FEATURE
Unilever: Global Supply Chain Reboot
by Mike Silverman
From South Africa to Mexico, London to the Philippines, Unilever is seeing the impacts of the digital transformation of their Customer Operations on a global scale. We went to Unilever HQ to learn more about the digital innovations and process improvements that are enabling the consumer goods company to evolve and thrive in an increasingly volatile environment.
Unilever is one of the largest consumer goods companies in the world – their products are used by more than 3.4 billion people every day in over 190 countries, and they're the biggest producer of soap on the planet.
What may be most interesting for our Zero100 Community is that they're going through a massive global transformation that's reshaping their operations and supply chain organization, with Business Operations uniting Supply Chain and IT, and the creation of Customer Operations which – as the run engine of Unilever – is putting customers center stage in an increasingly volatile landscape. They’re also completely redesigning the tech stack that powers Customer Operations with leading technologies, including AI-powered capabilities and the largest cloud migration in the industry.
And, if that wasn't enough, this editorial feature includes our interviews with five Unilever leaders from around the world. We discuss Unilever's mission, reorganization, and tech stack with leaders in London, and then share stories of how the global changes are being applied locally in the Philippines, South Africa, and Mexico, closing out with key takeaways for the Zero100 Community.
BIG CHANGES
Transforming teams and tech
My host at Unilever’s London office was Juan Carlos Parada, Global Head of Customer Operations, which, as you’d expect given the name of the function, consists of all customer-facing activities as well as the global Logistics organization. He shared the challenges that Unilever and others in supply chain are encountering:
“We are facing unprecedented speed in terms of technology development that is constantly creating new business models. This, alongside increasing customer needs and expectations, is creating complexity with a lot of disruption. I believe managing all this and moving at the right speed is probably the largest challenge we all face at this point in time.”
In order to leverage the latest technology and prepare for future disruptions, Unilever made major changes to their organizational model:
- Moving from a matrix organization to a simpler, more category-focused business, organized around five distinct Business Groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream (my favorite);
- Uniting Supply Chain and IT to create Unilever Business Operations, supporting the Business Groups and benefiting from its scale and global capabilities.
A critical team within Business Operations, Customer Operations is seeking to do two things differently for Unilever’s end-to-end value chain: “One is to simplify the decision-making process, and the other is to digitize at scale.”
Addressing the Supply Chain and IT divide is critical for any organization. New analysis from Zero100’s Rewired 2030 research report finds that 58% of CSCOs say they have a digital roadmap, yet only 22% view Supply Chain as an equal to IT on build/buy tech decisions. Unilever’s union of the two functions is a radical change that will rapidly digitize their supply chain, as demonstrated by its Customer Operations team.
“With our technology-first approach, we are driving transformation across the business. We are delivering an innovative, customer-centric agenda that’s driving the digitization of our value chain, redefining the E2E scope of the FMCG industry, and enabling our five Business Groups to grow through superior availability and superior value.”
DIGITIZATION AT SCALE
Keep it simple with standard processes
Simon Smith, Vice President of Customer Experience, leads the teams that are digitizing Unilever’s customer operations and sales operations around the world.
Unilever created hubs to help refine business processes and reduce variance in their tech stack: “We've got thousands of processes, literally hundreds of technology platforms across all of our markets, all effectively doing the same job. And what we're doing is moving a big chunk, probably more than half of that work, into seven global hubs with the intention of simplifying, standardizing, and then digitizing those processes for efficiency, speed, quality, and a better experience.”
“Of course, digitization loves standard processes and simple processes.”
Reimagining their tech stack started with investing in a data lake, “which is a much more structured, unified way of capturing, storing, collating, and using all our data across all our systems. That's supported by much better processes and organization for creating and maintaining our master data. And then on top of that, of course, we've got a backbone of an SAP ERP system.”
And then the pieces on top of that tech stack is where the fun stuff comes into play: “We have chosen industry-leading technologies for planning, for customer interaction, for trade promo management, for trade promo analytics, for cash collection and claims. A total of about 20 different technologies are all leaders in their fields of these processes and we've knitted them together in an integrated way, sitting on top of our ERP platform to deliver an integrated experience for our own people and a better experience for our customers.”
By establishing a standardized base layer of technology, Unilever can roll out new technologies like Kinaxis across the hubs in a single weekend – a process that would have otherwise taken 18 months to roll out market by market.
“The power of the hubs is not about simply making organizations simpler and leaner. The power of the hubs creates a fantastic foundation and platform for digitizing at scale and at speed, and we are already seeing the advantages of that playing out at Unilever.”
STEADYING THE SHIP
How the Manila hub is improving operations in a volatile market
Navdeep Singh is the Vice President of Customer Operations for the Southeast Asia region at Unilever, based in Manila, the Philippines. He explained that supply chains in the Philippines are much longer than those in Europe as there are more partners in the supply chain and extended lead times. Longer supply chains can mean a larger bullwhip effect.
