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?