in its Gillette products.