PRODUCTION AND OPERATION

MANAGEMENT

ASSIGNMENT NO. 1

COMPANY: PROCTER AND GAMBLE

SUBMITTED TO:
PROF. MEENU GOYAL
SUBMITTED BY:
KIRAT CHHABRA
BCOM 5C
2017010186

Procter & Gamble Co.’s Mission Statement

& Vision Statement: An Analysis
 The Procter & Gamble Company (P&G) is a leading firm in the consumer goods
market, directly competing against Unilever, which is also a major player in the
global industry. A firm’s vision statement describes the target future situation of
the business. In the case of Procter & Gamble, the corporate vision statement
emphasizes leadership in the global market. On the other hand, a company’s
mission statement specifies the strategic approach to fulfill the vision. Procter &
Gamble’s corporate mission statement highlights quality and value as the
foundation for ensuring business success. The company’s growth path and
strategies in the consumer goods industry are based on this strategic approach to
reach the corporate vision. As a dominant firm in the market, Procter & Gamble
needs to ensure that its vision statement and mission statement are fulfilled. It is
also necessary to consider possible adjustments to these statements to address
changes in market conditions and Procter & Gamble’s business needs over time.
A corporate vision statement for global market leadership defines Procter &
Gamble’s business aims. These aims require strategies for achieving leadership in
the organization and leadership in the industry environment, while considering
various aspects of the business, such as the threat of substitution and competitive
rivalry. In addition, a corporate mission statement imposes pressure on P&G
management to implement strategic objectives for enhancing the company’s
products to ensure competitive advantage based on quality and value.

Procter & Gamble’s Vision Statement

Procter & Gamble’s vision statement is “Be, and be recognized as, the best
consumer products and services company in the world.” In this corporate vision,
the term “best” characterizes what the company aims to achieve in the global
consumer goods market. This factor indicates how the Procter & Gamble Company
sees itself relative to other firms in the industry. In addition, the term describes the
capabilities and potential of the business organization. In this regard, the corporate
vision statement highlights the following characteristics relevant to Procter &
Gamble and its business condition:

1. Be the best consumer products and services company

2. Be recognized as the best consumer products and services company
3. Global market operations
 The first characteristic of Procter & Gamble’s vision statement requires steps that
ensure the company’s leadership in the consumer goods industry. P&G does not
specify the criteria for determining the “best” position. However, typical
considerations to achieve industry leadership include quality and value of products,
quality of customer service, and corporate responsibility status, among others. The
second feature of Procter & Gamble’s corporate vision statement focuses on
recognition. Such recognition requires strategic objectives that involve marketing
management, among others. For example, Procter & Gamble needs to effectively
implement its public relations strategy to enhance corporate and brand image. Such
strategy is included in Procter & Gamble’s Marketing Mix or 4Ps. The vision
statement also includes the characteristic of global market operations. The
emphasis is on maintaining an effective global reach. Procter & Gamble already
fulfills this part of the corporate vision by maintaining significant shares of various
markets around the world.

Procter & Gamble’s Mission Statement

Procter & Gamble’s mission statement is “We will provide branded products and
services of superior quality and value that improve the lives of the world’s
consumers, now and for generations to come. As a result, consumers will reward
us with leadership sales, profit and value creation, allowing our people, our
shareholders and the communities in which we live and work to prosper.” This
corporate mission contains a detailed specification that influences Procter &
Gamble’s strategic direction. Superiority in quality and value are emphasized, just
as these factors are also highlighted in the company’s vision statement. Procter &
Gamble’s corporate mission statement has the following characteristics:

1. Branded products and services of superior quality and value

2. Improve the lives of the world’s consumers, now and for generations to
come
3. Leadership sales, profit and value creation
4. Prosperity of people, shareholders and communities

The mission statement requires that the Procter & Gamble Company must ensure
the superior quality and value of its products. Based on this characteristic, a
strategic objective is to continue enhancing the company’s products to maintain
superior quality and value. For example, Procter & Gamble must always innovate
and ensure adequate R&D investment for product development as an intensive
growth strategy. Another feature of the mission statement is the improvement of
consumers’ lives. Thus, P&G develops its consumer goods to address challenges or
problems consumers face. The third characteristic of the corporate mission refers
to business performance, especially Procter & Gamble’s financial performance.
The fourth feature depicts the desired combined effect of the activities based on
Procter & Gamble’s mission statement, contributing to various stakeholders’
prosperity. Prosperity of stakeholders supports long-term business survival. This
consideration is included in Procter & Gamble’s corporate social responsibility
strategy.

