Supply Chain Management Of Unilever.pdf

Supply Chain Management The business strategy of Unilever is to achieve the highest profitability, growth, and return-on-assets.. E-Procurement Unilever meets two of the key corporate s

Supply Chain Management

Of UNILEVER

Introduction to Unilever

With more than 400 brands focused on health and wellbeing, no company touches so many people’s lives in so many different ways other than Unilever

Unilever portfolio ranges from nutritionally balanced foods to indulgent ice creams, affordable soaps, luxurious shampoos and everyday household care products We produce world-leading brands including Lipton, Knorr, Dove, Axe, Hellmann’s and Omo, alongside trusted local names such as Blue Band, Pureit and Suave

 Their products are sold in more than 190 countries with 2 billion consumers worldwide using a Unilever product on any given day

 Their underlying sales growth in 2011 was 6.5% – with emerging markets accounting for nearly 55% of our business

 They have more than 50 years' experience of working in Brazil, China, India and Indonesia

 Acquisitions, such as Alberto Culver – our biggest in ten years – added more than 1% to their turnover in 2011

 Dove became their first €3 billion Personal Care brand in 2011

 More than 171,000 people work for Unilever

 The number of women in senior positions rose from 23% in 2007 to 28% in 2011

 Project Shakti – their distribution program in India – has created opportunities for 45,000 female entrepreneurs to sell their products in rural areas, reaching over 100,000 villages

in 2011

 In South Africa, theirIndonsa factory, opened in Durban in 2011, produces savoury brands such as Knorr and is ‘water neutral’, using rainwater harvesting and recycling

 Sustainable Living Plan

people through our Lifebuoy brand’s hand washing program, reducing our greenhouse gases to 117.41kg energy per tonne of production, and purchasing 64% of the palm oil

we use from sustainable sources

Supply Chain Management

The business strategy of Unilever is to achieve the highest profitability, growth, and return-on-assets It has sold many plants and has had to put in place processes to coordinate with the third parties that own them, complicating its processes to meet its asset goals Unilever’s operating model has three components: quality, service, and cost While keeping its global branding, the company’s strategy is to have local supply chain for local demand to minimize complexity

Global Supply Management Program - Focus

 Unilever has recognized the importance of implementing a global supply management program focused on reducing Non Production Items (NPI) The NPI organization model being implemented in both Europe and North America (which will be extended to the rest of the world) is founded on clear cross-business governance and effective executive buying

 Strategic sourcing is being supported by the global rollout of e-procurement and participation in some key Exchanges, particularly in Transora, where an equity stake is held

 Regional and a few global NPI cluster teams have been formed which are undertaking a rigorous methodology to deliver the strategic sourcing strategies and implementation plans required to achieve the targeted savings The supply-chain model's primary function within Unilever is to provide the Group’s business with shared understanding of the scope of the supply-chain and its sub-processes

 The model provides the common language for the different Business Groups and thereby enables the identification and implementation of synergies

 Some of Unilever's most important chain model applications are assessing

supply-Distribution and Selling

 Unilever’s products are generally sold through its sales force and through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions

 Products are distributed through distribution centres, satellite warehouses, company operated and public storage facilities, depots and other facilities

 Home and Personal Care in North America (HPCNA) has also developed distribution centres for third-party manufacturers where products are collected to create heavier more efficient loads to re-supply customer distribution centres



 Home & Personal Care business in Europe (HPCE) selects haulers on cost, performance and environmental impact

E-Procurement

Unilever meets two of the key corporate strategic thrusts:

 World Class Supply Chain and

 Simplification by implementing NPI strategic sourcing and e-procurement enablement These are two of the six thrusts for implementation of world-class supply management:

# Implement executive buying

# Attract, develop and retain world-class buyers

# Professionalize NPI sourcing

# Enable e-procurement globally

Aggregation of demand and access to new suppliers through real time partnership has enabled

Unilever to improve efficiencies of the extended supply chain

Workflow automation has helped in simplification of the internal processes, which has created

scale for Unilever to leverage

For Unilever e-procurement represents the opportunity for sustaining the benefits gained from strategic sourcing through

 information,

 compliance and

 business process simplification

There are four ways of defining the benefits of e-procurement:

# A structural enabler for re-engineering the NPI procurement process enabling further benefits

to be gained through strategic sourcing, business simplification, visibility of total spend and effective integration routes both internally, e.g ERP, and externally

# The means for conducting electronic business upstream using lowest cost links, i.e cXML

# A business model prompting re-evaluation of the mechanisms for connecting customers, enterprises and suppliers (incl Exchanges and Marketplaces)

# A single front-end interface both externally to suppliers and internally for ERP and other areas

of integration

Strategically e-procurement complements Unilever's overall e-initiatives Learning from these and the strategic sourcing expertise gained during implementation, has improved business ability for the future e-procurement of both NPI and direct materials Workflow automation and simplification to global sourcing processes has resulted in increased productivity and reduction

of transaction costs Data made available can then be applied to

 harmonize items purchased,

 rationalize needs with suppliers and

 monitor and reduce usage, thus further increasing Unilever's buying opportunities

Unilever sells its products in nearly all countries throughout the world and manufacture in many

of them The company exports a wide range of products to countries where it does not makes them For example, inside the European Union, Unilever makes many of its products in only a few member countries, for sale in all of them The chosen manufacturing configuration is generally determined by an optimized regional sourcing strategy, which takes account of requirements for innovation, quality, service, cost and flexibility

Global Supply Chain Management Solutions Providers

In an effort to streamline its daily operations, Unilever has partnered with several technology and logistics providers on a worldwide basis Some of the major providers are:

