The world's 2nd largest FMCG player redesigns its complex SCM to tap the untapped market.

1. RESTRUCTURING OF THE
SUPPLY CHAIN MANAGEMENT
PRACTICES

2. nilever is a British Dutch multinational consumer goods company co-
headquartered in Rotterdam, Netherlands, and London, United Kingdom. Its
products include food, beverages, cleaning agents and personal care products.
It is the world's third-largest consumer goods company measured by 2012
revenue, after P&G and Nestlé. Unilever is the world's largest producer of food
spreads. One of the oldest MNCs, its products are available in around 190
countries

3. Unilever claims that in 1 min. the world would have used 330,000
of its products.

4. Unilever’s portfolio of
categories
Leading category
positions
Ice Cream &
Beverages
Personal Care
Homecare
Savoury,
Dressings
& Spreads
Strong category positions

5. OVERVIEW &
BACKGROUND

6. • Unilever is one of the world's leading suppliers of fast-
moving consumer goods. It has its three major global
divisions - Foods, home care and personal care.
• Vision: Our Vision is to help people feel good, look
good and get more out of life with brands and services
that are good for them and good for others.
• Mission: In the last five years, we have built our
business by focusing on our brands, streamlining how
we work, and improving our insight into the evolving
needs and tastes of consumers. Now we are taking the
next step in simplification - by aligning ourselves
around a clear common mission.

7. • Unilever was formed in 1930 with the merger of British soap
company Lever brothers and Dutch Margarine company Margarine
Unie.
• During 1960’s and 1970’s it expanded by horizontal and vertical
integration emerging as a diversified conglomerate.
• In 1980’s it decided to have a more focused approach and referred
to it as “core strategy” and focused on four industries – Food,
Personal care, health care and specialty industry, this decision
involved acquisition and divestiture of brands.
• As a result of this it developed an extensive range of product
categories under each business segment.
• Unilever found itself becoming inflexible due to its huge operation
and other inefficiencies. To come out of this mess it decided to
restructure its strategy

8. • They reduced their product category from 50 to 13
and by mid-1990’s it has acquired over 64 food
business.
• Food business recession in the Western Europe (their
main market) and US had severely affected its
business and they had to shutdown many of their
companies, to increase its sales
• It focused on different product segment for different
countries based on their sales potential which
doubled their sales.
• Due to this restructuring the operating margin
reached over 11% and return on capital over 22%. It
also became the second largest packaged consumer
goods company and the third largest firm

9. EASONS FOR RESTRUCTURING OF
SUPPLY CHAIN
1. Its announcement of special interim dividend
2. The growing popularity of internet and telecom stocks were
moving consumers away from the old stock.
Thus in the year 2000 Unilever announced a five year growth
strategy to bring a significant change in the company. This
initiative was named as “Path to Growth Strategy”. It
announced a comprehensive restructuring in their operation
and business and their SCM.

10. HORT TERM GAINS AND LONG TERM
PERSPECTIVE
1. In December 2001, Unilever was declared as the winner in
the Aberdeen’s groups.
2. Best practices in E-procurement contest by implementing
the Ariba buyer E-procurement solution.
3. Unilever established the European Ariba Academy to
provide multiple site implementation and virtual training.
4. The initiative named ‘Path to Growth’ aimed in achieving
the annual top line growth of 5%-6% and operating margins
over 16% by 2004.

11. •€15.3 billion spent on raw
materials and packaging from
over 10,000 suppliers
in 2009.
Raw materials and ingredients
Our share of world volume:
Preliminary data pending audit.

12. SUPPLY CHAIN
RESTRUCTURING

13. • Unilever decided to cut down its vast brand portfolio from
1600 to 400 in order to enable its complete focus.
• Unilever focused on 400 key brands including Dove soap,
Lipton tea, Calvin Klein fragrances, Close-up toothpaste,
Magnum ice-cream and Omo fabric detergent. Tail brands fall
away, good brands stay.
• The SCM restructuring plan was built around five focus areas.

