Blending OR/MS, Judgment, and GIS: Restructuring P&G's Supply Chain

Abstract

In 1993, Procter & Gamble (P&G) began an effort entitled strengthening global effectiveness (SGE) to streamline work processes, drive out nonvalue-added costs, and eliminate duplication. A principal component of SGE was the North American product supply study, designed to reexamine and reengineer P&G's product-sourcing and distribution system for its North American operations. The methodology developed to solve this problem drew on OR/MS and information technology, merging integer programming, network optimization models, and a geographical information system (GIS). As a result of this study, P&G is reducing the number of North American plants by almost 20 percent, saving over $200 million in pretax costs per year and renewing its focus on OR/MS approaches.