Unilever ranks highest among supply chain management
Supply chain design is one of the most important aspects of a company’s ability to compete in the marketplace as well as a main contributor for growth and success. The design process can be extensive as there are many interconnected parts working together to deliver products in an efficient manner. A successful supply chain design moves to reduce costs, improve quality, eliminate or combine unnecessary steps, and produce faster cycle times for more satisfied customers. One company that has worked hard to deliver these competitive advantages is British-Dutch consumer goods company Unilever. Unilever is one of the worlds leading suppliers of fast-moving consumer goods with Foods, Home Care, and Personal Care being their three major divisions. A few notable brands Unilever owns includes Ben and Jerry’s, Axe, Dove, Skippy, and Dawn.
At the beginning of 2000, they began a five year growth strategy which included a substantial restructuring of their supply chain operations. Their new focus was on five main areas of management, target organization, process identification, supplier involvement, supply chain executives, and technology. This new initiative included focusing on key brands that were performing well and leaving behind those that were trailing. Dove soap, Lipton tea, and Magnum ice cream were a few of the brands kept after Unilever cut their portfolio from 1600 to 400. They made a significant change in the number of manufacturing plants as well, by cutting their 380 factories to 150. They also installed new electronic communication systems to collect and share data throughout the company. They wanted to accelerate the simplification of the supply chain and form a collaborative relationship between the information gathered from consumers and management.
As a result they achieved 14.24 billion dollars in savings in 2003 which elevated them to the forefront of the consumer packaging industry. Since then, they have created a drive for sustainability. They are committed to improving and enhancing all characteristics of their supply chain to be as sustainable and eco-friendly as possible. By 2020 they even expect to sustainably source 100% of their raw materials. Unilever believes that leaving a smaller carbon footprint will ultimately reduce their costs and double the size of their business.
Do you agree that sustainability is a viable growth strategy for fast moving consumer goods brands?
Do you think that the adoption of sustainable practices is cost effective?
https://www.hollingsworthllc.com/best-supply-chains-companies-around-world/
https://www.slideshare.net/RahulAuddya/unilever-supply-chain-management
https://www.logisticsbureau.com/4-best-in-class-supply-chains-to-watch-and-learn-from/
It is always interesting to read about story’s such as this about a company having large savings due to streamlining their supply chain. It makes me wonder how more companies are unable to follow in their footsteps and save money. If they can source their own materials they can reduce their carbon footprint as Isabella said and their costs. The other benefit of them reducing their carbon footprint is that this would lead to good pr for the company and potentially lead to an increase in sales. Among the changes Unilever is making is they are adopting new technology. They are partnering with a start up company Ioniqa. Ioniqa “has developed a proprietary technology that is able to convert any PET waste – including coloured packs – back into transparent virgin grade material”. This technology if successful would enable them to turn waste into food packaging rather easily and very efficiently (https://www.newfoodmagazine.com/news/65924/unilever-plastic-packaging/). This would reduce costs, but also improve their carbon footprint and improve the environment as a whole
I believe yes in some cases the adoption of sustainable practices can be very cost effective for companies. Usually, most companies through this adoption are able to utilize their resources more efficiently and get the most out of their practices. It seems to me that these companies were so effective at reducing costs was because all of there operations were streamlined together. In addition, there was increased levels of communication within each process. We were able to see the value of communication in supply chain management through our activity in class.
I think Zach brings up a good point in regards to PR. Reducing one’s carbon footprint may or may not decrease costs altogether, as non-green practices may worsen the supply of natural resources available, but I feel it has become almost expected by consumers for companies to make concerted efforts to be more environmentally conscious; otherwise, they will be critiqued harshly for not doing so. Furthermore, looking at this article from 2017, another big factor is that with consumers paying more and more attention to eco-friendly companies and their products, investors are in turn doing the same, unsurprisingly, putting greater pressure on corporations to implement eco-friendly practices if they have not already begun to do so. Again looking at the article, based on market data, around 25% more companies have advertised the environmental benefits of their products in 2017, and 40% of all companies either are or have implemented plans to make their organization more environmentally conscious.
Source: http://www.greenmatters.com/living/2017/08/07/ZiYtXd/companies-go-green
I find Unilever’s approach to their business strategy quite unique. It is interesting how they quickly dumped numerous companies and shrunk the size of their warehouse portfolio. With these extra funds on hand they can afford adopting to sustainable practices. As sustainability continues to help companies gain demand for their products even though prices increase, Unilever should have a pleasant future. Other companies when attempting to move towards sustainability do not have the financial capacity to adopt smoothly. I think because of Unilever’s business strategy, the company will be able to yield success as they enter the environmentally friendly realm.
