This document outlines an initiative between P&G and Toserba Yogya to reduce inventory levels. It describes the initial situation of high and unmanaged inventory levels driven by a sales-focused relationship. The objective was to reduce inventory by 650 million rupiah without impacting store service levels. Key actions taken included implementing offtake-based ordering, synchronizing deliveries, and developing an inventory tracking tool. These actions resulted in a 59% reduction in total inventory and an improvement in service levels. Key learnings included shifting from a sales paradigm to focusing on inventory and service level relationships, taking a multi-dimensional approach, and ensuring collaborative relationships.

1. Inventory Reduction
ECR Annual Conference
February 2003
Budianto Hariadi – P&G Logistics Manager
Theo Maulana – Toserba Yogya Non Food MD

2. Outline

Introduction

Situation

Objective

Managing The Change

Result – Tool

Key Learning

3. 
Established since 1873 at Cincinnati, Ohio,
US, in Consumer Good industry with
current annual sales of $ 40+ billion.

P&G Indonesia established in 1989.
Distribute Vicks Health Care product line,
Pantene, Head & Shoulder, Rejoice,
Ascend, Oil of Olay, Pampers, Whisper and
Pringles.

Company Mission:
Touching Lives, Improving Life.

4. 



Insert customer facilities picture here.
Shelf
Store
Yogya BIP
Griya Buah Batu
Warehouse
Yogya Sunda
Yogya Kepatihan

5. Situation







Buy more for Out-of-Stock.
Quick decision for urgent, often not data-based.
Inventory not regularly reviewed.
P&G – Yogya together drive sales. (Sales-oriented)
P&G not regularly review inventory.
P&G acted upon OOS only.
100%
95%
52
90%
P&G had high Service Level.
80%
60
50
40
30
70%
20
60%
10
50%
0
Service Level
Inventory

6. Objective

Reduce inventory to increase cash-available at
Yogya without impact to store service level.
650
million
rp.

7. Project Team
Budianto Hariadi – Logistics Manager, P&G
Budianto Hariadi – Logistics Manager, P&G
Eric Tendean – Account Manager, P&G
Eric Tendean – Account Manager, P&G
Shumit Kapoor – MR Channel Leader, P&G
Shumit Kapoor – MR Channel Leader, P&G
Ceejay Bate – Logistics Manager, P&G
Ceejay Bate – Logistics Manager, P&G
Theo Maulana – Non Food MD, Yogya
Theo Maulana – Non Food MD, Yogya
Gunawan T. – Non Food MD Sub Head, Yogya
Gunawan T. – Non Food MD Sub Head, Yogya
Lucia Linda Edi – Non Food MD Manager, Yogya
Lucia Linda Edi – Non Food MD Manager, Yogya
Widjaja Tjandra – MD Director, Yogya
Widjaja Tjandra – MD Director, Yogya
Dede Martono – DC Manager, Yogya
Dede Martono – DC Manager, Yogya
Riana – Kepatihan Store Buyer, Yogya
Riana – Kepatihan Store Buyer, Yogya
Susana – BIP Store Buyer, Yogya
Susana – BIP Store Buyer, Yogya
Chi Yu – Buah Batu Store Buyer, Yogya
Chi Yu – Buah Batu Store Buyer, Yogya
Leony – Sunda Store Buyer, Yogya
Leony – Sunda Store Buyer, Yogya

8. Managing The Change
1.
Assess The Supply Chain from service level,
schedules, target inventory.
2.
Identify major cause of excess inventory
3.
Implement corrective actions
4.
Track progress on Inventory and Service Level.

9. Major Causes & Corrective Actions
From:
Traditional buyer-seller relationship
Sales-oriented
Buy more reaction for stockouts.
P&G acted on stockouts only
P&G had high Service Level
Traditional Inventory Control
Total inventory evaluation
Manual Ordering Process
Judgmental order generation
To:
Supply Chain thinking
Profit-oriented
Offtake based order
P&G acted on stockouts & excess inventory
P&G had high service level, reduce safety
inventory
Inventory Management
Breakdown into types of inventory: cycle
inventory, in transit inventory, seasonal/
promotional inventory, safety inventory.
Offtake Based Ordering
Order generation using built-in formula

10. Project Schedule



Project start to finish was only 93 days.
Getting commitment up-front is key.
Clear objectives, actionable and structured next
steps.

