Belajar dari Unilever

Hi student blogger,
Hari ini mau share artikel tentang Unilever.

Sebagai seorang muslim yang berusaha untuk memahami unjung dari perusahaan ini, maka si doi bakalan kerja keras buat ngeboikot barang-barang keluaran Unilever. At least buat konsumsi pribadi. Iya gak? Walaupun masih kesulitan disana-sini. Aku juga gitu soale T_T

Tapi sekarang aku bukan mau ngebahas itu.
Aku cuma mau ngebahas tentang manajemen rantai suplai mereka yang bisa kita ambil pelajarannya.
Hey, just open your mind about this and grab the secret behind their operational!

Buat memahami dengan sederhana gimana Unilever bekerja, artikel berikut bisa kamu baca. (Actualy this article is my final exam case from Dr. Nofrisel, S.E., M.M :D)

Oh iya.
Happy Jumu'ah  Mubarak!
Don't forget for Al-Kahf!
^^



UNILEVER SUPPLY CHAIN STRATEGY
(Adopted from IBS Center for Management Research, 2014)

Introduction
Unilever (called the Unilever Group) functioned as the operational arm of Unilever NV (Netherlands), and Unilever Plc., (UK), its two parent companies. Though these companies (Unilever NV and Unilever Plc), operated as separate legal entities (with separate stock exchange listings), they operated as a single business, with a single set of financials and a common board of directors. Unilever was formed in 1930 as a result of the merger of a Dutch margarine company, Margarine Unie, and a British soap company, Lever Brothers. Margarine Unie had been formed by merging many margarine companies during the 1920s and was a leading global player in the business. Lever Brothers was a name worth reckoning with in the worldwide soap market and had factories all over the world. It had diversified into many other businesses (primarily related to foods). At the time of the merger, the two companies, together, had operations in over 40 countries. During the 1960s and 1970s, Unilever rapidly expanded its operations through vertical and horizontal integration, emerging as a diversified conglomerate by the early 1980s. Diversification into different businesses was prompted in one way or the other by the existing business lines. For instance, oil seeds crushed for use in the margarine and soap businesses yielded a by-product called cattle cake,‘which led the company into the animal feeds business. Likewise, by-products such as glycerine and fatty acids, formed from processing oil for use in margarine and soap production, promptedthe entry in the chemicals business. The company operated twenty-four packaging plants (for its consumer products) in six European countries, from where goods were distributed worldwide. This activity made it one of the largest truckers in Britain and one of the largest shipping company owners in the world. In the 1980s, Unilever decided to have a more focused approach towards business, which it referred to as the “core strategy”. As part of this, the company decided to focus on the following four industries – Foods, Personal Care, Home Care and Specialty Chemicals.

The decision to focus on these industries involved acquisition and divestiture of brands and companies as well. In 1984, Unilever acquired Brooke Bond, a leading tea brand, to strengthen its presence in Europe‘s tea market. In 1985, the company sold Palm Line, its shipping company and in 1987, it acquired Chesebrough-Pond‘s Inc. to establish itself strongly in the US personal products market and to strengthen its position in the world skin care market. As a result of these initiatives, Unilever built up an extensive range of product categories under each business segment. However, the company reportedly did not take steps to streamline its business processes as it increased in size. Gradually, Unilever found itself becoming inflexible to change due to its cumbersome operations and other related inefficiencies. Industry observers even referred to Unilever (of the late 1980s) as a “sleeping giant”. To come out of the mess it had landed in, the company decided to restructure its operations in the early 1990s. The task involved reducing the number of product categories from 50 to 13, and to focus only on the core categories under each business segment. This strategy led to the company making numerous acquisitions and divestitures – by the mid 1990s, it had acquired over 64 food businesses. The company had decided to focus on emerging economies, which yielded encouraging results in the early 1990s, as sales increased in these regions.

However, the recession in the food business in Western Europe (the company‘s largest food market accounting for 68% of its food sales) and the US severely affected Unilever‘s performance during the 1990s. Due to this, it had to shut down or sell many food companies. To increase food sales, the company devised a new strategy of focusing on different product segments in different countries based on their sales potential. Thus, it focused on ice cream and margarine in South-East Asia, Southern Latin America and China, rather than pushing its ice cream products worldwide. As a result, the company doubled the sales of ice cream and increased its reach to 45 countries (as against 20 countries previously). Unilever exited from various businesses such as plant breeding and other agricultural products, packaging and professional cleaning products as well in the 1990s. In 1997, it exited from the chemicals business (one of the core businesses) to focus on the other core businesses. On account of this restructuring, between 1985 and 1999, 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%. The average earnings per share (EPS) increased by over 9% during this period. The company was now the second largest packaged consumer goods company (after Procter & Gamble) and the third largest food firm (after Nestle and Kraft Foods) in the world. It owned over 1,600 global, regional and local brands in the foods and home and personal care businesses. However, the above statistics were not enough to impress the investors – the company could not create much value for its stock. In fact, in the late 1990s, it was lagging far behind its competitors, Nestle and P&G in stock value and market capitalization. In 1999, the share price fell sharply, as the company failed to meet its performance expectations for the year‘s third quarter. This was attributed to two reasons – one, it announced a special interim dividend – a move read by the market as an indication that it had scaled back growth plans. Two, the growing popularity of Internet and telecom stocks was making investors move away from old economy stocks. Company insiders reportedly noted that its category based core strategy had lost its focus and needed to be reinforced to accelerate revenue and profit growth. Thus, in February 2000, Unilever announced a five-year growth strategy (expected outlay €5 billion), aimed at bringing about a significant change in the company‘s performance. The initiative was named the “Path to Growth Strategy”. As part of this strategy, the company announced a comprehensive restructuring of operations and businesses. Restructuring the SCM practices was one of the six major components of the “Path to Growth Strategy”. This initiative was expected to save around €1.75 billion.


