Supply Chain Management Of Unilever.pdf

Supply Chain ManagementOf

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

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

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

 Acquisitions, such as Alberto Culver – our biggest in ten years – added more than 1% totheir 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 villagesin 2011.

 In South Africa, theirIndonsa factory, opened in Durban in 2011, produces savourybrands 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 greenhousegases to 117.41kg energy per tonne of production, and purchasing 64% of the palm oilwe use from sustainable sources.

Supply Chain Management

The business strategy of Unilever is to achieve the highest profitability, growth, and 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

return-on-Global Supply Management Program - Focus

 Unilever has recognized the importance of implementing a global supply managementprogram 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-businessgovernance and effective executive buying.

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

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

 The model provides the common language for the different Business Groups and therebyenables 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 independentbrokers, agents and distributors to chain, wholesale, co-operative and independentgrocery accounts, food service distributors and institutions

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

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

# 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 fromstrategic 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 benefitsto be gained through strategic sourcing, business simplification, visibility of total spend andeffective 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 areasof integration.

Strategically e-procurement complements Unilever's overall e-initiatives Learning from theseand the strategic sourcing expertise gained during implementation, has improved business abilityfor the future e-procurement of both NPI and direct materials Workflow automation andsimplification to global sourcing processes has resulted in increased productivity and reductionof 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 manyof them The company exports a wide range of products to countries where it does not makesthem For example, inside the European Union, Unilever makes many of its products in only afew member countries, for sale in all of them The chosen manufacturing configuration isgenerally determined by an optimized regional sourcing strategy, which takes account ofrequirements 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 andlogistics 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-clientarchitecture, Web technologies that bring the company closer to its customers, and businessanalytics to make management information easier to access, according to Rick Ballou, ITbusiness-area director for UnileverHome and Personal Care North America.

With a market capitalization of $28 billion, the consumer-products giant reported that its recentIT achievements include the rollout of business-intelligence software from Hyperion, and "SAPERP wall-to-wall" as a global standard Unilever also has seen significant cost savings from itsinvestment in Ariba's sourcing technology, which has resulted in a reduction of the office-supplypurchasing 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 toportal technology On the B2B front, in addition to its RFID efforts, Unilever is participating inan industry-wide effort to standardize data elements throughout the supply chain throughUCCNet Unilever has also expressed their continued interest in CRM.

Unilever collaborates on statistical and market promotion forecasts for key products with a fewlarge 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 34custom-built data warehouses Unilever currently runs 100 separate, complete SAP enterpriseresource-planning systems.

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

Supplier Relationship

ISIS Supply Management Information System: ISIS is Unilever’s integrated supply managementinformation system It helps its local, regional and global supply managers make appropriatesourcing decisions, allowing them to collate and analyze information quickly and easily Thesystem 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 procurement following a rigorous selection process and initial pilot in North America Althoughinitial success has been achieved Unilever believes that these are still early days and that the

e-development There is an emerging recognition that e-Procurement can affect total supply chainoperation rather than just transactional activity Until recently few have taken action toimplement or sponsor the necessary changes Encouragingly though, Unilever believes that thisposition is changing and unquestionably e-Procurement provides a catalyst for positiveimprovement in supply management profile.

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

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 theworld by 2007 KALIDO delivers an aggregated view of data across Unilever Latin America athigh 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 andmanage a fully functional, adaptive data warehouse throughout its lifecycle while simultaneouslyrolling 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 theSinfonia and Harmonia projects continue to roll out The KALIDO data warehouse will growboth in geographic coverage and in scope, and is expected to reach 12 TB in size Throughoutthis period of growth it will deliver consistent business information, taking increasing volumes ofdata from the ongoing SAP implementation.

Unilever LA is converging processes, systems and information to enable a truly regionalapproach to business Using the KALIDO enterprise data warehousing solution, the organizationis 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 to4,000 users by 8 am every day across five time zones The solution will enable betterunderstanding of regional supply chain processes, brands, customers and suppliers, and willallow Unilever to respond rapidly to new opportunities, even against a backdrop of constantinternal and external business change.

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

supply chain management technologies, Unilever aims to enhance its supply chain businessmodel 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 ofThe 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 forMRP, 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.TheAchilles Group is one of the world’s leading experts in managing supplier information.Itidentifies, qualifies, evaluates and monitors supplier information on behalf of over 700 majororganisations 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 Companyaddress and contact details, parent company information (if applicable) and information aboutyour factory locations.

Unilever’s logistics operations present perhaps the biggest opportunity to streamline its supplychain and boost the company’s ability to achieve its lofty growth goals The company is in theprocess of consolidating its nearly 30 warehouses down to five massive distribution centerscapable of shipping customer orders within a day’s time.

Much of that consolidation is a recognition that retailers are adopting zero-inventory policies,which require an optimal use of flow-through and cross docking in the warehouses To increaseasset utilization, lower inventories and improve service, Unilever adopted collaborative planning,forecasting and replenishment (CPFR) relationships with some retail customers Thanks to thoseCPFR efforts, Unilever has been able to achieve 10% inventory reduction, 10% forecastaccuracy improvement and 5% increase in sales due to better on-the-shelf availability According to Fred Berkheimer, vice president of logistics for Unilever Home and Personal Care,since orders are often impacted by factors that cannot be projected, collaboration betweenmanufacturer and retailer is necessary to increase forecast accuracy “High accuracy inreplenishment can only be achieved through order forecast collaboration and extended supplychain visibility,” says Berkheimer Today, Unilever’s logistics department is experiencinginclude improved relationships with retailers, better planning, improved on-time performanceand more efficiency in handling promotions.

Unilever's supply chain Path to Growth Strategy

Unilever's supply savings programme is one of the cornerstones within the Path to GrowthStrategy towards the implementation of a world-class supply chain Through Path to Growth,Unilever’s five-year strategic plan announced in February 2000, the company has greatlystrengthened its business

1 Reconnect with the consumer - to anticipate the future

2 Focus the brand portfolio - reflecting consumer appeal and growth potential 3 Pioneer new channels - to be in the right place at the right time

4 Develop a world-class supply chain - simplifying sourcing, manufacture, and marketing 5 Simplify the business - reducing complexity

Significant progress has been made towards the achievement of its strategic ambitions with a