After researching the company it is interesting to see how many projects Unilever has in its efforts to do good around the world. One particular area that relates to the profitability of these ideas is the acquisition of Blueair air purifiers. Unilever’s efforts with this product are primarily focused in China where air pollution can be a very serious health risk. In selling these air filters Unilever claims that it is helping to prevent some of the 7 million premature deaths that occur each year as a result of air pollution worldwide. This demonstrates that companies can achieve good practices while also operating a profitable business.
https://www.bloomberg.com/news/articles/2018-03-20/unilever-wants-to-filter-china-s-foul-air-before-it-s-cleaned-up
Before reading this blog post, I never really wondered if companies consider sustainability in the design of supply chain. Like Zach, I thought companies used sustainability just for PR purposes. The questions about whether or not sustainability in a supply chain is actually cost effective made me curious so I researched it. I found this article (https://www.environmentalleader.com/2017/02/5-benefits-sustainable-supply-chains/) that talks about the main benefits of sustainability. The first benefit is, unsurprisingly, protection against reputational damage. So basically, for PR. The second is reducing the cost. Interestingly reducing costs was for both the environment and the company. I was shocked to see that Walmart’s supply chain accounted for 95% of its carbon footprint. Since sustainability is such a large part of costs, just by focusing on it, Walmart was about to cut costs by $12.4 billion in 2016. I think this example, as well as Izzie’s Unilever example, shows that focusing on supply chain sustainability gives a market advantage because it decreases costs and consumers like it. The next benefits were improving continuity of supply, innovating products and services, and creating partnerships or global-industry standards. I think the trend toward sustainability is becoming more and more evident in recent years. So, I do agree that sustainability is a viable growth strategy for fast moving consumer brands and I do think the adoption of sustainable practices is cost effect, as both of these claims have been proven by many different companies. Moving forwards, I think the most sustainable companies will be more successful in the long run.
Sustainability is a viable growth strategy. Today’s generation cares about the types of products they choose to buy and what goes into their production. The Polman Plan is what Unilever is currently undertaking, and its no easy feat. The Economist wrote, “Specifically, by 2020, Unilever aims to: “help a billion people to take steps to improve their health and well-being”; halve the environmental impact of its products; and source all its agricultural raw materials sustainably, meaning that they should meet requirements covering everything from forest protection to pest control.” This type of commitment has attracted a very niche group of investors to Unilever. Cutting down on the number of brands, reducing the number manufacturing plants, and fostering better company-wide communication are all steps in the right direction. Lastly, I also agree that the adoption of sustainable practices is cost effective. Most of these initiatives involve cutting out unnecessary waste and reducing the number of new intermediate items used in production. Also, the ability to use recycled material is cheaper than new material, especially if it is parts of your own products that are being reused.
https://www.economist.com/news/business/21611103-second-time-its-120-year-history-unilever-trying-redefine-what-it-means-be
I think the move to become more sustainable and eco-friendly is an interesting choice for Unilever to make. In my ethics class, we recently have been discussing the effects of a company choosing to put environmental sustainability and health as one of their top initiatives. Interestingly enough, it wasn’t all good. Walmart in particular has been implementing new ways to reduce its carbon footprint, but as a result of their use of renewable energy, they have actually grown as a company and have MORE stores and therefore are still producing MORE carbon over time (https://corporate.walmart.com/global-responsibility/sustainability/).
Additionally, a major discussion we had was about the business side of things. Albeit Unilever appears to not have gained any additional expense with this initiative, will it still be the case in the future? Furthermore, at one point do they consider themselves sustainable? Many companies say that they are “going green” or “becoming eco-friendly” but at what benchmark do they stop? Often times, companies hit a point that they deem “good enough” and stop, when they should continue trying to be better and better, both from a business standpoint but also an environmental one as well.
Basically, it overall seems like a good move for Unilever as costs seem way down, but overall, will it last, or will their initiatives be dropped first?
This efficiency that Unilever has pursued has been able to bring them much success in business across the world. Unilever has also recently pursued many large acquisitions of other companies to add to its portfolio and I wonder if this constant additions to its product offering will eventually take effect on its supply chain. I think it has reached a certain size such as Walmart where it has become so large and dominant in the market that it can pressure and squeeze its suppliers and distributors for price and pursue economies of scale. These cost savings will allow them to keep its prices low and turn a larger margin for each product which enhances the corporation’s success. I also believe that while their green stance may be more expensive and time consuming now, as we head into the future, Unilever’s green practices will begin to pay off for the corporation as a whole.