Business enterprises conventionally get into business with to pursue and attain different goals and objectives whose convergence is inarguable to maximize wealth. The continued attainment of goals hinges on the capabilities of firms in conducting their operations following and in alignment with customers’ needs and interests. With competition increasingly becoming strife as one of the elements of business dynamism, companies must establish themselves competitively to operate as going concerns continually. In light of this, firms have put into consideration various measures in enhancing the functionality of their relevant functions to ensure that they perpetually satisfy their customers. Among the issues of concern are supply chain management and its underlying building units that include but not limited to logistical operations. An analysis of Unilever is a classic illustration of the fundamental role that supply chain management plays towards the success of companies.
Unilever is a portmanteau of two companies, and that draws its existence dates back to 1929 after the merger of two companies, Margarine Unie and Lever Brothers (Companies History n. d). Its high diversification is highly pronounced not only geographically, where it operates in over 190 countries (The Guardian 2010), but also in its products, considering that it has over 400 brands of products. It manufactures and sells these products majorly in four categories that include personal care, food, refreshment, and homecare. Its products are primarily in the description of fast-moving consumer goods spread under these product lines. With this rich portfolio of products spread practically across the world, it would be a tasking affair to serve the spatially distributed markets without having a foothold on its logistical operations.
As Sok (2019) illustrates, Unilever is a global company that understands s the benefits of logistical issues. A Supply chain overview report released in 2018 revealed that it spent over $34 billion with supply chain and logistics accounting for 44%. As a reflection of these massive investments, Unilever peaked at number four on the Gartner’s Annual Supply Top 25 in 2015 for its outstanding performance in supply chain management. In a report presented by Leinhempel & Kempkes (2015), Unilever has a sophisticated logistical, operational model that links in unison over 400 suppliers, sixty-five strategically located global factories, over one hundred warehouses, and over 150 leading carriers.
With this voluminous business model, the company deemed it fit to take control of its inbound logistics, particularly in areas of raw materials and packaging. In its view, the fact that it had previously left these operations to external vendors and suppliers significantly reduced the company’s visibility over the process (Supply Chain Brain 2009). The essence, in this case, was not only to maximize carrying capacity but also considerably reduce costs. As the company analyzed, despite the vendors being supplied with routing information, it remained unclear whether they were followed, and so the question of cost and efficiency largely remained of serious concern (Henderson 2018). As Leinhempel & Kempkes (2015) illustrate, presently, after addressing this concern, the company utilizes the Ultralogistik operational model that cuts out the external third and fourth party logistics vendors, which saw an increase in efficiency with a significant reduction in cost by 8%.
The decision to take control over logistical operations, in essence, implied the company had an increased capability to consolidate the technological and operational systems into one unit. In this case, it becomes easier for the company to monitor the fleet of carriers and similar logistical means responsible for the movement of its raw materials and packaging between locations and in alignment with its focus of delivering value to the customer. It is imperative to note that the customer demands are not a static element, but whose dynamism represents a significant focus on the business. In this case, therefore, the company can enhance its efficiency, which translates to cost savings, which it passes through consideration to its customers in marinating a grip on them with 99% of the shipment delivered on time.
Although there was a significant shift towards internal sourcing, the company realized that the heterogeneity of the markets requires a combination of different logistical approaches to reduce costs and continually serve its markets effectively. It is also worth noting that Unilever considers Asia, particularly China, as a strong market whose rapid expansion is chiefly at the heart of its growth. With over 300 million customers, China remains geographically large and sophisticated in its consumer composition. Unilever, therefore, partners with other third party players, particularly JD, in this regard in offering logistical solutions that hinge on communication and effective engagement among the three parties for seamless business operations.
Whereas companies have a significant focus on delivering value to drive up their profitability, there is undeniable evidence that their operations leave a footprint on the environment. According to Unilever, a company’s supply chain management systems and models account for 80% of total gas emissions, which not only significantly affect the environment but also bite back into the company’s profits (Nutburn 2019). In light of this, therefore, it is of paramount importance that companies take a holistic approach in their operations, mainly supply chain management in driving up sustainability in the environment and their business as well. It is in the realization of these two critical issues relating to the environment and the company’s profitability that is gravitationally influential to its continuity that Unilever in part refocused on in-sourcing as detailed above.
Through the Sustainable Agricultural Program, the company establishes that it reaches to over 2.5 billion people globally who use their products (Unilever 2018). It also determines that the raw materials needed for the manufacture of these products needed to keep its business running are sourced from forests and farms around the world, with this avenue connecting it to millions of people every year in this regard. It falls upon it, therefore, in view of its report, to find sustainable solutions that it would chiefly embed in its operations to achieve sustainability, primarily through agriculture. Overall, the company streamlines its operational activities towards the convergence of its Sustainable Living Program, whose prime focus is achieving a high level of sustainability for both the environment and its business.
