Logistics is popularly considered to be the domain of a certain type of individual: systems-obsessed, jargon spouting - and male. So the announcement in May that the decidedly un-nerdy and, indeed, rather glamorous Lisa Dowding was taking the helm as P&G’s logistics director for the UK and Ireland came as a welcome surprise.
Dowding has spent 15 years with the company, most recently at its fabric and homecare business in Geneva. Now just over three months into the new job, she is frank about the challenges that P&G faces. “My priorities are to sustain the good progress as the business grows, becoming more differentiated and complex.
“Challenge number two is to increase the amount of joint action plan development we do with retailers and number three is to drive innovation and ask where we go with concepts such as retail-ready packaging?”
Meeting these challenges won’t be easy. P&G expects to double its sales by 2010 potentially placing pressure on the supply chain. But forewarned is forearmed, says Dowding, pointing to the £30m being invested into the expansion of P&G’s two multi-category distribution centres in Skelmersdale and London.
At the former, a new automated high bay, set to increase capacity four-fold, is under development, while in London the high bay is being doubled in capacity, with work set to be completed in the next two years.
Another priority is to continue to reduce inventory throughout the chain, she says: “Take out inventory and you take out time.”
The introduction of multi-category DCs two years ago has made a huge difference. “We’ve got to get the balance right in terms of how much stock is in each - it’s gone fantastically well. It helps customers reduce
inventory. We haven’t seen any negatives.” However, as P&G continues to grow - it has 1,700 SKUs - complexity is inevitably added to the supply chain. The only way to minimise this in the long term is to work more closely with retailers, says Dowding. As well as continuing to improve out of stocks, first-time fill rates (a measure of P&G’s capability to fulfil the customer’s order), billing accuracy and on-time arrival, she is keen to develop more joint action plans, or “a mutual hit list of priorities”, as she puts it.
“Joint action plans are the starting point. The whole concept of joint value creation comes back to taking time and cost out of the chain and ultimately to reinvest those costs to grow the joint business.”
There is one area in particular where she is keen to see improvements. “The big area that we need to work with retailers on is demand visibility and joint forecasting. It’s where we need to focus and is something that the retailers see as important.”
She admits that retailers can be a bit cagey about divulging what they see as commercially sensitive information, but believes that it is the only way forward. “We’d like to be able to share new initiatives with retailers, but we’d like them to share promotional forecast information with us earlier. The more we do 30, 60 or 90-day forecasts, the more efficient we could be.”
Another of Dowding’s plans is to resurrect a concept that fell out of favour almost a decade ago: cross-docking. Theoretically, it allows stock to be taken straight to the manufacturer’s distribution centre, through the retailer’s DC and on to the shop floor, without being unpacked, picked or held in storage at any point. When it was first touted in the 1990s, cross-docking failed to take off in a big way because neither manufacturers nor retailers had sufficiently efficient systems in place to create a truly stockless supply chain. That is now changing and with the advent of retail-ready packaging, which further reduces the number of “touches”, Dowding believes that cross-docking could make a lot of sense.
Indeed, it is potentially the ultimate mechanism to reduce inventory, particularly of big and bulky items such as tissue towels that take up a lot of space, she says. “The goal is to be able to move through retailers’ DCs in a stockless fashion. One or two retailers are very interested in doing this.”
P&G plans to conduct trials with a major retailer in the next six months, though she won’t divulge which. It will initially be trialled with one category only, but could be rolled out across other fast-moving lines.
“It takes out time and cost,” she reasons. “We are moving from the point where lead times were five days to a point where they are 24 hours (at the moment from the multi-category depots, they’re 48 hours or less).”
As for retail-ready packaging, which has been driven by retailers and had a decidedly mixed reception from suppliers on the whole, Dowding is an advocate. “Tesco’s wheeled dolleys are a good example of where we’ve got it right. It does put cost in but as long as it drives shelf availability, the benefits outweigh the costs. Anything that gives better service at lower cost or drives cost out of the chain is a good thing. We need to ask: is this right for the customer? If it is, we should be doing it.”
She remains to be convinced, however, by the merits of factory-gate pricing. “Is it really taking cost out of the supply chain or is it just transferring the cost? It doesn’t meet the joint criteria. Backhauling is another one. In our experience, it doesn’t improve service. We can deal with the peaks and troughs easier by managing it ourselves.”
And at the end of the day, she says, it is the responsibility of manufacturers such as P&G to stand their ground if a retailer tries to introduce a new idea that does not benefit both parties. “We need to ask whether it is the right thing for an end-to-end supply chain and whether it is delivering value for the consumer. But if only one retailer wants it, we will look at whether we can do it efficiently. That’s where the concept of differentiation comes in - and joint action. We can create a differentiated menu for retailers depending on their needs.”