Supply Chain Management of Unilever
Department of Business Administration
The Unilever Pakistan Limited (UPL), formerly Lever Brothers Pakistan Limited was established in Pakistan in 1948. Unilever Pakistan is the largest fast-moving consumer goods (FMCG) company in Pakistan, as well as one of the largest multinationals operating in the country. Now it is operating six factories at different locations around the country. The Unilever's Head Office was shifted to Karachi from the Rahim Yar Khan . Our brands are trusted everywhere and, by listening to the people who buy them, we've grown into one of the world's most successful consumer goods companies. In fact, 150 million times a day, someone somewhere chooses a Unilever product.
People's lives are changing fast. As the way we all live and work evolves, our needs and tastes change too. At Unilever we aim to help people in their daily lives. So we keep developing new products, improving tried and tested brands and promoting better, more efficient ways of working.We have a portfolio of brands that are popular across the globe - as well as regional products and local varieties of famous-name goods. This diversity comes from two of our key strengths are Strong roots in local markets and first-hand knowledge of the local culture and World-class business expertise applied internationally to serve consumers everywhere.Unilever is one of the world's leading suppliers of fast-moving consumer goods. Here are some recent highlights from our three global divisions - Foods, home care and personal care.
1.1. Mission:Vitality is at the heart of everything we do. It's in our brands, our people and our approach to business.
1.2. Unilever Corporate Vision:We help people around the world meet everyday needs for nutrition; hygiene and wellbeing, with brands that help people look good, feel good and get more out of life.Our corporate purpose states that to succeed requires "the highest standards of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact."Supply chain management of unilever:From sourcing raw materials to delivering the end product, supply chain is at the heart of getting brands to customers. Its remit is shared amongst four divisions:Customer Service - LogisticsCustomer Service - PlanSupply management
2.1 Plan:Unilever planners are unique individuals who have both analytical and great interpersonal skills and help bring innovations to market. Working with all business functions, they are key in their sales and operations planning process. Demand planning uses models as well as market knowledge to determine potential sales. Using this data, supply planning ensures factories are able to meet these sales on time in the most cost effective way. It do cost effective planningCost effective planning:Demand plan in this planner decides about what will be the demand of market and what quantity should be produced which will be cost effective.Supply plan in this planner focuses on whether there are enough raw materials available according to the demand or not.Types of planning in unilever include:Pre source: look at the vendors that whether local or international vendors are neededAfter source: when the raw materials are delivered then unilever do after sourcing and look at whether the products are according to the requirement or not.2.2. Supply Management:This is about optimizing the cost and quality of what it buys and how it buys it. Intelligent sourcing of raw materials, packaging and non-production items helps reduce costs and makes their business more effective. The team explores new ways of working with suppliers and plays an important role in technology innovation.Vendor Evaluation process: It evaluates the standards of its vendors through evaluation process to ensure that best in class suppliers is available for use. Unilever measure and monitor their performance for the purpose of reducing costs, mitigating risk and driving continuous improvement. And if there are variations in materials then conditions are rejected.Price negotiation is a common occurrence when purchasing materials or supplies. The purpose of the negotiations is to determine a price that is acceptable to both parties. Upon the completion of negotiations, either a deal is reached and the product is sold or there is no sale.Multiple sourcing is done in Unilever so that monopoly cannot be created and suppliers try to provide better material and low rates to get contract. It is also important for unilever because sometimes one supplier is not able to provide the entire material etc so it can ask others suppliers to deliver supplies.2.3. Manufacturing:Unilever's manufacturing record is one of the most envied in the world, with many of their facilities considered the best in the country. It helps factories improve efficiencies and adapt to the changing needs of customers and consumers. A manager might be responsible for a team's quality, output and costs. In engineering, he could be designing and building high-speed production lines.PlanningUnilever plans in a way that it can overcome the demand of customers for this it has to do forecasting.The strategy used in unilever is:Make to stock (PUSH): A traditional production strategy used by businesses to match production with consumer demand forecasts. The make-to-stock (MTS) method forecasts demand to determine how much stock should be produced. If demand for the product can be accurately forecasted, the MTS strategy can be an efficient choice. The main drawback to the make-to-stock (MTS) method is that it relies heavily on the accuracy of demand forecasts. Inaccurate forecasts will lead to losses stemming from excessive inventory or stock outs. For example product blue band is produced the whole year.Manufacturing process of unilever includes;Demand planner: do forecasting that what will be the demand of customer.Supply planner: looks on what is the demand then coordinates with the procurement department that how much material is required for the production.Production team: when the raw materials are available then the supply planner coordinates with the production team and the products are manufactured.Supply team: when the products are manufactured then the supply team distributes the products to the distributors.Dispatched team: when the products are manufactured they are delivered to the distributors but sometime problem occurs during delivery or due to some reasons the products are not manufactured (like due to strike) so the dispatch team comes into action and finds out that where the finished goods are available and then from there the finished goods are delivered to the required destination.Lean manufacturing: It also do lean manufacturing it purifies Canal water and use it in manufacturing of other products like