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Behind ONE Of ThE WORld’s bIGGEsT MaNufacTuRERs OvERhauls ITs sysTEMs
aNd PROcEssEs—WITh fEW IN ThE OuTsIdE WORld EvER NOTIcING.
2012 PMi Project of the Year aWard finalist
BY Keith jacKson ii
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That was the challenge facing Procter & Gamble (P&G), the global con-sumer products company, when it needed to enhance its nearly 20-year-old ordering, shipping and billing software and work processes.
This was no simple IT patch, however: The system served the very heart of P&G’s US$84 billion business. The company knew it had to identify, mitigate and manage any and all risks to the new system.
“This was the equivalent of heart transplant surgery,” says Bruno Pont, P&G associate director of global business services, Geneva, Switzerland.
Covering North America, Europe and 150-plus export markets, the project would directly impact a diverse portfolio of 250,000 products that includes everything from laundry detergent to pharmaceuticals to snacks. In a single day, the IT system typically juggles 18,000 orders shipped to 150,000 retailers on 8,000 trucks—accounting for US$200 million in revenue.
Any glitch would generate unwanted attention and potentially mean a hit to the bottom line.
large systems at the core of even the biggest,
and most successful, businesses sometimes need upgrade projects
fraught with risk.in a single day, the it system typically juggles 18,000 orders shipped to 150,000 retailers on 8,000 trucks—accounting for Us$200 million in revenue.
bruno Pont, left, and francisco fraga, P&G
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1 July 2010: Western Europe pilot: france
the start of soMething neWThe original plan called for a simple IT upgrade project, but that changed as P&G leaders recognized the project’s potential to produce more benefits. Implementing a new, more sophisticated system could also help the com-pany minimize lost sales, create efficiencies in the supply chain and drive down costs across the enterprise.
“These were all incredibly important issues that the company needed to address,” says Mr. Pont. “This project provided an excellent opportunity to not only fix an outdated system, but also to move the company forward.”
The P&G project was launched in 2009 with two driving goals: to collect and respond to feedback in real time and thereby create more compelling promo-tions and increase sales, and to identify the best ordering, billing and shipping processes for shipping products to target locations.
To ensure the revamp would align with those business goals, P&G’s global business services group created a project charter that included a business case, project assets, enterprise environmental factors, and a summary milestone schedule and budget.
“We knew it would be a project that would take several years,” says Patrick Arlequeeuw, P&G’s vice president of global business services, Antwerp, Bel-gium. “We spent some time on making the business case: What did we want to get out of it? What were the business capabilities we wanted to have? What is the investment and return needed as such? The interesting part is that the preparation time was almost half the project.”
The team also created a project statement of work that outlined the busi-ness needs and scope description. The overriding message was clear: The sys-tem would protect business continuity, deliver computer cost reduction and improve governance.
WorK this oUtThe project was one of the largest in the company’s history, and carried great risk along with the potential for big benefits. The team took a good, long look at what could go right—and wrong.
“We looked at three sources to identify our risks,” explains Francisco Fraga, director of IT, P&G, Cincinnati, Ohio. “First, we really looked at what has gone well or not-so-well in other previous implementations in other companies. So, we really looked externally to learn from those.
“At the point we’d started this project, we’d already done 70 smaller success-ful implementations of the software in the order, shipping and billing area of P&G, so we had a wealth of knowledge internally.
“Finally, we reached out to our retailers, and I personally met with many of our top retailers in North America to understand their own experiences with other vendors that had gone through similar transformations.”
Go to MarketStrategy
250,000+ productsPAYMENT US$200 million/day
SHIPMENT 8,000 trucks/day
ORDER 18,000 orders/day
P&g’s dailY ordering, shiPPing and Billing Process
“the interesting part is that the preparation time was almost half the project.” —Patrick arlequeeuw, P&G, antwerp, belgium
sight UnseenThe P&G team rolled out the transformation of the work process, organization and systems in waves for a given set of geographies (in Western Europe) or customers (in North america).
1 January 2011: u.s. wave 1
1 April 2011: u.s. wave 2; Germany, austria, switzer-land, belgium and holland
1 May 2011: united King-dom and Ireland
1 July 2011: u.s. wave 3: all customer exports and interplant systems
1 October 2011: denmark, finland, Norway, Poland, Portugal, spain and sweden
1 November 2011: Italy
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From these discussions, the team identified three major risks: n Loss of business due to an inability to process orders in a timely wayn Loss of credibility because of a lack of quality in the shipping process n Loss of sales as competitors took advantage of the transition
To mitigate and manage those risks, P&G introduced a board that included three of P&G’s five regional presidents, along with all 14 of P&G’s business unit presidents.
The move proved vital. Amidst one major acquisition deal, for example, the board identified potential human resourcing issues that could have thrown off the project. To minimize disruptions to the schedule, P&G reallocated staff from other areas of the company.
Given the complexity of the project, P&G also implemented a central technical and project management office team in each region. Local market teams mostly gathered in country head offices, but col-location of big parts of the teams was required for critical weeks such
as training and integrated testing. To build esprit de corps among the team members in more than 50 countries,
leaders implemented networking events when central and local resources were mixed for specific project periods. They also encouraged management visits that featured inspirational speeches, milestone recognition and celebrations for the completion of particular phases.
noW or neverWith the project encompassing thousands of customers, products and retailers
from small shops to one of its largest global retail partners, the team kept a keen eye out for fea-tures being added. “With a proj-ect like this, it is so easy to add scope,” says Mr. Arlequeeuw.
Looking to keep the project on track, the team established a set of global workshops to refine the scope as the project progressed.
Headed by a business leader, a subject-matter expert and an IT leader, the workshops used techniques such as brainstorm-ing and mind mapping to docu-ment potential gaps in scope. The results allowed for plan-ning, tracking and reporting of any given requirement through-out the project life cycle.
The board also discussed pos-sible project enhancements—and dug deep to see if the potential benefits were actually worth it.
As implementation drew closer, P&G conducted vigorous testing to simu-late the daily order cycle. Once the system was ready, the team executed the rollout in three waves.
To keep things running smoothly, so-called “war rooms” let team members “stay on top of what was going on inside the project and react to anything out of the ordinary,” says Mr. Pont. The goal was to communicate everything that happened on the first day of implementation to other teams across the world.
“This project was all about changing everything with the external world not noticing at all,” says Mr. Pont.
It worked. “One of the things I feel very proud of was how we were able to mitigate
the risks successfully and really be able to have a zero impact on the day-to-day operations of our business and our retailers,” says Mr. Fraga.
Shipping times and customer satisfaction improved with the new system—though to the outside world, it just seemed like business as usual. PM
“at the point we’d started this project, we’d already done 70 smaller successful implementations of the software in the order, shipping and billing area of P&g, so we had a wealth of knowledge internally.” —francisco fraga, P&G, cincinnati, Ohio, usa
Watch a video case study of the Procter & gamble project on the PMi Youtube channel.
bruno Pont, left, and
francisco fraga, P&G
P&G world headquarters, cincinnati, Ohio, usa