Unilever Restructures its Supply Chain Management Process

PRESENTED BY: AMIR AHAMAD PRAMOD KUMARMAHTO SRI RAM KRISHNA MURTI VIVEK RANJAN PANDEY

About Unilever
Established -1930

Area Served World Wide

Key people- Michael Treschow

(Chairman

Paul Polman (CEO) Headquarters -Unilever House, London, United Kingdom; Rotterdam, The Netherlands

Background Note
During 1960 and 1970, Unilever expands its

operations The company operated twenty-four packaging plants In 1980s company decided to have more focused approach towards business which it referred to as the core strategy On account of this restructuring the company succeeded in improving its operating margins from less than 6% to over 11% and its return on capital from less than 11% to over 22%

Supply Chain Restructuring

Unilever decided to cut down its vast brand portfolio

from 1600 400 The company decided to make global sourcing an integral part of the supply chain restructuring thrust. It expected to save a lot in cost by sourcing on global basis to ensure that supply management best shared between the foods and home & personal care divisions world wide.

Contd..
Unilever procurement department, managed the

procurement activities of their respective companies. This procurement model resulted in costly redendcies and in many missed opportunities for the company Unilever had a decentralized IT infrastructure with multiple IT environments- it was using many legacy systems and ERP applications from different companies like SAP BPCS etc Company launched UIP (Unilever Information Program)

Question 1
EXA M I N E TH E G R O WTH O F UN L EV ER I N TO O N E O F TH E L E A DI N G C O N S UM E R G O O DS C O M P A N I E S B Y TH E L A TE 1 9 9 0 S . C O M M E N T O N TH E C O M P A N Y S P A TH TO G R O WTH S TR A TE G Y A N D A N A L YZE T H E R E A S O N S B E H I N D I TS DE C I S I O N TO R E S TR U C T U R E TH E S UP P L Y C H A I N .

ANSWER
Unilever one of the leading consumer goods company by late

1990. Task involved reducing the no. of products categories from 50 to 13. Focusing on the categories under each business segment this leads to the numerous acquisition and diversities. By mid 1990 it had acquired over 64 food business. In fact in the late 90s it was lagging far behind from its competitors. Nestle and P&G in stock value and market capitalization. In 1999 the share price tells sharply as the company failed to meet its performance expectations for years. Plans to grow strategy:- as a part of this strategy the company answered a comprehensive re structuring of operation and business.

Question 2
Examine the measures taken to modify the

supply chain organization at unilever as part of the overall supply management restructuring exercise. Explain how the supply management divisions structure would help streamline the supply management framework better

ANSWER
Measures taken to modify the supply chain organization at unilever as a

part of overall SCM structuring exercise. As a part of restructuring plan unilever decided to cut down its vast brand parts taken from 1600 to 400. because its want to focus on key products like dove , lipton tea etc. The SCM restructuring plans was build around five focus areas like organisation , process , people , suppliers , technology etc. Unilever decided to make significant changes of its supply chain of 350 manufactured plants by focusing on 150 key factors. The major areas where implementing are executive purchasing , attracting developing and retaining world class supply management.

Question 3
What was the nature of benefits derived by unilever

on account of restructuring its supply chain management practices? how do you think the initiative would contribute to the companys path to growth strategy? Suggest some measures that can help unilever becomes a world class supply chain management practioner

ANSWER Q.NO. 3
On the account of restructuring between 1985 to 1990. the company

success in improving its operating margins from less than 6% to 11% and its restructuring on capital from less than 11% to 12%. Average EPS increased by 9% during this period. It become 3rd largest food chain and 2nd largest packaged food customer food company of the world. It owned over 1600 global regions & local brand in the food and home personal care business. Restructuring the SCM practices was one of the some major components of the path to growth strategy. This this initiative was accepted to save around 1.77 billions.