Supply Chain Management Assignment: SCM in Unilever
Question
Task: Write a supply chain management assignment critically analysing the supply management process of Unilever.
Answer
Introduction to the theme of supply chain management assignment
A group of different processes that is involved in the production and the distribution of products and services which usually follows a sequence is called the supply chain. The supply chain acts as a network for connecting firms with their suppliers who produce and distribute the products or services. The supply chain is composed of every company and firms who are involved in the accumulation and transportation of components and parts of a specific product to the producer or the manufacturer. In this study, the supply management process of Unilever will be critically analysed, then a report of how the implementation of a recent technological advancement like blockchain helped the supply chain management and finally there are some supporting functions that are linked to this operation and they can be improved for a sustainable business growth for the company.
Critical Analysis of Operation Management of Unilever
The products of Unilever include personal care items, food, beverages, and cleaning agents. The operations management of the firm leverages the end-to-end supply chain by eight disciplines namely planning, engineering, procuring, logistics, quality, safety, and customer service. There are more than 460 warehouses and 260 factories spread across 90 nations (Supply Chain Transformation, 2019).that help the company operate and serve more than two billion customers. In the recent few years, however, the company has faced continuous issues with the sustainability of the supply chain. One of such issues was with the pace at which the orders are made. The customers have faced the issue with timely delivery and there have been complaints that the waiting time for the delivery of the goods could be very long. This delivery issue is due to the declination in the process of procurement of materials and resources which is responsible for creating the delay between the customer and the company. The welfare of the employees is also a problem inside the warehouses of the company.
(Source: Unilever, 2019)
To have effective competition, be successful, and hold a major position in the global market share, any organization needs to have a potential supply chain management. The implementation of a strategic supply chain management system has led Unilever to draw its focus on relationship building with the supplier of the resources that their product uses and earn their trust and commitment. Thus, creating a strategic relationship between Unilever and the important suppliers, the environmental uncertainties that can be found in the supply chain can be eliminated. This leads to the execution of an effective lean supply chain management. There are other factors that can reduce or eliminate the organisational processes and its inefficient and redundant parts. This is going to support Unilever in having a smooth process of workflow in the supply chains which in turn is going to minimise any kind of processes that does not belong to the system. If the efficiency of the supply chain is increased then Unilever can benefit in sustainable ways (Supply Chain Transformation, 2019).
To create a lean supply management chain each area that is affected must be examined. The first of which is the procurement. This is a process which focuses on creating strategies which are beneficial in the long-term for the supply chain of Unilever and its purchasing power.
Unilever has two kinds of purchasing power, one is the group for corporate purchasing and another is the power of local purchasing.
(Source: Unilever, 2019)
At the headquarter of Unilever there is a unit which is responsible for the order from the local purchasing group. This can, as there have been in many cases, be a waste of resources as there are duplicated purchasing functions at the lower level of Unilever’s corporate headquarters. Having so many purchasing departments can lead to conflicts and wastage of valuable resources. Unilever follows a lean manufacturing process which has in recent years getting accepted as the standard process of manufacturing in many other companies. The process of manufacturing maintains a top-tier operation while reducing wastes and curbing the use of resources. For Unilever the quality of their products are very important and the lean manufacturing process aims at maintaining this quality and delivering it while generating less waste and an increase in efficiency in the process. Unilever aims at producing products that are of top quality and if the customer likes them and it lasts long then there would be no need for extra resources.
This is followed by warehousing. For a multinational company like Unilever this is not really a problem. There are more than 460 warehouses and 260 factories spread across 90 nations that help the company operate and serve more than two billion customers. However, the processes of these warehouses should go through a strict examination in an effort to find out the areas that can eliminate waste and steps that just flower the process. Unilever has taken as an effective measure for this problem by incorporating inventory control management which helps the company in reducing the cost. Unilever has plans to reduce unnecessary inventory thus lowering the space of the warehouse and handling the overall cost by lowering it.
(Source: Unilever, 2019)
The last problem is the problem of transportation and how Unilever is reacting to it. Unilever is focusing on reducing the shipping costs of transportation. It has been observed that to fulfilthe customer’s desire and provide them satisfaction the cost of transportation increases and the quality of the product decreases. Thus, this leads to shipping decisions that are really bad for the company. To avoid all that, the lean process is implemented and areas are determined that are open to be streamlined thus multiple companies and chains of shipping and ultimately reducing the costs.
Using the lean supply management process Unilever is able to examine all the processes that are in work with the supply chain and helps in identifying the sources that are causing unnecessary waste or resources that are not needed. This consciousness can be helpful in maintaining a competitive market, provide good services to the customers and earn great revenues generating profits for the company. Sustainable manufacturing process which has in recent years been accepted as the standard process of manufacturing in many other companies should be implemented. The process of manufacturing maintains a top-tier operation while reducing wastes and curbing the use of resources. For Unilever the quality of their products are very important and the lean manufacturing process aims at maintaining this quality and delivering it while generating less waste and an increase in efficiency in the process.
Implementation of Technology
Unilever has involved its steps into a year-long pilot project that involves the use of high-end technology of transaction management within supply chain management of their tea production. The supply chain of the company starts from procuring resources and raw materials from farmers and suppliers then using them for producing the products that are desired by the specific customers. This is one first where the blockchain is used in practical applications of the industry (Bilovodska, et al., 2018). The project partners can be enabled to track the products reliably all along the supply chain and the shared system of data which is based on blockchain can make the validation of the sustainability of the agricultural practices of the tea farmer and pay their rewards accordingly.