Procter & Gamble Company’s operations

management (OM) strategy

The Procter & Gamble Company’s operations management (OM) strategy follows
goals for optimization in efficiency and effectiveness in satisfying various needs of
the business in consumer goods markets worldwide. The strategy addresses the 10
strategic decisions, which pertain to various operational areas of the company.
Procter & Gamble’s operations management efforts push for maximum
productivity in these 10 strategic decision areas. Highly productive operations
support effective strategy implementation. For example, based on higher
productivity, Procter & Gamble’s operations managers can implement higher
production capacity directives. These conditions contribute to the company’s
ability to stabilize its global business. Current OM strategies and tactics work to
fulfill Procter & Gamble’s business goals. However, it is essential to make
adjustments in response to changes in P&G’s industry and market variables. Such
adjustments should match variables like market demand and technological
advances to maintain high performance and support market leadership goals
embodied in Procter & Gamble’s vision statement and mission statement.
Operations management decisions determine productivity and the capacity of
Procter & Gamble to respond to business needs. These needs change according to
consumer goods market conditions and organizational conditions. Procter &
Gamble’s operations managers implement changes in the 10 strategic decisions
accordingly.
 Procter & Gamble Company’s Operations
Management, 10 Decision Areas

1. Design of Goods and Services. Operations managers are concerned about

product specifications, which determine other strategic decision areas of
operations. Procter & Gamble’s objective in this area is to develop products within
organizational capabilities, while supporting goals for innovation. Innovation is a
main factor in the company’s intensive growth strategies. In applying this
approach, the company’s operations managers focus on cost minimization without
sacrificing product quality. In this way, Procter & Gamble’s vision statement and
mission statement are satisfied in terms of ensuring quality and value of consumer
goods. For example, cost minimization is possible through high quality P&G
products designed for high operational productivity levels. Thus, Procter &
Gamble maintains high quality standards while keeping flexibility in other related
factors for this strategic decision area of operations management.

2. Quality Management. Quality management’s objective is to implement quality

standards based on the expectations of target customers or consumers. In this case,
the Procter & Gamble Company’s goal for this strategic decision area is to apply
high quality standards in OM. These standards support leadership in OM, and
business leadership in the consumer goods industry. High quality standards address
issues linked to competitive rivalry shown in the Porter’s Five Forces Analysis of
Procter & Gamble. For example, products of higher quality are more likely to
succeed in the saturated market of consumer goods. At Procter & Gamble,
operations managers use current market data to determine the suitability of quality
standards. Operational specifications and productivity measures are adjusted
according to changes in data pertaining to P&G consumer expectations. Thus, in
this strategic decision area of operations management, Procter & Gamble’s
dynamic quality standards are used to match market expectations.

3. Process and Capacity Design. The strategic decision in the area of process and
capacity design considers the specifications and requirements in Procter &
Gamble’s production processes. The company’s objective is to maintain adequate
capacity and productivity. In this regard, the operations management approach
used at Procter & Gamble involves maximization of automation in production. For
example, automation increases productivity and capacity through higher
operational efficiency. The resulting condition contributes to the benefits of
economies of scale, which is one of the strengths identifiable in the SWOT
Analysis of the Procter & Gamble Company. In this strategic decision area of
operations management, designs are also based on regular reviews of P&G’s
processes. The resulting data allow Procter & Gamble’s operations managers to
develop solutions to ensure that the consumer goods business remains highly
productive.

4. Location Strategy. Optimal distances from resources and target markets are the
operations management objective in this strategic decision area. Procter & Gamble
uses an approach that prioritizes proximity to target markets. For example,
facilities are located where it is easy to transport P&G’s consumer goods to
retailers. In this condition, Procter & Gamble’s operations managers maximize the
benefits of high productivity. For instance, high operational productivity in
manufacturing and distribution facilities supports effective market reach through
retailers.

