Procter & Gamble - April 2021

PROCTER & GAMBLE

How IWS is driving operational excellence IN ASSOCIATION WITH:

DIGITAL REPORT 2021

HOW IWS

IS DRIVING OPERATIONAL

EXCELLENCE

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Manufacturing mastery of P&G’s IWS delivered cost savings of up to $1 billion despite the pandemic, says Maciej Stawicki, Global Manufacturing VP powered to a large extent by IWS,” he said.

“We had a strong first half of the fiscal year with impressive sales. This was enabled by the Product Supply organisation and practically uninterrupted operation of manufacturing sites driven by IWS, while in

MACIEJ STAWICKI TITLE: VP GLOBAL MANUFACTURING INDUSTRY: CONSUMER

EXECUTIVE BIO

P

rocter & Gamble’s iconic family and home care products flew off supermarket shelves around the world during the past year - a surge fueled by the COVID-19 pandemic.

Who would have thought that more than 180 years after Mr. Procter (a candlemaker) and Mr. Gamble (a soapmaker) opened their doors in Cincinnati promoting the ‘highest grade soaps and candles’ the company would again be focusing on its basic household hero products as they supply a world working from home during lockdown.

Despite COVID-19 causing massive distribution challenges for some companies, P&G has leveraged their manufacturing and supply chain resiliency to enjoy a competitive edge and always ensure their consumer products, from Charmin to Mr Proper, are on the shelf.

One key to success for such operational excellence is P&G’s Integrated Work Systems (IWS) which works on two principles; the power of zero defects and losses and the power of 100 per cent Total Employee Ownership (TEO).

“The power of IWS, has not only enabled us to go through the pandemic with minimal impact, but in some respects, has made our organisation stronger by building the learning into how we operate going forward,” said Maciej Stawicki Global Manufacturing Vice President speaking from his office in Geneva.

“Looking at the last calendar year, we continued to deliver to the company close to a billion dollars of total delivered cost savings

Maciej Stawicki is the P&G Global Manufacturing Vice President.

He owns the Integrated Work System capability building program for 113 manufacturing sites across the globe.

Stawicki earned his MS in Mechanical Engineering from Warsaw Technical University and worked as Process Engineer in CNC Machine Tools Design Center before joining P&G in 1993. Since then he successfully performed several manufacturing roles in several countries including leading three plants in Saudi Arabia, Poland, and Germany. Prior to his current role, Stawicki led the Baby Care category Product Supply organisation in India, Middle East, and Africa region.

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“Looking at the last calendar year, we continued to deliver to the company close to a billion dollars of total delivered cost savings powered to a large extent by IWS.” MACIEJ STAWICKI

GLOBAL MANUFACTURING VICE PRESIDENT, PROCTER & GAMBLE

parallel ensuring highest safety standards and effective COVID protocols. We were able to sustain our results while sometimes a significant number of our employees in our factories had to stay at home.”

MASTERY IN MANUFACTURING P&G is renowned for its ‘multiple decades of mastery in manufacturing, supply chain excellence and operations’ and with IWS P&G continues to be recognised. Industry accolades reflect this as the company has been awarded Supply Chain Master distinction from Gartner, Supplier of the Year from Walmart and close to 100 awards for individual plants across the world for example, the most recent “Fourth Industrial Revolution Lighthouse 6

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Factory Award by the World Economic Forum for P&G Lima, USA and P&G Amiens, France plants.

According to Stawicki, IWS has “evolved beyond the manufacturing discipline” and is now a fundamental element of an E2E supply chain blueprint for others to follow. It can be leveraged by other companies and shows a step-change in results within a timeframe of 16-20 weeks.

P&G partners with consultants from Ernst & Young to implement the systems in more than 400 non-P&G factories around the world.

“I think that the partnership with EY is unique. Together we can offer help to other global companies to reach worldclass standards,” he said.

PROCTER & GAMBLE

1837

Year founded

99,000+ Number of employees

$71bn revenue

$14bn

TDC savings in the last 10 years

$1bn

of cost savings over the last calendar year largely driven

by IWS

DID YOU KNOW...

ALLIANCE WITH ERNST & YOUNG (EY) P&G is now sharing the manufacturing excellence of IWS with other companies around the world - to improve their supply chain performance - via their partnership with EY. The alliance between P&G and EY combines their supply chain and manufacturing excellence capabilities to bring a different approach to attaining improved end-to-end supply chain performance and higher levels of manufacturing reliability.

The combination of P&G’s IWS program and EY’s consultants for implementation (including smart factory) is now used in more than 400 non-P&G factories around the world.

“On one side, we have P&G with multiple decades of mastery in manufacturing, supply chain excellence and operations. On the other side, we have EY who has expertise in delivering global transformation programs. Together we can offer help to other global companies to

reach world-class standards,” said Stawicki.

An example of IWS working in practice is an automotive supplier who implemented it and reduced unplanned stops by 90 per cent and unplanned downtime by 96 per cent.

“It was so successful that the company decided to roll out the IWS program across all of its sites,” said Stawicki. “The important thing to note is this does not have to take a long time.