Blue Band. Other than that Ariba procurement software is used in this no paper is used in order to safe paper with the help of this cost is also reduced and processes are also speed up; also considered as green logistics.High demand and low supply: It prepares itself for every situation for example when "Maggie" was first introduced in Pakistan they produced a limited amount because they thought it might not work in here but the demand of Maggie increased so they immediately increased the production of Maggie and other then that built another production line which was costly but their main focus was to fulfill the demand.Joint venture: Unilever also believe in joint ventures to tackle certain situations for examples Proctor and Gamble (PG) first introduced its product "Pamper" for certain period it created the monopoly and earned a lot and the revenue it collected from this product was utilized on its other products like shampoo. So unilever found out that how PG is bringing innovation in its shampoo so it found out about pampers so to break the monopoly it made a joint venture with "Huggies".2.4. Logistics:In Logistics unilever core role understands customer needs and working together to solve joint logistical challenges like on shelf availability. Roles includes responsibilities for order management, working at the interface of warehousing and transportation and ensuring products arrive as promised to meet customer needs.It is the most important part of supply chain management as it is directly related to fuel which is very expensive.Bottle neck is a phenomenon where the performance or capacity of an entire system is limited by single or limited number of components or resources so in Unilever transportation is the bottle neck of the company.CCFOT stands for "customer case fill on time". Unilever wants to satisfy their customers but it is not possible because of transportation so for this situation Unilever hire other transportation at higher rates. It is expensive for the company but it don't wants to lose its customers.OSA is the "on shelf availability" . The products are available on shelf or not all depends on transportation that whether they are delivering the products on time or not this is very important to deliver the product on time because if the product will not be placed on shelf then the sales will be affected. A team monitors it on daily basis.Types of Transportation:There are two types of transportation which includesInbound Transportation: it is also known as primary transportation. In this the raw material and packaging materials (RMPM) from suppliers are delivered to the company then the RMPM is used in manufacturing of a product.Out Bound Transportation: When the goods are manufactured it is distributed to the distributor it is called outbound transportation or secondary transportation.BSL "Bashir Siddiqui Logistics" is the transportation company. Unilever transports their product with the help of BSL. It helped BSL to become a transportation company but when it saw that monopoly has been created and BSL are demanding higher rates then Unilever broke the monopoly and started multiple sourcing.There are two types of vehicleDedicated vehicle are those vehicles that only works for unilever. It includesFixed cost (includes vehicle cost )Variable cost (includes driver and diesel cost )Box rate vehicle are also known as non dedicated vehicle that also works for other companiesWarehousing:The largest and the oldest of LBPL is situated in Rahim Yar Khan. Basically at this factory personal products (HPC), soaps, glycerin and dish wash bar are manufactured.Unilever's Rahim Yar Khan Factory is situated in the middle of the city. It was established in 1948. The main reason for choosing this location for the factory was:The land for the factory was donated by the NAWAB of the Bahawalpur State.It was the ideal location to cover the Indo-Pak border areas.It was the central location of Pakistan so it was a convenient location from the distribution point of view.Availability of the cotton seeds because south Punjab is cotton area.Government tax free areaAvailability of inexpensive laborULTRA (Unilever Trade Automation):This software was actually developed for Pakistan .The software is basically an IT enabler that has provided visibility and exchange of data and business information between Unilever and its key distributors (up to point-of-purchase)for better management of their business, services delivering ,capabilities to drive the business growth agenda through the availability of measureable KPIs. It is established in 2000-1 for harmonizing sales and trade activities of UPL and its distributors. The implementation was carried out at more than 100distributors of UPL across the country, during which the helpdesk support was also provided to resolve their day-to-day operation problems. ULTRA alerts the firm at its head office that how much inventory is left behind at the ware house of distributor and shows that how much stock is available and how much is required. all the record of inventory is kept in ULTRA , whenever the stock is received and delivered by the distributors , all the records in the ULTRA is being updated and is being monitored by the company at the head office at the day end.Segregation is done in ware houses so that different categories product can be separated for example products that have chemicals like soap shampoo body wash etc are placed in other side and food products are placed on other side so that the smell of chemical cannot be absorbed in the food product.Cross-docking is done in unilever because it involves the reduction in handling by sending warehouse received goods directly out to stores or another transit point, by-passing warehouse storage and traditional picking.Distribution centers:KDC (Karachi Distribution Centre) it is near port.raw materials are stored there and the products are exported from there as wellLDC (Lahore Distribution Centre).KLI (Karachi Lahore Islamabad) is in the middle of these three cities.Functions of distribution departments :In unilever Distribution department performs following functions:Receives finished products from production departments.Receives monthly or weekly Plans for distribution from Marketing Sales Department HO.To makes daily dispatch plan.To arrange transport facility for delivery of products.To pay Excise Duty and arrange Provision for Excise Duty according to legal Requirements.To pay Sales Tax liability at the end each month up to 20th day of next month.And some Misc. General Functions.Distribution channels:LBPL has a centralized distribution system in which the products are distributed from one warehouse to the selected distributor of the company, and then the distributor make the product ava