Logistics Providers

SCM Technologies in Unilever’s Business Model

Unilever's overall technology vision includes a strong push from client-server to thin-client architecture, Web technologies that bring the company closer to its customers, and business analytics to make management information easier to access, according to Rick Ballou, IT business-area director for UnileverHome and Personal Care North America

With a market capitalization of $28 billion, the consumer-products giant reported that its recent

IT achievements include the rollout of business-intelligence software from Hyperion, and "SAP ERP wall-to-wall" as a global standard Unilever also has seen significant cost savings from its investment in Ariba's sourcing technology, which has resulted in a reduction of the office-supply purchasing budget by millions of dollars, and a consolidation of data centers from 18 to five; eventually, the number will fall to three

A cross-functional global committee already is working on the shift from desktop client-server to portal technology On the B2B front, in addition to its RFID efforts, Unilever is participating in

an industry-wide effort to standardize data elements throughout the supply chain through UCCNet Unilever has also expressed their continued interest in CRM

Unilever collaborates on statistical and market promotion forecasts for key products with a few large customers, using a collaborative system from Waltham, Mass.-based Syncra Systems Inc The organization as whole had multiple ERP and CRM systems from several vendors, and 34 custom-built data warehouses Unilever currently runs 100 separate, complete SAP enterprise resource-planning systems

Similar on these lines, some of the major SCM technologies and IT solutions implemented in the business model of The Unilever Group are discussed below:

-Supplier Relationship

ISIS Supply Management Information System: ISIS is Unilever’s integrated supply management information system It helps its local, regional and global supply managers make appropriate sourcing decisions, allowing them to collate and analyze information quickly and easily The system enables its managers to negotiate with suppliers in a transparent and efficient way, benefiting both parties

E-procurement Solutions from Ariba: Unilever selected the Ariba Buyer software for e-procurement following a rigorous selection process and initial pilot in North America Although initial success has been achieved Unilever believes that these are still early days and that the

development There is an emerging recognition that e-Procurement can affect total supply chain operation rather than just transactional activity Until recently few have taken action to implement or sponsor the necessary changes Encouragingly though, Unilever believes that this position is changing and unquestionably e-Procurement provides a catalyst for positive improvement in supply management profile

Enterprise-Scale Data Warehouse and Business Intelligence Solutions: In order to gain a clear view of business performance across its 34 companies in 19 countries, Unilever Latin America has embarked upon an enterprise-scale data warehouse and business intelligence project called Sinfonia

At the heart of Sinfonia, KALIDO enterprise data warehouse creation and management software (KALIDO) provides a solution that will grow to encompass one of the largest databases in the world by 2007 KALIDO delivers an aggregated view of data across Unilever Latin America at high speed throughout constant business change such as acquisitions and market consolidation KALIDO is now making it possible for Unilever Latin America (Unilever LA) to build and manage a fully functional, adaptive data warehouse throughout its lifecycle while simultaneously rolling out an underlying regional SAP system in a 4 to 5 year sister project called Harmonia The flexibility of KALIDO is enabling Unilever LA to maintain business continuity as the Sinfonia and Harmonia projects continue to roll out The KALIDO data warehouse will grow both in geographic coverage and in scope, and is expected to reach 12 TB in size Throughout this period of growth it will deliver consistent business information, taking increasing volumes of data from the ongoing SAP implementation

Unilever LA is converging processes, systems and information to enable a truly regional approach to business Using the KALIDO enterprise data warehousing solution, the organization

is successfully delivering a large-scale enterprise data warehouse, on time and within budget, while simultaneously rolling out a region-wide SAP system

The new information architecture Sinfonia, powered by KALIDO, delivers high-quality data to 4,000 users by 8 am every day across five time zones The solution will enable better understanding of regional supply chain processes, brands, customers and suppliers, and will allow Unilever to respond rapidly to new opportunities, even against a backdrop of constant internal and external business change

KALIDO facilitates strategic planning and drive improved decision-making, by delivering tailored information at high speed to key business users, enabling Unilever LA to realize

supply chain management technologies, Unilever aims to enhance its supply chain business model The following diagram describes the company’s supply chain system vision:

-Discussed below are the various types of information systems used within the business model of The Unilever Group with their specific usage: -

 R&D System R&D System (LIMS): Used for formula development

 Specifications Systems: Used for Packaging, Raw Material, Formula, Master BOM, Finished Products and Process Specifications Manufacturing Planning Systems: Used for MRP, Production Orders,Purchase Orders, Standard Costs, RM/Pack/WIP Inventory, Financial Transactions, Material Masters and Production Reporting

 Planning Systems: Used for Demand Planning (DP), Demand Req Planning (DRP), Constrained Prod Planning (CPP), VMI and Finite Scheduling

 MFG Execution Systems (Various): Used for Finished Goods Production, Compounding/Batching, Quality/Lab Systems and Plant Maintenance Systems

 Order to Cash Systems: Used for Order Entry/Management, Terms of Sale, Deduction Tracking, Stock Allocation and Invoicing

 Finished Goods Management Systems: Used for Shipping, FG Warehouse,

The major part of supplier information of unileveris updated and maintained byAchilles.The Achilles Group is one of the world’s leading experts in managing supplier information.It identifies, qualifies, evaluates and monitors supplier information on behalf of over 700 major organisations across theglobe

The relationship with suppliers is updated through basically three simple steps :-

Step 1

Validation of contact details

Suppliers are asked to complete a simple questionnaire which will capture their Company address and contact details, parent company information (if applicable) and information about your factory locations

Step 2

In 3 - 6 months company contacts the supplier again to communicate quality and responsible sourcing standards and confirm which products you currently supply to Unilever

Step 3

On an annual basis company asks suppliers to re-confirm the data that they have on record to