Wednesday, September 11, 2013

Unilever's Keys to Success

The IKEA discussion made me think about other companies with successful supply chain models that competitors have not been able to replicate.  Among the top 5 companies that made the cut to 2013 Gartner’s Top Supply Chain [1], there was only one company that is not known for being a “titan” in its industry: Unilever.  Yes, everybody knows Unilever, but it has always been behind its closer competitor, Procter & Gamble, when it comes to market share and positioning.  So how has Unilever managed to beat companies like Coca Cola or Wal-Mart when it comes to supply chain practices?

In 2010, Unilever launched an organizational transformation plan that completely switched their gears.  They decided to utilize supply chain sustainability to drive their growth.  This was not an easy conversion and had to start from the core.  Not only processes and policies changed, but people’s mindset changed, which is one of the most difficult challenges to accomplish within an organization.

Their first key step was to incorporate sustainability as part of their long-term strategy.  They were no longer being sustainable just because other companies were doing so or external factors were forcing them to do so.  They created a vision for growth in sustainability, sales, positioning, and consumption that would span for the next 10 years.  Today, they can confidently say that sustainability is part of their backbone.

To reach where they are today, Unilever maximized their available resources and went as far as creating a dedicated division that focuses on aligning strategy to sustainability.  This division not only includes experts in engineering and business, but also agronomists that can provide a different perspective and add the necessary skillset variety to the team.  In addition to that, Unilever has also redesigned some of their transportation processes to lower shipping and handling costs; moreover, they also modified manufacturing by investing in eco-friendly equipment to incorporate in their production line.

Last, but not least, they assigned a Chief Sustainability Officer and made every effort to learn more about their suppliers’ business practices.  The latter helped them “weed out” those suppliers that were not aligned with their vision of being sustainable and could hurt their reputation.  The appointment of a CSO was crucial as this became a business unit that has grown into the organization’s core beliefs.

In sum, there were two main “keys to success” that Unilever adopted to become a Sustainability-Driven grown company:
1    1.  Identifying, accepting, and committing to the need for change.
2    2. Aligning every party involved in the chain to their strategy to make sure they all moved towards the same goals.  Those who were not on board were left behind.

It sounds so simple, yet it completely changed their business, and they continue to grow stronger today.  How difficult might this approach be to replicate?


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