Procter & Gamble is a worldwide fast moving consumer goods company with operations
approximately in 70 countries around world. Fem Care is one of the biggest categories
in Procter & Gamble with many manufacturing sites in many locations of the world.
Fem Care Category products are analyzed in 3 different dimensions:
- Product Tier (Quality / Comfort of the product): Tier 1,2,3
- Package Size (# of Pads in a Pack – 5 different Sizes): Single, Value, Trio, Quatro,
- Size of the Pad (surface area of Pad): Regular, Long, Night
In line with consumer needs Tier 1 (premium, high quality) products are decided
to be launched in market.
1. In order to be able to plan production & distribution, we need to forecast the
shipment volume of products. Please make a projection of 1st year volume with the
data presented below:
In the market there are 25 million total consumers who consume pads regularly. 20%
can afford this product tier group.
Plan is to reach 20% of the target group via marketing activities. Market studies
show that 15% of consumers who try the product become loyal consumers and repurchase
Average consumption is 25 pads/month per consumer.
On top of consumption, there is a volume that is shipped to trade prior to launch
fill the shelves and back stores. Shelves need to be kept full at all times so that
the consumers find products when they need. On average, 1 month of consumption is
at trade for this purpose.
2. This product is currently produced in Budapest Plant and this is not preferred
due to excessive supply chain costs. NPV calculations will be done to check the
feasibility of the localization option.
a) What are the inputs to be considered during the NPV calculations?
Now that the decision has been made for localization and there is a stable demand
of 5% of market volume monthly; one of the production lines from Budapest Plant
will be relocated to Gebze Plant. The lead time for the equipments is 3 months and
line start-up period is estimated as 15 days. Assuming that the line is producing
1400 ppm and that the current production can be done by 5 operators per shift,
b) What steps should be followed to start-up the new line and
launch the new product?
c) What would be the shift pattern to meet the consumer needs?
- PPM: Pads Per Minute
- NPV: Net Present Value
- 1 Shift: 8 Hours
- 1 Year: 350 Working Days