In early 1988, top executives from P&G and another mass-merchandise chain met to discuss
ways to improve logistics in the channel. The retailer was warehouse constrained due to rapid
growth and was relying heavily on costly LTL shipments to meet demand. LTL shipments were
expensive for both partners, and made it difficult for the retailer to increase diaper sales. During
the meeting, the CEO of the mass-merchandise chain suggested that P&G simply ship products on a
just-in-time basis when needed using the retailer's actual sales data. Deals and promotions would
be replaced by a constant allowance that resulted in an equivalent net-price for the retailer to
remove forward-buy incentives.