Navdeep said: “That's what we are trying to do with all these technology transformations – we are trying to improve the visibility of our supply chain. We are trying to use artificial intelligence models to better forecast so that we can capture the demand volatility and also make sure that there is visibility across the value chain, which is much longer than you will typically see in a developed market.”
The global transformation helped Navdeep’s team with two important functions when it came to improving operations: reducing logistics cost and improving inventory management.
Navdeep shared how inflation typically runs at 4-5% with high demand volatility. In order to reduce their logistics cost as a percentage of turnover, they use the Distribution Requirements Planning (DRP) System. “The DRP system helps us plan better 'loadability' of trucks. We can run bigger trucks, which means lower cost of operations and logistics, and also run more green and sustainable operations in logistics.”
The challenge with inventory management is accentuated by the regional market: “Southeast Asia experiences extremely high demand and with the e-comm channel demand, which is growing, our demand volatility has increased even further.” The new Kinaxis planning system addressed this and helped improve the quality of stock and reduce non-moving and slow-moving stock, which enhanced service to Unilever’s customers and channels.
STEPPING IN
How a global hub helped the Durban team in a time of crisis
In 2021, there was a 48-hour period of civil unrest in Durban, South Africa, that affected businesses throughout the region, including the Unilever head office, two major manufacturing facilities, and the facilities of many Unilever suppliers. Peter Lamplough, Vice President of Customer Operations in Africa, recalled the experience, saying there was “mass looting, mass violence, and destruction of both industry and key infrastructure points. It was a really scary time to be in this part of South Africa.”
With the disruption, one of Unilever's key packaging suppliers was damaged so badly that it had to shut down. “Out of nowhere, we had a really unexpected disruption to our supply chain. That meant the whole team had to double down, go back, and replan everything from a supply side, as well as from a demand and a promotion side.
“The team based in Durban were themselves impacted by the civil unrest, so we really weren’t in a position to be spending long hours in the office doing extra work. And it was the first time that working with the hubs really provided a moment of clarity for me because our colleagues sitting in Chennai, India, were removed from the civil unrest. They could get on with the job of replanning both the supply and the demand side and gave us some scenarios from which to make decisions about how best to get through the crisis.
“It was a really amazing moment of resilience when they were able to step in and help us. Service dispatch rate didn't drop, and we didn't miss turnover. We were able to change plans with customers and recommend replacement promotions that enabled them to continue serving consumers with much-needed products.”
Things would have been very different if the hubs weren’t up and running at the time: “If the civil unrest had happened when all of the work was still being done in-house and we didn't have the resilience option of the Customer Operations hub, there would've been huge business disruption. It's as simple as that. We would've been significantly out of stock until the crisis had abated.”
ONE SUPPLY CHAIN
How AI is powering a next-level partnership with Walmart Mexico
With a customer-centric agenda designed to digitize and optimize Unilever’s complete end-to-end value chain, Customer Operations aims to leverage technology to create full operational integration with customers, fully embracing the concept of “One Supply Chain” to drive superior customer experiences and unlock new competitive advantages for both the customer and Unilever.
Walmart Mexico, the retailer’s second largest global operation outside the US, has worked with Unilever on a collaborative planning, forecasting, and replenishment (CPFR) program since 2009. But in 2022, they launched Sky, a pilot designed to fundamentally disrupt and advance their partnership. Regina Montes, Lead for Customer Experience for Unilever in Mexico, explains more: "The basic concept of Sky is to connect with our customers, in this case, Walmart, to a point where we don't notice where one supply chain starts and the other one ends. Getting us closer to our consumers and getting our customers’ needs into the backbone of everything.”
The way they achieved this collaborative supply chain was by building an AI system that automatically ingests Walmart data by SKU, by store and by day, accumulating up to five years of historical data. Unilever feeds promotional plans for the next 3-4 months into the system, and the algorithm takes into account historical information, price elasticity, recent trends, special events, and other metrics. The system then generates more than 3.1 million forecast combinations every day, and the neural network model makes 12.5 billion computations per day, feeding the data back into the Walmart system. This AI and data-enriched system can then trigger the replenishment of 20 million cases of Unilever products around the country.
The program was piloted with Unilever’s Nutrition Business Group, including brands like Knorr and Hellmann’s, which represents 30% of Unilever Mexico’s business. The pilot has achieved 98% fill rates and 98% on-shelf availability. Regina said: “This technology is enabling growth from improved stock and, as one supply chain, it's enabling the delivery of profit, as well as the possibility to work with Walmart's logistics capabilities more efficiently to become true value creation partners, unlocking the concept of “One Supply Chain” across both companies.”
The Sky program will be expanding to the entire Walmart Mexico business, and it will be piloted in other markets to begin global expansion.