We have a program that enables achieving breakthrough results within the timeframe of 16-20 weeks.

“Within this timeframe we have multiple examples where companies were able to reduce the unplanned stops by more than 50 per cent and increase the MTBF by a couple of hundred per cent. It doesn't have to be a very long journey to see the breakthrough results. It's also sector agnostic as it works for automotive, pharma, food companies and heavy industry,” he said.

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TOP HIGH GROWTH CATEGORIES IN 2020 Home care - Surface cleaners Family care - Toilet paper, paper towels

COMPETITIVE ADVANTAGE OF IWS: • Operational excellence driven by IWS is crucial to the delivery of Operating Total Shareholder Return (O-TSR) goals in every node of the E2E supply chain.

• IWS is the productivity enabler which drives convergence and focus on cost, cash, predictability and responsiveness.

• The framework applies to any industry, product type or form and drives a stepchange improvement in performance from any baseline or level of maturity.

• Enables financial flexibility (cost and cash) for re-investment in disruptive and transformative innovation that drives growth and shareholder value.

PEOPLE POWER OF IWS While many multinational companies struggled during the pandemic, P&G already had an infrastructure in place to navigate the challenges with the use of standard work processes that were digitally enabled in their plants and regional Planning Service Centres.

Immediate actions were triggered in line with the three top company priorities: ensuring the safety of employees and their families, providing the businesses with uninterrupted supply and supporting local communities.

“We were able to activate existing, strong business continuity plans immediately. Despite the fact that people 8

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5bn

P&G consumers

113

P&G factories implement IWS

400+

non-P&G factories around the world have IWS as a result of alliance between P&G and EY

$10bn was achieved

by Pampers

“The power of IWS, has not only enabled us to go through the pandemic with minimal impact, but in some respects, has made our organisation stronger by building the learning into how we operate going forward.”

MACIEJ STAWICKI

GLOBAL MANUFACTURING VICE PRESIDENT, PROCTER & GAMBLE

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Expect more.

EY: Alliance with P&G role model for operational excellence

Watch the EY and Procter & Gamble partnership

Unlock the potential of your business and elevate performance with EY’s smart factory A successful alliance between Ernst & Young (EY) and Procter & Gamble (P&G) which - achieves operational excellence in manufacturing - is now used in 400 smart factories resulting in savings of $15b.

accountability. Lean manufacturing focuses on: • A drive to zero losses • 100 per cent employee ownership

The 10-year partnership between consultants EY and household product brand P&G - best known for Pampers, Gillette and Ariel - focuses on improving the end-to-end supply chain with an Integrated Work System (IWS). This smart factory model is now helping other global manufacturers and SMEs optimise their business.

What is a smart factory?

“We’ve taken an industry leader in performance, coupled it with an industry leader in operations consulting and transformation and together we’re offering organisations the ability to deliver transformational results,” said Craig Lyjak, EY Global Smart Factory Leader.

“It’s great that we can go into a site and have significant capacity improvement in a short period of time,” said Lyjak who pointed out EY has now renewed the contract with P&G.

Uplift in performance

What is IWS? P&G’s IWS empowers every employee through a vertical line-centric model that establishes clear ownership and

Cyber-physical systems monitor the physical processes, provide analysis and automate controls and decision-making to improve manufacturing efficiency.

By boosting overall equipment effectiveness (OEE), the smart factory helps manufacturers increase revenue and defer capital investment.

“When you combine IWS and EY’s smart factory this can quickly accelerate and sustain performance,” said Lyjak.

“From a timeline perspective there is generally a performance change in about eight to 12 weeks and within four to six months, you will have broad acceptance that it’s not just a blip but will continue.”

Lyjak pointed out that it is not just solving one problem but taking it step-by-step to solve the next and continue that uplift.

Learn more now

PROCTER & GAMBLE

Proctor & Gamble: How IWS is driving operational excellence

were working from home, the the teams and digital tools are brain of the whole supply leveraged to support daily chain was practically intact work,” said Stawicki. when the pandemic hit,” One example of this said Stawicki. being put into practice “When we look at was a factory in India the performance of following the town going into sudden our sites during the pandemic we have lockdown. seen a relatively minor “We were able to impact. This can be restart the facilities measured in terms of only within a matter of days MACIEJ STAWICKI GLOBAL MANUFACTURING two to three per cent of the despite the fact the VICE PRESIDENT, overall equipment efficiency plant was only managed PROCTER & GAMBLE loss for a very short time. Then by a reduced `number of immediately we got back to target - this technicians while managers had to was clearly a reflection of the power of IWS.” work remotely. This was enabled by the These superior results were enabled by fact that every single person in the plant a combination of extraordinary people, knew exactly what standards to follow standards and digital (SEE INFOGRAPHIC). and, supported by the digital tools, did “All our people know their IWS tools and not require a manager behind them. This how to use them, standards are in place for is the power of IWS,” he said.

“P&G has multiple decades of mastery in manufacturing, supply chain excellence, and operations.”

