LOG201 Supply Chain Management

Question:

This assignment will briefly discuss the Unilever Company’s supply chain management.

This assignment explores the supply chain management of Unilever Company, paying particular attention to its product-lining and financial departments.

The Company’s profit margin is lower than its competitors nestle, Proctor & Gamble or many other companies.

However, Unilever Company’s consumer surveys are a powerful weapon to help them propose new ideas for product manufacturing.

This may prove useful in narrowing Unilever’s profit margin compared to its competitors.

Answer:

Introduction

Supply chain management is an essential aspect of any organizational operation. It must be supported by the best technology and processes.

Supply chain management refers to the entire process of managing raw materials manufacturing and guiding them for market entry.

Manufacturing is more than just about making something. It involves many factors before it can be produced (Christopher 2016).

Unilever was chosen as the manufacturer, as they are the largest consumer goods company in the world. Their revenue for 2012 is $1.2 billion.

It is the most important company in the production of food products like margarine.

It is one of the oldest multinationals and has a presence in at least 190 countries.

It is the owner of more than 400 brands worldwide, but its focus is on thirteen brands like Knorr, Sunsillk and Lipton.

Home Care and Personal Care are the main divisions. Foods and Refreshment is another.

The Company has many research and development centres that are located in different parts of the world, such as the United States and India.

It was established in 1930, following a merger of the Margarine Unie (Dutch) and Lever Brothers (British).

The Company made a significant impact on world business by changing its image to be more than a manufacturer and processor of oils and butters.

This assignment will examine the Unilever Company’s supply-chain management. It will consider the key supply chains, the make process, as well as the supply forecasting.

The Supply Chain Key Flows

Product Flow

Figure 1: Unilever’s Product Flow

Unilever claims that people all over the globe will have access to 330,000 products in a matter of minutes.

The top categories of products include dressings, tea, ice cream, housecleaning, daily haircare, and other household cleaning.

It is the largest supplier of fast-moving consumer products in the world.

The company’s vision is for people to feel good and offer a wide variety of products.

Because of its production of many products, however, the Company was unable to sustain this vision.

Due to the focus on a wide range of products, the supply chain management becomes insufficient.

This is when the Company realized that it was urgent to reform its supply management.

To focus more on select products, they reduced the number of their products.

The US and Western Europe have experienced severe food business recessions.

To increase sales, many companies were forced to close down.

The company then began to concentrate on different products for different markets, which allowed it to grow its capital (Fawcett Ellram & Ogden (2014)).

The Company’s supply chain was also restructured due to other factors such as the growing popularity of internet.

It altered its existing method of operation and required it to change to meet the new business environment.

Unilever created a world-class management of supply to ensure product flow and income. This was broken down into two parts: project methodology and focus areas.

These include global procurement, supply chain organizations and technology.

Project methodology is the process of identifying projects, agreeing targets, providing resources etc. (Monczka, et al. 2015).

Information Flow

Different ways can be used to encourage information flow in Company, such as sharing organizational practices, training, and awareness.

Training and awareness is key to inducing this process. It encourages the establishment of an awareness program to reduce the manufacturing’s impact on the environment.

Unilever encourages all people to participate in the organization, with their potential feedbacks as well as suggestions.

Unilever is not very environmentally friendly as shown by the high levels of mercury exposure in India.

It was forced to shut down India’s thermometer plant. Then, it was sued by the Indian government for contributing to the high mercury exposure rate (Ross 2013).

Cash & Return Flow

Unilever’s financial planning is a key focus. Cash flow and return flow are two of the most important factors.

It aims to have clear financial plans to ensure maximum profitability.

It believes in controlling the monitoring and measuring of KPIs.

Cash flow is an important element of financial planning.

It serves as the basis for financial reporting every year.

Although the Company has a limited profit margin, the cash flow and return flow it generates from its different product lines are very important.

The Company’s profit margin is constantly challenged by its largest competitors like Nestle, Proctor & Gamble, and many others (Wisner Tan & Leong (2014)).

Figure 2: Comparative Cash flow of Unilever

The management of flow between different operations is described as supply chain management. This includes inventory management, raw material management, and many other areas.

These are some of the recommendations that can be made based upon theory in supply chain management (Rushton Croucher & Baker (2014)).

Recommendation on the Different Key Flows Within Supply Chain

Here are some recommendations for Unilever Company:

Property software can help with solid inventory management.

For an accurate measurement of raw materials, production facilities must be computerized

Technology is needed to solve complex problems in value chain management

It would be useful to look at the examples of some of the most successful companies in this area.

Walmart is an example such company that has managed complexity within its value chain efficiently, which is also a strength.

To avoid any shortage of labor, minimum wages should be paid to the appropriate laborers

The Make Process

Unilever has a strong market position, but some of its weaknesses have severely affected its production.