POST-AI
Getting ready to adopt the next disruptive tech
The recent explosion of AI capabilities showcases the need for supply chains to quickly leverage the latest technology. However, new analysis from Zero100’s Rewired 2030 research report finds that while 83% of CSCOs say that supply chain is directly accountable for business results, only 11% have comprehensive AI-enabled, long-horizon planning. These gaps need to be addressed faster.
One idea that is central to Unilever’s transformation is the S-curve. The measure most commonly applied to tech projects, it shows that the benefits from a new product are slow at first, then rapidly accelerate, and finally taper off again. Simon shared how Unilever is applying this way of thinking to their global transformation, both in terms of technology and organizational structure.
“We talk a lot about our S-curves. Two S-curves are how we think about this – the near future, and the more distant future. The current S-curve is what we are building at the moment and is all about the concentration of the work in our hubs. Building these partnerships with our two strategic operating partners and our technology partners, we are well on the way to creating a solid foundation for our operations under a project we are calling Integrated Operations (iOPS). And that gives us standard processes, harmonized and simplified processes, and a more unified and integrated technology stack. But we consider that our first step. It's got some AI and some machine learning, which is really taking us a big step forward in terms of our operational capability, the value that we're getting out of the system, and the experiences our people and our customers get with working with Unilever. It's a big step forward.
We have been and are creating a fantastic foundation at Unilever so we can grasp opportunities when they come over the horizon on the next S-curve.”
“But we really see it as just the foundation of the future where we’re creating the next S-curve, based on the first one. That first S-curve is a much more robust, simple, standard foundation that's already digitized. That is a fantastic platform to now start driving any new technology that comes down the way. And nobody knows what the new technology's going to be in two or three years’ time. You saw how ChatGPT took the world by storm in six months. Not many people saw that coming. What's the next ChatGPT? We can't always be sure, but what we are sure of is that we have been and are creating a fantastic foundation at Unilever so that we can grasp those opportunities when they come over the horizon on the next S-curve."
CHEAT SHEET
Key takeaways for the Zero100 Community
Reorganize for standardization and digitization
Zooming out to the reorganization that Unilever undertook in their transformation, Simon shared two things driving Unilever’s success at the moment:
“First, digitization loves standardization and scale. We’ve created that in our hubs, and that’s accelerating our digitization journey tremendously. The concept of creating focused hubs to drive digitization is really working for Unilever.
“The second thing is, when you’re landing technology, make sure that you’re building teams around products that are measured on outcomes. You put operational, technology, and data folks all into a team that is measured on the outcomes that you’re trying to create, not just on landing the latest new technology.”
Rethink traditional supply chain boundaries
Regina talked about how the Sky program is unlocking enormous potential by sharing large amounts of data with their Walmart Mexico customer and erasing the former barriers between their supply chains:
“I think the number one lesson is that technology gets you a long way. I’m taking this quote from Walmart themselves: ‘Retail is detail.’ But we have a ton of stores, over 2,000 stores, and we have a ton of SKUs. So if we don’t do the work through technology, there’s no way we can execute the level of detail that our shoppers deserve or have that great execution at store-level. We can’t do it without technology.
“The second learning is collaboration. For us, having Walmart telling us they want to improve the fill rate and that they’re willing to collaborate with us, in order to get the fill rate, really powered up how we get things done – and not have any surprises about decisions being made in one team that affect the other one without them knowing. We really eliminated that.”
Embrace digitization for reinvention
Juan Carlos spoke to us about how the Unilever supply chain is different now, saying it has altered to be unapologetically customer-focused with technology at the heart, explaining why this is critical when it comes to increased resilience and agility. Change, both as a result of tech developments and broader disruptions on a global level, needs to be embraced – and now.
“I could not be more excited about what we’re doing at Unilever because we are digitizing at scale. We are evolving our people [strategy], we are bringing benefit to the business, and we are creating models that are new to the market… I believe it is the key source of competitive advantage and success in an extremely complicated environment that is only going to become more challenging, more fragmented, and more difficult.”
This case study shares the organization, processes, and tech platform behind Customer Operations and reveals how Unilever is preparing to leverage and adopt the latest, disruptive supply chain technology now. Global supply chains will continue to evolve and partner with IT capabilities to stabilize operations in increasingly volatile markets, and being part of that evolution looks to be exciting as well as vital when it comes to delivering business results.
Check out the full interviews with Juan Carlos, Simon, Navdeep, Peter, and Regina at Unilever:
About the Author
Mike Silverman
Research Director, Zero100
Mike Silverman is a Research Director at Zero100, creating research and content for our community. A former journalism nerd and recovering management consultant, he found his groove doing research and content at L2 and with Scott Galloway. He also led the DTC Labs data-driven strategy practice at Barbarian before joining the epic team at Zero100. He holds a BA from Emory University and an MBA from NYU Stern School of Business.