14. NILEVER- THE WORLD CLASS SUPLY
MANAGEMENT INITIAVE
Focus Areas Project Methodology
Organization(Supply Chain
Organization)
Agree Targets
Processes(Global Procurement) Identify Projects
People(Supply Chain
Executives)
Provide Resources
Supplier(Supplier Involvement) Measure and Track
Technology(e-Procurement &
Information technologies)
Ensure Enablers

15. • Unilever decided to make significant changes to its supply
chain of 380 manufacturing plants across the world, by
focusing on 150 key factories.
The major thrust areas were:
1. Implementing executive purchasing.
2. Attracting, developing and retaining world class supply
management executives.
3. Professionalizing the purchase of non-production items.
4. Enabling e-sourcing in all worldwide facilities.
5. Accelerating and leveraging simplification of supply chain.
6. Driving information and management.

16. SUPPLY CHAIN
ORGANIZATION

17. •Unilever manages a
number of
partnerships
globally.
Customer partnerships
•Around one-fifth of
Unilever’s sales are
through ten major retail
chains.
•Our products are sold in
over 10 million small
shops in developing and
emerging markets.
•50% of sales from
developing and emerging
markets.
ISTRIBUTION
AND RETAILING

18. • The supply chain division installed two electronic
communication system, one of which was Internet-centric.
• These systems were frequently used to collect and share
information on all supply chain management activities in the
company.
• The electronic systems were helpful as they provided ready
access to information that enabled supply management
executives to analyze projects based on their size, risk and
resources.
• Unilever focused on fostering healthy relationship with its
suppliers.
• According to an Unilever supplier, the company was forming
collaborative rather than a traditional combative relationship.

19. SOURCING

20. • Sourcing (Sourcing Mgmt. Div.) had to take place at the Global
level, it would ensure cost savings and leverage.
• Ensure that best practices in Supply Mgmt. were shared
between the Food and Home & Personal Care product
businesses. (Polcer)
• For production purchases Unilever setup more than 40 global
commodity teams that included supply managers.
• Products Globally sourced included: Alkalis, Surfactants, Oils,
Flexible Packaging and Plastic Molding

21. • 1 Global Commodity team received the “Path to Growth”
gold award for innovating the corrugated packaging material,
used in 110 European factories, saving costs and reducing the
supply base.
• Regional Commodity teams also setup because purchases at
regional level at times better than global level. (Regional over
Global)
• Global Commodity teams involved in Cross Divisional
Purchases as well. (Production and Non Production items)

22. • Sourcing for non-production items for both Food and Home &
Personal Care Businesses were combined as they weren’t
consumer related.
• Economies of Scale easily achievable for non-production items
and these items were not involved in the Company’s
innovation processes.
• Non production item executives encouraged by company in
strategic sourcing of these items, as company believed that
these executives knew better of industry than the Supply
Mgmt. team.

23. E-
PROCUREMENT

24. • Pre-restructuring SCM, Unilever’s various companies
worldwide, managed procurement activities of their respective
companies. Companies were independent w.r.t systems and
staff.
• The above policy was costly, missed better opportunities at
making deals in purchase with suppliers.
• 1990s, Unilever on acquisition spree, above process results in
redundancies.
• 2000, procurement & distribution system through e-commerce
and internet. Use of web-based applications.

25. • March, 2000: Unilever partners with Ariba B2B platform.
• Ariba initially used for non-inventory and indirect expense
areas. Simplifying and streamlining worldwide purchases
from larger supplier base.
• According to Charles B. Strauss, President, NA, Unilever;
benefits of Ariba:
- Consolidate purchase
- Enhance scale for company and supplier
- Guarantee quality merchandise
- Automatically create information base to manage these
materials

26. • 2 major and several other web based applications used:
 Ariba ORMS B2B Procurement
 Ariba Network Commerce Service
• Employees involved in purchasing were given access to Ariba
• 2002: e-procurement enters into more continents for purchase
purpose.
• Oct, 2002: Unilever partnered with A T Kearney, leading global
consulting firm to reduce costs in procurement and SCM.
• 2003: 20% of Unilever procurement activities web-based.
Reverse auctions used for procurement, web based for cheaper
purchases.

27. OTHER INFORMATION
TECHNOLOGY
INITIAVES

28. • Until 2000 Unilever had a decentralized IT infrastructure with multiple
IT environments
• It was using many legacy systems and ERP systems(SAP, BPCS, MFG Pro
and FOURTH SHIFT)
• It was using well established intranet services linked with 70000
desktops worldwide which helped the company executives across world
access and share knowledge.
• The company felt that this infrastructure would not support the kind of
Quick Information transfer needed.
• Hence it needed a global information network that will enable its
executives to access actionable info on both regional and global basis.