These are just a few of the many weaknesses that have greatly hampered Unilever’s production (Dyckhoff Lackes & Reese (2013)

There is less diversification in the business

Retailer dependence at an alarming rate

Its competition can copy certain products. This is not a good sign for the Company’s production success.

Rexona, Dove, and many other firms could easily copy the Company’s products.

To be competitive in business, the imitation rate has to be lower. This will allow the Company to find a solution to the problem of copying products.

One of the most successful examples is China’s production method. There are copies for nearly all types of goods, including smartphones and electronic appliances.

They are extremely popular at copying the Smartphone, just as they did earlier in the case of Samsung’s Galaxy series phones (Waters & Rinsler (2014)).

High levels of dependence on retailers for customer contact is not a good move to ensure market competitiveness.

Before the business was started, the retailers would have their own requirements and demands.

While the Unilever organizational values might not dictate the exact requirements, retailers will be compelled to agree upon them due to their dependence on them.

This would reduce their control over the requirements of customers.

A retailer might try to meet the needs of customers by presenting them with its judgment. This judgement is based on the customer’s purchasing behavior.

A variety of factors could influence a buyer’s buying decision, including low pricing and poor quality.

But, the sales volume of a particular product is only an indication of its popularity among customers.

The main reason for a popular product’s popularity would not be revealed by this (Fernie & Sparks (2014)).

Lux soaps’ high selling rate was due to their different scents and fragrances.

It didn’t have any clinical advantages. However, retailers would only focus on the selling and communicate the same message about the Brand.

They would be encouraged to continue producing the same product line and encourage their competitors to do so.

It is crucial that the Company has a strategic approach to customer needs.

It is possible to prove its value in analyzing customer requirements on a specific product.

Recommendation

These recommendations can be made for Unilever based on theory of supply chain management. This theory supports the efficient management and control of inventories.

Resist less dependence on retailers

It is important to diversify production lines by modernizing production methods

A procurement software must be installed on the warehouse system. It helps to maintain the inventories efficiently.

All operations require computerization to prevent imitations.

Forecasting of the Supply Chain

There are many ways to forecast supply chain management.

The opinions of executives

Managers’ and employees’ opinions

Market research

Time-series model

These techniques are useful in forecasting the future supply chain management. However, not all techniques can guarantee the desired outcome.

The most crucial methods for ensuring a successful supply chain are market research and time-series models.

Market research can be helpful in analyzing strategies to gain a competitive edge in the market.

This involves analyzing the quality and production of your competitors.

One example is if a Company plans to launch food products. It needs information on the competitor’s product strategies.

This is due to the possibility of a counter-response to existing quality.

It isn’t just concerned about the product’s quality; it also considers all aspects of the product such as pricing and design (Ross (2015)).

Recommendation on the Best Method To Forecast SCM in Unilever

These are some tips to make supply chain management more effective (Ross (2015):

A survey conducted online could be a smart move for the Company since it relies more on intermediaries to sell its products.

Collecting data from e-commerce platforms in order to collect information on customer preferences for the products

Establishing an e-commerce platform for customers to make it easier to connect with them

You can include a large number of products in your personal e-commerce platform

It would be more beneficial to concentrate on the Company’s e-commerce platform, as this would reduce its dependence on intermediaries.

Conclusion

Supply chain management can be a complex task. This requires the support of many theories and concepts in order to implement it at an organizational level.

Unilever is a major brand in the world, but due to issues with its SCM it is not able to generate the same amount as other brands like Nestle or Proctor & Gamble.

It is possible to restructure supply chain management by making certain improvements in departments such as financial and product lining. This will give it the best shape.

Unilever’s supply-chain management can be affected by factors like the ones mentioned above.

Unilever considers consumer surveys the best method for reducing their dependence on retailers and improving the customer experience.

References

Unilever’s global company website.

Logistics & Supply Chain Management.

Pearson UK.

Management of supply chains and reverse logistics.

Springer Science & Business Media.

Supply chain management: Vision to implementation.

Logistics and retail management: New challenges and emerging issues in the retail supply chain.

Fundamentals of supply chain management.

CRC Press.

Operation Management, Sustainability & Supply Chain management (Vol.

Global logistics and supply-chain management.

John Wiley & Sons.

Purchasing and supply chain management.

Competing through Supply Chain Management: Building market-winning strategies through supply channel partnerships

Springer Science & Business Media.

Distribution Planning and Control: Managing in the Age of Supply Chain Management.

The handbook of logistics distribution management: Understanding the supply-chain.

Integral logistics management: Operations and supply chain management within and between companies.

CRC Press.

Quantitative models to manage supply chain management (Vol.

Springer Science & Business Media.

Global logistics: New directions and approaches in supply chain management.

Principles of supply-chain management: A balanced approach.

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