Supply Chain Restructuring
As part of the restructuring plan, Unilever decided to cut down its vast brand portfolio from 1,600 to 400. The reason was to enable itself to focus on these 400 key brands, which included names such as Dove soap, Lipton tea, Calvin Klein fragrances, Close Up toothpaste, Magnum ice cream, and Omo fabric detergent. Company sources expected this move to help improve supply chain efficiencies. According to Unilever Co-Chairman Niall FitzGerald (FitzGerald), ― The consequence is that the tail brands will fall away in due course and we will be able to simplify and make major improvements to the supply chain and to the way in which we do business generally. The SCM restructuring plan was built around five focus areas. Unilever decided to make significant changes to its supply chain of 380 manufacturing plants across the world, by focusing on 150 key factories. Around 100 factory sites considered surplus were to be sold or closed. According to company sources, the above two exercises were expected to cost around €2.3 billion. The major thrust areas were: implementing executive purchasing; attracting, developing and retaining world class supply management executives; professionalizing the purchase of nonproduction items; enabling e-sourcing in all worldwide facilities; accelerating and leveraging simplification of supply chain; and driving information and management.


Supply Chain Organization
Unilever established a supply chain division that was led by two Vice Presidents (one each from the Foods and Home & Personal Care businesses). In addition, the company also set up a supply chain steering team to lead the supply chain restructuring process. The team was chaired by John Rothenberg (Rothenberg), Senior Vice President (Supply Chain, Home & Personal Care, North America), who reported to the Executive Management board of the company. Other members of the steering team were Gregory F. Polcer (Polcer) [Vice President (Global Sourcing Management)], heads of supply chain activities for the Foods and Home & Personal Care divisions, and heads of Information Technology (IT) and non-production item purchasing divisions. This steering team and the supply chain division were made responsible for managing the supply chain initiatives and delivering expected results. According to Polcer, this matrix SCM structure ensured that the entire supply chain restructuring exercise was supported by top executives and was collaborative in nature, across its businesses worldwide. The steering team met four times a year to evaluate the implementation of the initiatives and the results reaped. However, the team members remained in touch with each other through emails, video conferences and telephone on a regular basis. This enabled them to control and manage the supply chain restructuring initiatives much more efficiently.

The company also realized that having an efficient and committed supplier base was important for the success of its supply chain initiatives. Hence, it focused on fostering healthy relationships with its suppliers. To encourage suppliers to commit themselves to the “Path to Growth Strategy”, the company rewarded them on the basis of their ability to help the growth of brands, to improve their processes to reduce costs and to help in innovations. According to a Unilever supplier, the company was forming collaborative relationships with its suppliers rather than a traditional combative relationship. The company made its major suppliers responsible for inventory management at the factory level and provided them with Web-based tools to manage the inventory better. For example, in 2000, Unilever made Clariant Inc., [sole supplier of sodium isothionate (a key ingredient in soaps) for the Hammond, Ind., manufacturing plant since 1996], responsible for managing the inventory (of sodium isothionate) at the plant. The company also provided Clariant with Web-based tools that helped it make more precise schedules of shipments based on the supply requirements.

Sourcing
The company decided to make global sourcing an integral part of the supply chain restructuring thrust. It expected to save a lot in costs by sourcing on a global basis. The major function of the global sourcing management division, led by Polcer, was to ensure that supply management best practices were shared between the Foods and Home & Personal Care divisions worldwide. By adopting a global sourcing model, the company expected to take complete advantage of its purchasing power and leverage across divisions worldwide. Commenting on the benefit of global sourcing, Polcer said, ― Take sugar for example. If we combine the purchase, Latin America may save $5 million, but it will cost North America $1 million. Net/net, however, Unilever is better. For production purchases (Home and Personal Care businesses), the company set up more than 40 global commodity teams that included supply managers working in different geographic regions. These teams reviewed the regional and global supply markets for various commodities and chose the best solution for the company. Commenting on this, Polcer said, ― The teams ensure we extract the appropriate scale. If scale is derived regionally rather than globally, the supply management executives in the region put together a regional team for the purchase. The global commodity teams did not make production item purchases only for one business division – they made cross-divisional purchases as well. Some of the commodities procured globally were alkalis, surfactants, flexible packaging, oils and plastic molding. One of the commodity teams also won the “Path to Growth Gold Award”, an award instituted by the company to motivate its employees to commit themselves to the “Path to Growth Strategy”. This commodity team received the award for developing a project that involved consolidation of corrugated packaging (material) buying for Unilever in Europe. Under this project, the corrugated packaging buy in Europe was consolidated, and delivered to 110 factories (in Europe). This project helped in reducing the supply base and the purchase costs significantly. Apart from the global commodity teams, Unilever also had regional commodity teams, which were set up since some times supply markets for a commodity were more regional in nature. Under these circumstances, purchasing that commodity globally was not profitable.

Apart from cross-business purchases, the company also focused on promoting executive purchases for its non-production items. According to Unilever sources, executives who used non-production items or services in various processes throughout the company knew better about the industry than the supply chain team. Therefore, they could help a lot in strategically sourcing non-production items. Hence, the company encouraged non-production item users to help in the strategic sourcing of these items. This was expected to remove inefficiencies from the purchasing processes, resulting in significant cost savings.

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Pengen gue ulas sih ini.
Tapi next postingan aja yah. Kapan nya gak bisa janji in :P
Daah...

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