29. HANGES BROUGHT IN IT STRUCTURE
• In late 2000, company launched the UIP program.
• The major goal was to harness the data from seven
regional business groups and over 300 operating units
which were supported by numerous IT environments.
Goals of UIP
1. To understand consumer needs better and plan accordingly
with key suppliers
2. Monitor the progress of the top 400 brands and their
respective competitors
3. Identify the means to achieve world class supply
management and to financial reporting and business
intelligence services to Unilever mgmt.

30. • “the data warehouse should be regularly fed with relevant
information from sources without having any performance issues of
OS” – President UIP
• Benefits of UIP were: Durable, Scalable, Easily maintained and
flexible to changes that will occur over time.
• The major dynamic information system used was KALIDO, business
objects data integrator and business objects rapid marts.
• KALIDO was used as a information integration solution to collect
and store data from diverse global systems, it enabled commonality
across its global systems, cross-referenced by the same master
data warehouse ensuring accuracy and consistency of info.

31. • Major function of Business Objects Data Integrator at Unilever
was to extract data(worldwide), convert it into usable business
information then load it in the master data warehouse.
It provided:
1. Business logic
2. A prepackaged batch
3. Real-time data movement for analytics and data-intensive
integration projects such as SCM & CRM, thus helping decision
making in both areas.

32. • In early 2001, Unilever decided to use RFID technology
enabled to track the movement of consumer products
• According to Unilever, the RFID based system enabled the
company to track the position of each products at all times.
• Its effective in collaborative planning, forecasting and
replenishment(CPFR) which was tested in 3 Phases:
1. Pallets
2. Goods
3. Individual items.

33. DISTRIBUTION

34. NILEVER RESTRUCTURING DISTRIBUTION NETWORK
ne warehouse in each region
peration handover to third party
roblem faced by warehouse
igh value & lower turn over products – special storage
ow value & High turn over products - floor loaded
So, to solve this problem –

35. teps taken to eliminate inefficiency shipping process and
to reduce cost
ombined shipping process
ransportation software tool - eRFX Solution
Prepared by Tigris consulting that reduce cost by 15%
Advantages of the Tigris’ eRFX Solution
ustomize supplier proposal
educe truck load by 25%

36. SUPPLY CHAIN AND
INNOVATION

37. • Unilever had integrated SCM with its innovation process at Global and
Regional level
 Innovation
• To improve existing products and create new ones that consumers
love
• Unilever R&D teams work on breakthroughs that will build a brighter
future for customer, company and environment
 Global Level – SCM division appoint representatives who provide list of
potential suppliers to innovation team
 Regional Level – SCM division appoint innovation manager to help
innovation groups to identify potential suppliers.

38. BUILDING THE
GROUNDS FOR LONG
TERM BASE

39. • Unilever achieved $14.24 billion in savings from its SCM and
procurement initiatives in 2003
• Company mainly focuses on procurement technology and processes
which helped in reducing procurement costs and strengthening its
relationship with suppliers.
• Emerged as the leader in the consumer packaged industry for technology
adoption with its e procurement and technology initiatives.
• Unilever came up with a project to extent the dove brand to deodorants.
They tried to come up with a packaging for dove deodorant that fit for
gentle image of dove.

40. ROWTH OF UNILEVER IN OPERATING
PROFIT MARGIN
n 2002 fiscal, Unilever’s operating margin increase to
14.9%, 1% and 3.8% increase over it margin in 2001 and
1999.

41. • In the mid 2003 the 2nd
mega distribution centre in North
America, which began its operation in Carlisle and in north east
region.
• Three mega distribution centers in Texas, Califonia and Illinois
were schedule to be opened by the end of 2003.
• Unilever was moving ahead with its supply chain restructuring
projects and expected to meet its target of $1.56 billion in late
2003.
• Company has adopted long term outcomes initiatives which it
fits with the overall organizational restructuring program.

42. ARUP RANJAN ROUT () PURNISHA DASGUPTA (32)
RAHUL AUDDYA (33) RAJPRITAM PARASAR (35)
RAKTIM RAJKHOWA (36) SANTOSH KUMAR DAS ()