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“We continue to progress a strategy to shorten our supply chains and to move our supply points from single source materials to materials that can be sourced from multiple locations. So the pandemic also accelerated this journey and helped us move faster towards our vision.”

Serendipitous strokes of genius by P&G’s people that have defined the brand:

EXECUTIVE BIO

OVERALL EQUIPMENT EFFECTIVENESS One of the most critical metrics of manufacturing excellence is overall equipment effectiveness (OEE).

“OEE is one of the key indicators we look at and compare performance across our plants as it has a major impact on cost and cash,” said Stawicki who pointed out that from a cost standpoint a high OEE performance means minimal losses and reduced waste.

“At the same time, operating equipment with a higher efficiency means we have much higher utilisation of our assets. So

FIRST BILLION DOLLAR BRAND

Pampers: When P&G researcher Vic Mills became frustrated with changing his newborn grandson’s cloth nappy he decided there must be a better alternative. In 1956 he asked R&D to work on developing the first disposable nappy. This led to the creation of Pampers - the number one nappy brand worldwide, serving 25 million babies in more than 100 countries and P&G’s first brand to generate more than $10 billion in annual sales. P&G now has 22 billion-dollar brands.

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we need less assets to produce the same volume. This means we are able to defer capital investments - often not only associated with incremental packing machines but sometimes associated with building a new plant - so this has a massive impact on deferring capital spending which is why OEE is so critical.”

Stawicki pointed out that one of the most important things of manufacturing excellence is preventing defects in a product which can be detrimental to building trust with our consumers in our brands, especially in the world of social media. “This is why ensuring that the zero defects are produced and shipped to the consumer is absolutely fundamental.”

TOUCHLESS FLOW OF INFORMATION P&G’s digital journey is also critical for the company to retain its competitive advantage.

“It can only be fully adopted when we create the right culture - what we think

ADVANTAGE OF P&G’S AGILE MANUFACTURING P&G’s manufacturing teams across the world harnessed their innovation capabilities to provide additional relief beyond their brands to help during the pandemic.

In Northern Europe, the agility of P&G teams enabled the production of 28,500 litres of hand sanitiser supplied to the WHO Formula 1 - the equivalent of 9.5 million hand washes.

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and what we look at – enabling us to engage and energise our people to achieve the current performance where certain losses like breakdowns and minor stops have been practically eliminated to zero,” said Stawicki.

“So as a next level loss, we look at the digital journey enabling touchless flow: creating end-to-end supply chain touchless flow of the information and in the other direction, touchless flow of the materials and product. Eliminating touches is the next vision we are progressing against and energising our organisation to deliver.”

STAWICKI POINTED OUT THE FOUR STAGES OF P&G’S DIGITAL ROADMAP: 1 | Build the right organisation structure in the manufacturing sites. This includes a strong partnership with the IT organisation and the right capability for the people in the organisation.

2 | Create the infrastructure, which is resilient and critically cyber secure, as well as ensuring everyone has the core set of solutions implemented as the foundation to build from.

3 | Harvest value creation with the integration phase. Unlock the significant benefits by integrating across the digital platforms and applications to drive a seamless flow of data to fully leverage the power of the digital transformation.

4 | Exploit what is possible in the amplification phase. The final phase is to leverage the power of the cloud to drive higher levels of analytics from digital twins and machine learning as well as enabling distributed innovation.

PROCTER & GAMBLE

“We had a strong first half of the fiscal year with impressive sales. This was enabled by the Product Supply organisation and practically uninterrupted operation of manufacturing sites driven by IWS” MACIEJ STAWICKI

GLOBAL MANUFACTURING VICE PRESIDENT, PROCTER & GAMBLE

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“All our people know their IWS tools and how to use them, standards are in place for the teams and digital tools are leveraged to support daily work” MACIEJ STAWICKI

GLOBAL MANUFACTURING VICE PRESIDENT, PROCTER & GAMBLE

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JOURNEY TO INDUSTRY 4.0 Stawicki explained that you can only leverage the smart factory and Industry 4.0 capabilities if you have a base fundamental excellence in place.

“If you have this in place then, of course, there are a lot of opportunities that come with a smart factory. The more advanced capabilities with machine learning or AI will get you to the next level and eliminate much more difficult defects that were not possible with the base human analysis.

“If you first maximise productivity gains through eliminating obvious work process inefficiencies and losses in the site, then bringing in automation makes sense. It builds on organisational gains and brings the next level of productivity improvement via automating high frequency, non-value added physical tasks. Similarly, you can leverage Robotic Process Automation (RPA) to eliminate repetitive tasks in the work processes.

“Finally, once you have a very reliable, predictable and agile E2E supply system you can effectively leverage extremely powerful capabilities across the end-toend supply chain like digital twins where you can model “what if” scenarios such as a pandemic,” he said.

Reflecting on what ultimately drives the company to future growth, Stawicki concluded: “The P&G mantra is that people are the main asset of the company. As our former CEO, Richard Dupree said: ‘If you leave us our money, our buildings and our brands, but you take away our people, our company will fail. But if you take away our money, our buildings and our brands, but you leave us our people, we will rebuild the company in a decade.’”

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