For a company with P&G’s product depth and
breadth, a one-size-fits-all inventory strategy is not
optimal. Capacity utilization of high-speed papermaking
operations, in which capital and logistics costs
demand high utilization and turnover for profitability,
differs dramatically from hair-care batch-making
operations in which many stock-keeping units (SKUs)
are made and distributed through a multiple-tier distribution
network. Different businesses require different
modeling methods and tools to determine the
correct inventory levels. In recognition of this need
for different inventory models, P&G has deployed a
framework (see Figure 2) that assigns the appropriate
inventory technology to any business based on its
operating characteristics and complexity. In the next
paragraph, we describe the framework and its applicable
terms.