Discuss about the Unilever's Operation Management.
Unilever is among the largest consumer product manufacturers globally. Unilever specializes in the manufacture, distribution, and sale of various trusted brands and specializes in the manufacture of Beverages, Food, personal care and cleaning products. The company was established in 1930 and is today spread across the globe. As of 2017 the company has a total of 169,000 employees and has registered a net income of 5.5 Billion Pounds in 2016. The company has registered constant growth over the years but automation and advances in technology have resulted in the number of employees working for Unilever to reduce from 290,000 in the year 2000 to just 169,000 in 2017. This has resulted in the current workforce needing to take up alternative responsibilities which has added pressure on the Unilever operation managers and staff.
Unilever's Operation Management
Unilever has distributed its operations globally which has resulted in the head office needing to coordinate and manage operations at a global scale. This has resulted in the need to distribute responsibilities among operation managers who have been assigned specific roles that allow each manager to monitor and report their assigned work stations performance. There are ten decision areas that the operation managers have been assigned to manage namely:
- Products/ Service Design,
- Quality management,
- Process and Capacity Design,
- Location Strategy,
- Layout Design and Strategy,
- Human Resources and Job Design,
- Supply Chain Management,
- Inventory Management,
- Resource scheduling and Management,
Each of these operations plays a critical role towards ensuring the brands smooth operations and also ensures the brand remains competitive on the global market (Thompson 2017). To manage each of the operational tasks effectively, operation managers have been assigned to monitor, manage and report their operation progress following a hierarchy leadership platform. This eliminates the requirement for highly ranked officials to manage operations and frees their thus allowing them to monitor global operations, expansion planning and brand development.
Unilever's Supply Chain Transformation
Declining sales and revenue generation due to increasing competition in the consumer good and service market meant that Unilever had to adopt a radical supply chain transformation to remain in operation. The first move would see Unilever adopt a new approach to managing its supply chain by focusing on the following areas:
- Understanding the supply chain influences to growth,
- Emphasis on Improving Profit margins through Automation,
- Increasing capital efficiency,
- Developing a Unilever Sustainable Living Programme.
In addition to the above-mentioned areas, Unilever has also fully integrated its back office operations at the supply chain control tower of its operations centre in Poland. This would allow better monitoring of operations at different manufacturing plants and data analysis which can help determine areas that needed further improvement. As digital technology and the internet make connectivity easier Unilever back office operations also becomes more efficient with regard to monitoring and report on different Unilever manufacturing and supply chain operations (Marle 2016).
Another major development related to the supply chain transformation was the way Unilever took charge of handling its European Logistics. Traditionally, Unilever had depended on contracted logistics companies to distribute its products to customers across different regions in Europe but this was leading to high costs and low revenue generation. Instead, Unilever would develop its own supply chain network known as the point to point network which adopted a courier type approach of distributing Unilever products across Europe. The point to point network would comprise of 9 main hubs across Europe which would result in reducing the movement of a truck by 20%.
Unilever's Operation & Supply Chain Management
Unilever has 260 factories and over 460 ware houses across the globe results in Unilever having huge operations and supply chain management task on its hands. This was one of the main reasons linked to Unilever revamping its operations and supply chain management due to the company gradually registering lower profits as the brand expanded. This is contrary to expansion laws where a business should actually be registering rising profits with expansions which have resulted in Unilever adopting some radical approaches towards regaining optimum operations and spiking its profit margins (SupplyChainBrain ND).
Unilever had achieved an all-time high of 290,000 employees in the year 2000 but this high number of employees also meant that higher expense would be incurred by the business. This would prompt Unilever to begin a process and manufacturing automation transformation at many of its factories and ware houses which would see the company lay off a large number of employees. while this may sound negative the company had been forced to adopt automation for its processing to keep costs low and maintain its competitiveness against brands when where developing from emerging economies. Several competitors had already automated their operations which resulted in slashing production costs considerably and to remain in business Unilever had to adopt the same strategy.
Supply Chain management
The supply chain transformation adopted by Unilever would allow the business cut its supply chain costs directly by 20% which was a major achievement in terms of cost cutting. It also meant that Unilever was able to improve its supply chain management operations which would help improve efficiency and ensure its 2 billion customers were satisfied. The supply chain management would also be backed up by back office operations which helped distribute managerial responsibilities thus ensuring Unilever smooth operations and constant availability of its products and services to its esteemed customers.
Unilever's Lean Thinking
Unilever would also require developing a different approach linked to manufacturing so as to reduce overhead expenses and costs related to manufacturing products which remained on shelves for long periods. This meant that Unilever would need to put in place a lean thinking task force who would analysis the brand's product consumption over a specific period and determine changes in consumer purchasing interest. This data would allow Unilever would determine periods when certain of its products attracted more demand from consumers and when the products had lower demand (LeCoque 2012). This would, in turn, allow Unilever organize is factory production lines accordingly and organize the production of fast flowing products thus helping reduce costs incurred during the manufacturing process. It would also mean less capital was invested in products that sat on shelves and allows the business to have more liquid capital at all times.
Unilever's Capacity Planning
Another Area Unilever would need to focus its attention was towards capacity planning which involves the expansion of production capacity for certain products which have high consumer demand. OMO, Skip laundry detergents, Knorr, Robertson’s, Knorrox, Aromat and Rajah have all registered overwhelming demand among consumers globally. This made it important for Unilever to increase its production capacity for these brands as opposed to other products which may register lower demand (Unilever 2013). This would also allow Unilever to focus its efforts towards certain products thus allowing the brand to increase its profits and reduce overhead expenses related to mass productions of a wide array of products.
Being able to adopt the above-mentioned measures has allowed Unilever to cut down its manufacturing costs and also allowed the business increase is productivity and supply chain management. All these factors have contributed towards the business operations and growth thus allowing Unilever to maintain it’s competitive and edge on the global consumer product market. Today Unilever is ranked 5th position among the top 10 FMCG Companies in the World (Lists 2017).
LeCoque, J 2012, Operational Savings: How P&G, Unilever Benefit from Shorter Product Hold Times, viewed 31 July 2017, <https://www.industryweek.com/leadership/operational-savings-how-pg-unilever-benefit-shorter-product-hold-times>.
Lists, TB 2017, Top 10 FMCG Companies in the World 2017, viewed 31 July 2017, <https://www.mbaskool.com/fun-corner/top-brand-lists/17186-top-10-fmcg-companies-in-the-world-2017.html?start=5>.
Marle, G 2016, Major supply chain revamp pays dividends for Unilever across Europe, viewed 31 July 2017, <https://theloadstar.co.uk/major-supply-chain-revamp-pays-dividends-unilever-across-europe/>.
SupplyChainBrain ND, How Unilever Derives Value From Its Supply Chain, viewed 31 July 2017, <https://www.supplychainbrain.com/content/research-analysis/gartner/single-article-page/article/how-unilever-derives-value-from-its-supply-chain-1/>.
Thompson, A 2017, Unilever’s Operations Management, 10 Decisions & Productivity, viewed 31 July 2017, <https://panmore.com/unilever-operations-management-10-decisions-productivity>.
Unilever 2013, Unilever to invest €75m in capacity and capability, viewed 31 July 2017, <https://www.unilever.com/news/Press-releases/2013/13-01-31-Unilever-to-invest-EUR75-million-in-building-capacity-and-capability-in-South-Africa.html>.