The Challenge

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, Mega
  • 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 product.

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?

Additional information:
  • PPM: Pads Per Minute
  • NPV: Net Present Value
  • 1 Shift: 8 Hours
  • 1 Year: 350 Working Days