The chief information officer at Procter & Gamble said that a dramatic change in the way the company interacted with suppliers has meant IT delivers better business results.
Filippo Passerini said the consumer goods company, which in the UK sells brands including Gillette razors, Pampers nappies, Wella shampoo and Ariel washing powder, is creating business plans more closely with suppliers and has begun giving them better long term incentives.
A change had become necessary as existing dialogue “sometimes focused around squeezing the most out of suppliers” but there were concerns it would not always nurture successful longer term partnerships, he said.
Passerini said SAP-based P&G, which employs 138,000 employees in 80 countries, now offers more incentives to suppliers and works closely with them on their long term account goals.
“We want collaborative partnerships, not just the traditional getting the most out of suppliers,” he said, at the Forrester Services and Sourcing Forum in London. “With the right collaboration, we can reduce the cost, increase quality and scalability, and improve our abilities to innovate.”
P&G has made $600 million of cost savings in the last three years, Passerini said, and launches eight times as many high tech initiatives each year than before.
In 2003, P&G signed a range of long-term, multibillion dollar IT deals, with HP for infrastructure management and transactional accounting, IBM for human resource services and Jones Lang LaSalle for facilities management. It also works with BT for infrastructure management, and Infosys and Tata for business process management.
Its 3,000 strong internal IT department works on architecture, design, project management and supplier relationships, among other tasks.
Asked whether giving suppliers more say could result in a less strong direction for P&G, Passerini said the company had ensured there were still milestones and “clear measures for success” that suppliers had to achieve. The difference, he said, was that suppliers can now see long term revenue generation from the P&G account, with regular reviews, and this encouraged better team work.
The right collaboration had enabled the company to successfully integrate IT at Gillette onto the P&G SAP platform in 15 months, he argued, “as opposed to three or four years if we’d tried to do it ourselves”. Gillette was acquired by P&G in 2005, and Passerini said over a billion dollars of synergies had been achieved.
Passerini meets every three to six months with the services head management at P&G’s outsourcers, in order to do joint business planning, agree on targets and track results.
P&G uses SAP ERP software across its business, as well as Oracle databases and customer relationship management. It has a shared service centre in Newcastle, and other process centres around the world.