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Procter & Gamble Eurocor Sergio Barbarino

My career at Procter & Gamble

Quote

Vague, but exciting! (M. Sendall)

Personal

-  Age, 46

-  Living in Bruxelles -  Rower -  Sommellier

- MBA Solvay 2004 - Master Chem Eng. 1991 - UNINAPOLI

@ University

2011 Research Fellow, SNIC

2007- 2011 – Principal Engineer Process Breakthrough

- Started the First Global Supply Network Innovation Center

1991-2007 – Various Positions as Process Development Engineer

-  Brands: Mr. Clean, Viakal, Tide, Lenor, Fairy

-  Plants: Europe, China, India, Egypt, Morocco, Mexico, Guatemala, Russia etc.

-  Locations: Brussels, Rome, Cincinnati

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P&G at a Glance Net Sales $84 (billion)

Number of Employees 127,000

Countries of Operations 80

Countries Where Our Brands Are Sold 180

Consumers Served by Our Brands 4.4 billion

R&D organization 9,000

R&D spending $2.2 (billion)

(Approximate)

Copyright © 2011, P&G. L Deketele. All rights reserved.

P&G network in Western-Europe

P&G Logistics operations in WE •  30 plants •  15 regional DC’s •  50 storages for finished

products •  60 customization centers

Copyright © 2011, P&G. L Deketele. All rights reserved.

P&G Finished Product Flow

“Normal flow”

PLANT PLANT DC REGIONAL DC

RETAIL DC

RETAIL SHOP

SHOPPER

Inventory = Money

Most of the talk is not about the actual physical cases…

Please ask the Biblical Pharaoh of EGYPT if Inventory is a good or a bad thing….

Please ask yourself when sitting on a Toilet if that extra roll you keep there just in case is a good or a bad thing

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Thesis

[Optional slide for additional info/data]

This is bad for both profitability and environment

EUROPE GAINS to 70% : Eur160 Billions

1.3% CO2 footprint

Inefficiency – Where the real money is

Cost of inefficiency

%Load Factor

%empty truck (km)

%Road efficiency

FACT Slow steaming

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“ We just start production a week before”

FACT Just in Time….

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How to apply it correctly?

FACT Goods average travelling speed is slow…

no matter how fast the mean of transport

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Supply chains inefficiency

Transport inefficiency is a €160 Billions loss and 1.3% of EU27 CO2 footprint!!!

Full, but only 25% of weight limit

60% empty, but at weight limit

This is bad for both

profitability and environment

P&G TINA CUBE Mixing light & Heavy Products

3. EFFICIENCY

Light goods: Only 25% of weight limit

Heavy goods: Only 40% of volume limit

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Why stay within one company?

Heavy Light

Only one Ideal combination : Combine Heavy Light – Create optimal density for a vehicle

drive same weight fill % and vehicle fill % - UP!

Horizontal Collaboration - Fill

External opportunities & challenges

Easy to handle, transport,

store, interlock, load,

construct, dismantle

& decompose

Smart tag enabled

+ sensors

Standard sizes & dimensions

Unit loads along entire supply chain

Common communication,

planning & monitoring

Optimised space Open networks &

pooled resources

Less network

complexity

Modular box

system

Interconnected comms

Modular logistics units

New handling & storage

technologies

Co-operative logistics networks

Modular dimensions from

cargo container size to tiny

Key

attr

ibut

es Potential PI

savings: 22% freight km

50% CO2 15% efficiency 20% loading

Save CO2

New modular load unit concept Smoother interfaces along the supply chain

– create a more efficient, sustainable supply chain by using new modular load units & smoother supply chain interfaces

Visi

on

Smooth interfaces along the supply chain •  Within inter plant operations

•  During trans-shipment

What is the Physical Internet Vision ?

π-Concept | Positioning the Physical Internet.

Source: Montreuil (2012).

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Cooperation experiment

Going to the beach

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Going to the beach

1 person 3 persons

4 persons

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Rules of cost/benefits sharing Shapley value is easy to calculate…;-)

• It is based on a company’s marginal contribution to groups of other companies: • Shapley value is the only gain sharing concept that satisfies all the following fairness properties:

Efficiency: The complete savings of collaboration are distributed

Monotonicity: If player A adds more value to every coalition than player B, player A will get a higher payoff

Dummy: A player that adds no value to any coalition, will receive no payoff

Symmetry: If two players add exactly the same value to every other coalition, they will get the same payoff

Individual fairness: No player will suffer from collaboration (cost level after collaboration is not higher then individually, i.e. without collaboration)

A competitive advantage!

Shapley solution? The new Passenger should pay 50% of the costs

1)  The single passenger is now paying as if he is sharing with another passenger 2)  The group of 3 are now paying as if they were 6 passengers sharing the costs !

Note that: a scale of 6 is physically IMPOSSIBLE if you do not COLLABORATE

Another asset underutilization of transport in Europe…

People Mobility insights

Footprint of Traditional Shopping

CO2 emitted by supermarket shopping

Consumer trip (transport between home & store)

Packaging (store - shopping bag)

Retailer operations (store/ DC /transport)

Manufacturer operations (DC/ transport)

Source: LCA study, P. van Loon, J. Dewaele, L. Deketele - Heriot-Watt University / P&G

30 items/shopping basket - UK B&M supermarket - typical (average) travel behavior (distance, transport mode)

Estimating the hidden costs of a shopping trip Travel cost >400 eur/annum (car tco)

Time >50 hours(ex trip)

Finding/Picking >100 eur/annum

-> An hidden budget to fund Home Delivery?

Direct to Consumer Delivery: a big sustainable business opportunity

• Value Creation for Consumers: Less car trips=Less cars!

• Return logistics possibilities (e.g. higher package recycle)

• Produce AFTER Demand ( -> Cash Flow relief!)

• Brand loyal consumers can get subscriptions (E.g. Pampers, Toothbrush, Razors, etc. etc.)…and the best prices.

• New Service Jobs Creation Issue is: Scale is essential for the last mile to be efficient.

Around the World Heritage Postal companies own the most capillary network. A few of them (DHL, B-Post) have declared strategic to develop it for goods delivery as traditional mail services decline.

Opportunity: ALICE!

Freight Transport Modes - Intermodality

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ALICE THE ETP on Logistics

Industrial sectors- Manufacturing

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Foundation Science & Technology

Logistics + Supply Chain

How to Transport What to Transport

The connection between Modes and Industrial ETPs for

Optimized Logistics and Supply Chain Management

29 Barbarino.s@pg.com