The companies that are involved in this blockchain project other than the manufacturer Unilever includes Sappi- a packaging company, Sainsbury’s- a grocery retailer working alongside firms of banking- Barclays, BNP Paribas and Standard Chartered and several start-ups in the field of technology. The group is working together to develop a system that can track and verify the contracts of the farmers working in the United Kingdom who are responsible for supplying tea to Sainsbury’s and Unilever. Provenance, a supply chain services firm based on blockchain and Halotrade, a company for supply chain data processing and supporting analysis of information, provides the majority of the technological support.
The technology of blockchain has been designed for real-life application by the farmers whose main focus is on the methods that can help in the increase of their harvest without any usage of extra land (Bilovodska, et al., 2018). This is beneficial to them more than the preferential pricing. The sustainable practices target of the banks is simple, that is to give financial support to the practices discussed. However, the banks find these practices often very difficult to give validation considering whether the farmers are actually using such methods. Unilever’s sustainable agricultural program to source all the raw materials in sustainable ways by the end of 2021 is also getting help from this initiative. The company has decided to practice their business in a way that creates zero waste and in turn benefits the earth.
The initial structure of the project is to involve gathering the farmer’s information about their produce, unit price, sustainable production methods of harvesting and the unit price and connect it to a blockchain. Using this shared data system of the blockchain all the partners in the project can reward the farmers with verified methods of payment that are sustainable and secure.
The ledger system used by the blockchain is secure and uses digital currencies such as bitcoins. This is a widely regarded method of transaction of all kinds which also includes the supply chain and its transparency. This system will help Unilever maintain a record of their supply chain process in a very convenient way using the digital platform.
Sustainability as Supporting Function
Unilever follows a step-by-step model of business where the idea of sustainable supply chain is to be transformed into reality. For this to happen the company follows the Porter’s Value chain where the following component are included:
- Procurement: The supply chain of Unilever begins with the procurement of raw materials and resources from the supplier or the producer which in most cases are the farmers, and then use them to produce items and materials that are needed in the market and desired by the customers. Logistics:
- Operations: The supply chain is composed of every company and firms who are involved in the accumulation and transportation of components and parts of a specific product to the producer or the manufacturer.
- Technological development: Recently the company has started to integrate modern technological advancements such as AI and blockchain in their supply chain management systems.
- Infrastructure: The implementation of a strategic supply chain management system has led Unilever to draw its focus on relationship building with the supplier of the resources that their product uses and earn their trust and commitment. Thus, creating a strategic relationship between Unilever and the important suppliers the environmental uncertainties that can be found in the supply chain can be eliminated.
- Human Resource Management:Unilever has some properly organised policies that are sustainable for the maintenance and care of key staff working all along the supply chain and the network of logistics.
From the procurement of raw materials to the distribution of its products in the global market Unilever has maintained and followed a standard lean process of supply chain. With the help of this supply chain Unilever transports the products to the market, thus generating revenues and profits.
In the present times of uncertainty the company should draw their focus on the sustainable ways in which the company can improve its existing supply chain in order to increase its grasp in the market and meet the high customer demands. Logistics is one of the segments that can be helpful in generating business and can benefit from the sustainable growth. The performance in the business operations of Unilever will increase once the focus is shifted towards logistics.
Unilever will become efficient in handling the everyday activities of production and the management of the goods and services produced once logistics management is incorporated as a sustainable practice. The improvement in the sustainable options can help Unilever in establishing green corridors across the most important locations. For sustainable growth the warehouses should go through a strict examination in an effort to find out the areas that can eliminate waste and steps that just help in catalyzing the process. Unilever has taken as an effective measure for this problem by incorporating inventory control management which helps the company in reducing the cost.
There are improvements that can be done with the help of sustainable supply chain management and this can be done by the help of the network of logistics which would help the firm to increase business and create benefits from the business by reducing costs, providing better services to the customers and curbing GHG emissions. Another important segment that is crucial in developing a sustainable supply chain to reap benefits from it is the engagement of highly skilled labour all around the world. Unilever has some properly organised policies that are sustainable for the maintenance and care of key staff working all along the supply chain and the network of logistics. With the help of the sustainable improvements Unilever can be helpful in identifying the capabilities of employees that are essential for the growth of the company and attainment of higher business strategies.
Conclusion
The supply chain acts as a network for connecting firms with their suppliers who produce and distribute the products or services. In the recent few years, however, the company has faced continuous issues with the sustainability of the supply chain. One of such issues was with the pace at which the orders are made. The customers have faced the issue with timely delivery and there have been complaints that the waiting time for the delivery of the goods could be very long. This delivery issue is due to the declination in the process of procurement of materials and resources which is responsible for creating the delay between the customer and the company. The process of manufacturing maintains a top-tier operation while reducing wastes and curbing the use of resources.
The implementation of a strategic supply chain management system has led Unilever to draw its focus on relationship building with the supplier of the resources that their product uses and earn their trust and commitment. Thus, creating a strategic relationship between Unilever and the important suppliers the environmental uncertainties that can be found in the supply chain can be eliminated. This leads to the execution of an effective lean supply chain management. There are other factors that can reduce or eliminate the organisational processes and its inefficient and redundant parts. For sustainable growth the warehouses should go through a strict examination in an effort to find out the areas that can eliminate waste and steps that just help in catalyzing the process. Unilever has taken as an effective measure for this problem by incorporating inventory control management which helps the company in reducing the cost.
References
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