5. Layout Design and Strategy. The Procter & Gamble Company addresses
layout design and strategy through real-time data. The objective in this strategic
decision area of operations management is to optimize the flow of resources and
information to support the consumer goods business. In this case, Procter &
Gamble’s organizational structure also determines the layout design and strategy.
For example, internal business processes are grouped according to the divisions in
the corporate structure. Moreover, operations managers are concerned about
layouts that suit internal business processes in Procter & Gamble’s corporate
offices. The aim is to support P&G employees’ productivity. Understandably,
Procter & Gamble’s operations management approach for this strategic decision
area adapts to available spaces, considering variations in facilities and regulations.

6. Job Design and Human Resources. Operations managers are involved in

efforts to ensure the adequacy of human resources. To address this objective,
Procter & Gamble implements employee training programs for innovation and
productivity. Employees are among the main stakeholders of the company. The
approach used for this strategic decision area also supports leadership and passion
for winning as a way to enhance employee morale and career development.
Aligned with Procter & Gamble’s organizational culture, these factors and
operations management efforts ensure effective and adequate human resources.
Adequate HR supports consistency and effective capacity in P&G’s consumer
goods business. For example, the strategically developed human resources and its
culture make it easier for Procter & Gamble’s operations managers to address
operational issues.

7. Supply Chain Management. This strategic decision area of operations

management has the objective of strategically aligning an effective supply chain
that supports Procter & Gamble’s consumer goods business. The condition of the
supply chain determines the capabilities of the company in terms of productivity
and capacity. In this regard, Procter & Gamble’s operations managers prioritize
external and internal factors that significantly influence the supply chain. The
company aims to minimize the negative operational effects of these factors on
productivity. For example, the PESTEL/PESTLE analysis of the Procter & Gamble
Company shows that ecological factors can create challenges in maintaining an
adequate supply chain for P&G. Thus, the company uses data on external
conditions and internal conditions to address such challenges and to fulfill the
operations management objectives in this strategic decision area.

8. Inventory Management. For inventory management, Procter & Gamble’s

operations management team focuses on the objective of matching inventory and
organizational needs. At the same time, the company considers consumers,
suppliers, and business productivity in this strategic decision area.
Moreover, Procter & Gamble’s marketing mix (4Ps) imposes requirements on
inventory management activities. For example, the activities of retailers influence
P&G’s operations management decisions in this strategic area. The methods that
Procter & Gamble applies for inventory management include the periodic method
and the first in, first out (FIFO) method. FIFO minimizes spoilage of raw materials
and consumer goods. Procter & Gamble’s operations managers also use buffer
inventory to address sudden fluctuations in market demand.

9. Scheduling. In this strategic decision area, Procter & Gamble’s objective is to

develop and implement short-term and intermediate operational schedules for
optimum utilization of resources to support business needs. In this regard, the
approach to OM involves fixed schedules for most of P&G’s corporate offices, and
rotating variable schedules in some facilities. For example, Procter & Gamble’s
corporate office employees adhere to their fixed schedules for data processing and
analysis. On the other hand, operations managers apply rotating schedules for
manufacturing processes. Some of these rotating schedules are variable to enable
Procter & Gamble to correspondingly vary its productivity as a way of addressing
changes in market demand for consumer goods.
 10. Maintenance. P&G has the objective of maintaining effective and adequate
processes in this strategic decision area of operations management, in
consideration of productivity and capacity, demand, and resources. Procter &
Gamble’s operations managers maintain dedicated personnel for each process. For
example, for problems involving the supply chain, the company has a dedicated
team that specializes in supply chain management. This operational approach
ensures continuity in Procter & Gamble’s operations management policies and
strategies, leading to consistency in productivity and output of the consumer goods
business.

Productivity at Procter & Gamble

As a global consumer goods business, the Procter & Gamble Company uses an
array of measures or criteria for evaluating productivity. Operations management
uses the results of such evaluation to support P&G’s processes. The following are
notable criteria used to determine productivity in different areas of Procter &
Gamble’s operations:

1. Batches per hour (Procter & Gamble’s manufacturing productivity)

2. Tickets per day (Customer service productivity)
3. Variant tests per month (R&D productivity)