Since the company’s operations are global, sophisticated, and massively connected to the environment through its four segments, the company would, without a doubt, require significantly high levels of investment and commitment. The company answers this with its connection to over 6,000 scientists distributed across its R&D centers globally (Unilever n. d) in the search for new and improved opportunities towards manufacturing sustainability (Unilever 2018). Unilever finds that the use of data and employing new and improved technologies in combination with intense training and subordination of employee interests and efforts to the common goal regarding sustainability is pivotal towards its achievement. It is through this model that the company established the World Class Manufacturing Program (WCMP) that addresses all issues relating to manufacturing and how they affect sustainability.
As Ovenden (2019) reports, Unilever has featured continuously among the top companies on Gartner’s annual supply chain top 25 thanks to its consistency in delivering value. In its case, the company realizes the need and importance of data analytics in its mix of strategies, as evidenced by its introduction of the RFID. The technology has been and remains influential in tracking supply chain systems and logistical operations alongside its recently added Ultralogistic model in delivering value and achieving sustainability. Since businesses do not operate solely to achieve their goals, Unilever collaborates with its stakeholders through communication and other varied engagements for the progression of its sustainability initiatives (Unilever 2018). Its realization of plan evaluation is a commendable approach as it assesses its progress regarding sustainability biennially sin coordination and collaboration with its stakeholders, including its customers and consumers.
In this analysis, regarding the sustainability credentials and initiatives of the company, there is a striking strategy that Unilever leverages on to fulfill its interests. Since it connects with over 2.5 billion users of its products, the company has had a considerable focus in agriculture not only to spur its production but also to engage farmers in this regard sustainably. It would be an inclusive approach if it were done individually. However, the company holistically approaches the issue with a continuation of its strategy to its manufacturing section, which enlists the services of 6000 scientists as indicated. It is commendably strategic how the company wraps up this tripartite model with the focus on its supply chain management, with the result being a workable sustainability program. The breakdown of this model is as shown below.
|Sustainable Agriculture code(SAC), (Unilever 2017)
|Sustainable Living Program
In the wake of increased competitive engagements among companies, business entities have continually spread their risks geographically to earn on the benefits of such diversification. In so doing, however, they have increasingly sophisticated their operational engagements in which case there is a requirement to have in place measures aimed at synchronization for efficiency and continuity. With this comes the need for the integration of information technology and similar systems to achieve coordination of activities, including supply chain issues for the benefit of the companies. According to (Varma & Khan 2018), Information technology is gravitationally paramount in communication, optimization, and lowering inventories with a focus on achieving a high level of service efficiency.
A study conducted by Bertolini et al. (2007) on Italian firms revealed that the adoption, integration, and implementation of information technology systems increased their potential to reduce their lead times significantly. The use of IT works to achieve three functional support issues which Auramo, Kauremaa, & Tanskanen (n. d) detail as transaction execution, collaboration and coordination, and decision support. With this in focus, companies increase their flow of information among relevant parties along the chain, improve their efficiency, and are also able to focus on other equally important functions of their operations. The use of IT also enhances a company’s ascendancy over the flow of materials and information and thereby enhances its accountability, which with increased process optimization, improves profitability, stability, and sustainability, which relates to continuity as going concerns.
While at heart of the success of the supply chain management at Unilever lies strategic management efforts that determine its success, it is the augmentation of these efforts with technology that largely contributes to its performance. As mentioned, Unilever was among the first few companies to integrate technologies in their supply chain operations, as seen with its introduction of the RFID systems. According to its supply chain report (Unilever 2019), the company further leverages on digital applications and connections to ensure that it synchronizes its globally dispersed operations for ease of management. With the integration of IT in its supply chain management, Unilever distinguishes itself as a company that has an unmatched grip on its operations about every critical element that makes its whole.
As detailed above, Unilever has been a global blockbuster sowing to its brand, which is credited to a host of activities that define its business operations. At the core is its supply chain systems, which have made it appear on the Gartner supply chain top 25. In this case, it distinguishes itself as a global leader in supply chain management ahead of other players in the same or different sectors. Regarding this, there is a profound difference between its method of operation and others’ which ultimately explains this scenario. While some companies, such as Unilever, may have a mix of supply chain strategies blending third party logistics (3PL), 4PLs, and in-sourcing, others may adopt two or less of these strategies. The decision to use any of these models, according to Ciemcioch (2019), hinges on the ability of companies to define in practicum the benefits attributed to them and capabilities to put them in motion.
While the above differences define companies regarding their supply chain management distinctively, there are operations that are common amongst them. That in essence implies that notwithstanding the sector, global strategy, or size, the activities of firms would somehow be common. In its case, Unilever has demonstrated a strong capability to remain afloat in business, and functionally in its supply chain management. Following this analysis, the company can further strengthen its position by finding a perfect structure of its 4PLs and 3PLs as well as in-sourcing to augment each of the three models. As illustrated, the company had cut off its inbound logistics vendors for full control, but it proved an unworthy venture in the case of China. Since growth is not capped, China may only be precedence to further challenges, in which case it needs to reconsider its Ultralogistik. Additionally, it would be prudential that the company reevaluates its measures for accountability among its logistics vendors for more efficiency. The decision to take over inbound logistics was mainly due to this void, and therefore filling it would be fundamentals important in the adoption and implementation of the first recommendation.
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