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Procter & Gamble was founded in the US in 1837, by William Procter from England and James Gamble from Ireland. Both men were travelling through the Unites States when they met by chance in Cincinnati.
Having decided to go into business together, they founded a small soap and candle company that grew and thrived to be become, according to Fortune Maga- zine * , one of the world’s most admired companies. In our 2012 global SRM report, we assessed P&G to be the single leading company according to our SRM maturity criteria. Consequently, we were keen to invite them to share some insights into how they have developed and maintained this level of excellence. We were introduced to Mary K. Wagner – Director, P&G Purchases, and currently on assignment in China – who kindly agreed to answer a few questions. What were the original business drivers for your SRM programme? P&G has a long history of positive engagement with its suppliers and sees SRM as a natural extension of this. P&G’s SRM programme was established to pro- vide a rigorous methodology for managing supplier relationships, to deliver sustained business results over time. It was created to drive supplier-generated value, which would enhance P&G’s competitive posi- tion with both our customers and consumers, in a way that clearly links to our compelling desire to improve and win in the market place. How have these business drivers changed and how has SRM adjusted to remain aligned? A key challenge for our SRM work has been to remain aligned to our business strategy as it has evolved. This has essentially meant operating in new geogra- phies and new markets, with new products and new services. It has required our SRM work and thinking to evolve – from an increased need to focus on the most important relationships, to the development of new relationships in emerging markets and new industries, and to the creation of new business mod- els, particularly in the services area.
What were the major barriers and how were they overcome (internally and with suppliers)? Given the size and scope of P&G’s global business, we clearly have to work at effectively managing our com- plex supplier relationships. These relationships, which touch P&G inmany ways, need solid linkages, constant communication, good systems, clear measures, and resources that can effectively coordinate both strategic direction and day-to-day issues over time. Relation- ships are about people and can easily be affected by personnel changes, shifts in business direction, and miscommunication. Ensuring strong leaders are in place to guide the overall relationship is critical to ensuring both parties are getting their needs met. As purchases has expanded its participation in indi- rect spend areas, we have had to evolve our participation in markets which previously were man- aged directly by leaders in the marketing, media, or IT services areas as examples. Bringing our solid rela- tionship management systems, processes and thinking into these areas has required some rewiring of how and where supplier relationships are man- aged. This has taken time, but the overall value that has been realised by this change has resulted in enormous suction for our structured SRM efforts.
* Fortune Magazine, 3rd March 2011 - P&G ranks 5th overall and 1st in their industry sector in Fortune Magazine’s World’s Most Admired Companies
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