11. Inventory Reduction
Major Action

Store

DC

Total
% Out-of-Stock
Offtake-based order
Offtake-based purchase
order
Synchronize deliveries
Goal
Actual
Reduct
ion
MM rp.
Area
Base
MM rp.
MM rp.
%
323
169
219
32%
1128
633
372
67%
1451
802
591
59%
5.0%
5.0%
3.5%
1.5%

12. Inventory & Service Level
Check point

13. The tool: offtake based order
An excel spreadsheet to support inventory decision, whether to replenish
the product or not.
INPUT DATA
 Sales data
 Lead Time + Order
Cycle
 Promotional
 Actual Inventory
 Exception / Overwrite
CHECK POINT
 # Items Overstock
 # Items Out-of-Stock
 Inventory Days
 Perpetual control

14. STOCK
INVENTORY
CONTROL
SHEET
INVENTORY
TARGET
DAILY SELL OUT
PROMOTION
OR
ALOCATION
The tool
PURCHASE
ORDER

15. The tool
SO R BY I E
T
T M D SC
E
SO R BY I E
T
T M COD
E
Menu:
Sort by item desc.
Sort by item code
Sort by Inventory
IN V E N T O R Y C O N T R O L S H E E T B U A H B A T U
Ta ngga l O rde r: 2/2
O RDER CYCLE :
7
# I m O ut of S toc k :
te
Ta ngga l Pe ne rim a a n Ba ra ng: 2/7
E TR
X
AC T
Loka s i I
nve ntory (Na m a S tore /Guda ng):
LEAD TI
ME :
5
# I m O ve rs toc k :
te
9
10
SOR B I
T
Y NV.
I
CO Da ys (A) :
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
I m Code
te
4500377
4500117
4500155
4510147
4510338
4510208
4510345
4510321
4510154
4510161
4510215
4410867
4410843
I m De s c ription
te
Ca s e
Pa c k
12
Da ily Se ll
O ut (pc s )
ASCEND CLEAR SHPO 100 ML 48
1.5
ASCEND CLEAR SHPO 200 ML 24
0.5
ASCEND CLEAR SHPO 7.5 ML
64
6.1
ASCEND LEAVE ON 180 ML
12
1.3
ASCEND LEAVE ON 50 ML (48) 48
1.6
ASCEND LEAVE ON 7.5 ML (384)
64
6.8
ASCEND LEAVE ON INTENSIVE 50 ML (48)
48
1.3
ASCEND LEAVE-ON INT. 180 ML12
0.9
ASCEND RINSE OFF NORMAL 100 ML (48)
48
0.7
ASCEND RINSE OFF NORMAL 200 ML (24)
24
0.2
ASCEND RINSE OFF NORMAL 7.5 ML (384)
36
3.4
FORMULA 44 120 ML (6'SX8)
6
0.2
FORMULA 44 30ML (6'SX18)
6
0.5
Ta rge t Ma x . S toc k :
Prom o/
F
ore c a s t
(%
)
I
CO
(pc s )
Ending
S toc k
(pc s )
Sugge s t
O rde r
(c rt)
Fina l
O rde r
(c rt)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
25%
25%
18
6
73
15
20
81
16
10
8
2
41
3
8
0
60
64
5
0
60
0
4
1
0
50
5
2
0
0
0
1
0
0
0
1
0
0
0
0
1
1
0
0
0
1
0
0
0
0
0
0
0
0
30
Stoc k:
Be fore
O rde r
(da ys )
0
120
11
4
0
9
0
5
2
0
15
20
3
Ac tua l Stoc k :
S toc k:
Afte r
O rde r
(da ys )
31
120
11
4
29
9
0
5
20
0
15
20
3
La s t
We e k
S toc k
(da ys )
100
64
64
12
13
64
0
10
9
0
50
6
12
1
8
Note
OVERSTOCK
OVERSTOCK

16. Key Learning

Paradigm shift on the relationships of inventory and service
level.

Know clearly where we are now and where we want to be.

Improving the flow of information reduce the inventory.

Multi-dimensional approach; process, system, people.

Collaboration relationship is critical.