VI. Short "Collaboration" Case Studies
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A. Wal-Mart and Proctor & Gamble
1. If there are two companies that have made supply chain a household word, they are
Wal-Mart and Proctor & Gamble. These two companies started collaborating back in
the '80s when retailers shared very little information with manufacturers. The two
giants built a software system that hooked Proctor & Gamble up to Wal-Mart's
distribution centers. When Proctor & Gamble's products run low at the
distribution centers, the system sends an automatic alert to Proctor & Gamble to
ship more products. In some cases, the system goes all the way to individual Wal-Mart
stores. It lets Proctor & Gamble monitor the shelves through real-time satellite
up-links that send messages to the factory whenever a Proctor & Gamble item swoops
past a scanner at the Wal-Mart register.
2. With this kind of up-to-date information, Proctor & Gamble knows when to make,
ship and display more products at the Wal-Mart stores. No need to keep products piled
up in warehouses awaiting Wal-Mart's call. Invoicing and payments happen automatically
too. The system saves Proctor & Gamble so much in time, reduced inventory and
lower order-processing costs that it can afford to give Wal-Mart "everyday, low
prices" without putting itself out of business.