Promotion Optimization Institute Spring 2013 Summit

Chicken or Egg –Standard System orStandard Processes,which comes first?

P&G’s Journey to get theright data, in the right place,at the right time - Globally

Out

line P&G's Business1

23

What we’ve learned in the TPM area

Our Journey

4 Some Key Learnings &Results

Procter and GambleBackground – and some quick

facts

175 Years of GrowthP&G celebrated a milestone in 2012 that very fewcompanies have achieved: its 175th anniversary.

The Company was founded in Cincinnati in 1837 by William Procterand James Gamble  a candle maker and a soap maker who starteda small business that has grown into one of the world’s mostadmired companies and includes brands that have becomehousehold names, used and trusted by consumers every day innearly every part of the world.

Today, P&G is the world’s largest and most profitable consumerpackaged goods company.

P&G Quick Facts P&G brands touch the livesof 4.6 Bn. people around theworld ~$84 Bn. revenue (2012) 300 Brands sold in over 180countries 25 Billion dollar brands Operations in over 80countries ~60% revenue from outsideNA - 38% from developingmarkets 126,000 Employees

Leadership Brands

P&G Trade Promotions - Quick Facts Program runs a fiscal year cycle in +180countries Number of promotions per customer / yearrange from <10 to 3,000+ Promotions can be for a single brand, or up tothe P&G family of brandsPromotion length varies by typeFunds may be settled in various waysMonies are typically paid in local currencyMultiple “activity types”Strategies for multiple customer formatsImpacts both local and US GAAP reporting

P&G Trade Promotions - Quick Facts• Run year round in close to 180 markets• Number of promos for each customer / yearranges from 10 to 1,000+• Multiple brands involved in a singlepromotion (From 1 up to 20)• Promotions often involve multiple“activity types” ie Display +instore consultant + price.• Different promotion strategies fordifferent

What we’ve learned…

SummaryWork Process Standardization is keyAdvanced Trade Promotion control, analysis and optimization is nolonger optional The information required for promotion and investment optimization isHIGHLY complex

• US data fundamental but insufficient: >60% revenue from outside•This data is highly volatile•Commercially available data is not always available•Most of this data cannot be automated: It’s in the manufacturer’s sales rephead and/or Retailer buyer

Unlike other “systems” projects the users can avoid using the TPMsystemFocus has to be on the E2E processes, not just promotion managementThere is a significant impact to the selling organization – key to successis strong sales leadership

•Following BIC processes and getting the required information isextremely taxing to the sales organization•Data now being visible is an issue

Our Journey …

The Goal: Optimizing our trade spendglobally

Our journey of 10 years and counting…

1. Key Program Considerations2. Building the foundations : Align

externally with Customers3. Standardize internally: Systems,

measures and processes4. Minimize impact to organization

especially the sales force

Program Considerations for today’smarketplaceFunding

Performance basisPayment Options

External Alignment with Customers –P&G Terms harmonization

Foundational work – Essential

Align P&G promotional guidelines with customers:

• Performance and proof of performance requirements

• Funding principles and guidelines

•Payment Options

Active sponsorship from top leadership required Huge task (effort, time and $) Identify (or design) best practices and “globalize”fast Start with good (not perfect)and evolve

Internal Harmonization: Processes,measures and systems

Minimize impact to the organization –especially the Sales Force

Crawl / Walk / Run Apply Shared services concept to salesprocesses Leverage P&G’s collaboration strength/strategy Partner with best in class partner to optimize thetransactional steps Map processes: identify key strategic steps vsadministrative / transactional

Optimizing the transactional steps:Collaborating with partners to collaborate with our customers

Leverage partner’s operational excellence

Strategy: Lift and shift Stabilize Optimize

P&G’s sales force continues to focus on

strategic things

Partner manages system and administrative

complexity

Some Results…and still counting….

40-50% efficiency gain for sales in reported E2Epromotions and payments management time 10x reduction of payment errors 100% SLA compliance and data qualitymeasures Significant increases in quality of data availableforanalysisSimplified approach to changes inprogram specificsOperations charges are up