The problems which the company faced in the start that when they linked EDI with CRP

was
instead of cost reduction. There had been an increase in the cost incurred by the firm. It was also
because of the fact that P&G was drastically adopting technology and they didnt even conduct
proper tests before the final implementation of the system.

A test was conducted which was associated with ordering process with large mass merchandiser,
the essence behind this was to change the way diapers were ordered and distributed in an effort
to reduce retail store stock-outs, lower product, acquisition cost and minimise total inventories
but due to the storage constraint, retailers had to purchase diapers in small quantities. Retail
stores then faced stock-out problems and cost of these small orders delivered directly to the store
was high for both P&G and the retail chain. As a result of this the implementation of the system
had a negative effect on the costs. According to me, it appeared as if the company was quite
over-confident that the system will fit perfectly in the supply chain and therefore, additional cost
of research should not have been incurred. Due to this the company didnt achieve what they
thought they could from the system.

Later, the P&G CRP system could be bought by manufacturers as a service provided by IBM (as
P&G had sold their CRP system to IBM). P&G wanted this innovation to be rapidly adopted by
industry, and once again the company was confident enough to believe that every retailer has a
market share which will allow it to invest in the system. In my opinion, it would have been better
for the company, both strategically as well as economically if they had been the only
technological leader in innovation. With the outsourcing of this technology, there competitor can
also have that technology and increase their value chain.

In the end of the analysis, it can be suggested that the company should have registered retailers
on their channel so they can distribute and supply their product and having CRP system link at
both ends. Secondly, the pricing strategy was value based and the company had not taken into
account the effect of inflation which can cause problems in the long run of the business. Later on
a new pricing plan was restructured, this was basically a necessity as CRP expansion could not
be implemented in the presence of old pricing plan. So, the new pricing plan would cost time,
resources.
According to the nature of economics, there are certain variables that effect value pricing such as
supply and demand. These should have been incorporated in the pricing strategy of the company.
Other than that, the company must have a proper channel for raw material purchase in order to
weaken the artificial forward buying. In the case the key decisions which were taken by the
company was to implement CRP implementation, OSB changes, ECR and pricing restructure but
did they take their employees and managers on account for that? Did they have proper training
and development of employees before implementing the technology? The customer relation
management system was properly managed? These were the questions which need to ask and
analyzed after reading the case.