Procter & Gamble plans digitisation drive

31 August 2010

CINCINNATI: Procter & Gamble, the consumer goods giant, is seeking to become the "most technology-enabled company in the world" to enhance performance across its operations.

Writing in P&G's 2010 Annual Report, Bob McDonald, its ceo, argued the shift to a model centred upon "touching and improving the lives" of shoppers was already delivering tangible benefits.

"We believe a purpose-inspired growth strategy is intrinsically rewarding and motivating," he said.

"It unleashes creativity, commitment and peak performance in P&G people. It attracts talent and partners. It builds goodwill with external stakeholders."

The Cincinnati-based firm's organic sales climbed 3% during the last financial year despite the recession, helping reverse an approximately 0.5% decline in global share over the previous 12 months.

Moreover, the owner of Pampers and Gillette expanded its customer base by 200m consumers to 4.2bn, moving towards the ultimate target of 5bn in 2015.

Per capita expenditure also increased in 70% of its largest markets, compared with 60% for the 2009 fiscal year, and worldwide household penetration jumped by 2%, to 61%.

"Innovation has been - and will continue to be - at the heart of our success," McDonald continued, citing the company's annual investment nearing $2bn in R&D as proof.

"In fact, we invest about 50% more than our closest competitor and more than most of our closest competitors combined," he added.

"This leadership level of investment is multiplied by our global network of external innovation partners, which leads to an effective investment in innovation that far exceeds the reported spending."

Procter & Gamble was credited by SymphonyIRI, the research group, with launching five of the ten highest-selling FMCG products in the non-food sector in 2009.

This list encompassed Tide Total Care, Gillette Venus Embrace, Bounty Extra Soft, Always Infinity and Secret Flawless.

"We have a strong multiyear pipeline that will continue to drive growth in the future. The impact of this innovation program is already evident," said McDonald.

At present, P&G competes in just 50% of possible segments in its 50 biggest countries by revenue, showing an obvious way to bolster its reach.

"Our objective is to fill out our product portfolio in every category and then expand to the most relevant geographic markets," said McDonald.

Innovation also fuelled a surge in marketing activity, with the number of impressions generated by P&G brands rising 20% during the last year.

"Decades of experience have demonstrated that making people aware of our innovation and motivating them to try our new products is the key to long-term success," said McDonald.

"This is the foundation of brand building, and P&G is committed to investing sufficiently and consistently to support innovation and build brands that thrive for decades."

Another major current initiative is the "digitisation" of processes throughout P&G's corporate structure, which will contribute both to trimmings costs and facilitating greater flexibility.

"We want P&G to be the most technology-enabled company in the world," said McDonald. "We are targeting a 20–25% reduction in some spending areas and we are looking for a sevenfold increase in real-time data.

"By getting the right data to the right decision makers at the right time, we can become increasingly efficient and productive."

One form this has taken is a "Control Tower" introduced to manage transport systems, cutting the amount of empty truck journeys by over 15% to date.

Data sourced from Procter & Gamble; additional content by Warc staff