Sustainable Supply Chain Management

This assignment asks students to critically evaluate Unilever's approach to sustainable supply chain management. The analysis should encompass various aspects such as the company's commitment to reducing environmental impact, ensuring ethical sourcing practices, engaging with stakeholders, and implementing reverse logistics systems. Students are expected to draw upon relevant theories and frameworks from operations management, sustainability, and business ethics to provide a comprehensive assessment of Unilever's efforts.

Running head: SUPPLIER SELECTION OF UNILEVER
Supplier Selection of Unilever
Name of the Student:
Name of the University:
Author Note:

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SUPPLIER SELECTION OF UNILEVER
Table of Contents
Introduction:..................................................................................................................... 2
Supplier Selection Criteria and Issues:............................................................................3
High quality of raw materials:....................................................................................... 3
Sustainability:............................................................................................................... 4
ICT for Purchasing Operations:........................................................................................5
Supply chain organisational dynamics:.........................................................................6
Electronic commerce:...................................................................................................6
Knowledge management system:.................................................................................7
Purchasing cost analysis:.............................................................................................7
Cost analysis:............................................................................................................... 8
Inventory analysis:........................................................................................................8
Conclusion:...................................................................................................................... 9
References:....................................................................................................................10

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Introduction:
The purpose of the assignment is to analyse the three aspects of purchase
management namely, supplier selection criteria, purchasing cost and use of information
technology in purchasing operations and management. The paper studies these three
aspects from the view point of a purchase manager of an organisation. The organisation
selected to study purchasing operations is the British-Dutch multinational FMCG
company, Unilever. Unilever is the owner and manufacturer of branded products like
Lux and Axe which are worth billions of dollars. The FMCG giant has to acquire raw
materials, work-in-progress and finished goods from thousands of suppliers all round
the globe, both from local and overseas suppliers. The purchase goals of Unilever is to
acquire these materials at economic prices to ensure smooth production.
Tesco is one of the biggest local retailers of Unilever in Britain and sells a
number of products like Dove and Lynx. The products offered by Tesco can be
categorised into frozen food, fresh food, bakery, drinks, baby products, health, beauty,
pets, household articles, home, entertainment products, inspiration & events. Tesco
obtains products from a vast supplier market consisting of suppliers of diverse
categories(tesco.com, 2017). For example, it acquires FMCG products like health and
beauty products from FMCG companies like Unilever and Colgate-Pamolive. It acquires
dairy products and meat products from dairy and meat packing firms like Nestle. The
competitors of Tesco in the United Kingdom are grocery chains like Morrisons and local
grocery stores who sell grocery items. As far as electronics items are concerned, Tesco
has to compete with the super market chains and stores like electronic products like
Samsung stores and Sony World. The organisational goals of Tesco is to provide its

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customer segments chiefly in Britain with high quality goods and act responsibly
towards stakeholders’ interests. The organisational strategy of Tesco consists of several
components. The first strategy of Tesco is offering high quality products to meet the
demands of the customers at affordable prices to earn high revenue and market
position in Britain. The other two business strategies of Tesco are to reduce the waste
emission and recycle them to reduce environmental pollution. The company through
these strategies strive to benefits its stakeholders like customers, shareholders and the
community as a whole.
Supplier Selection Criteria and Issues:
Multinational FMCCG companies like Unilever purchase raw materials, work-in-
progress(WIP) goods, information and machinery from the suppliers according to
certain criteria. These goods are required by the production department of the company
to manufacture finished goods. The company has several purchasing goals of the
multinational company like production of finished products following its own international
standard which make it acquire materials from the suppliers. The following section
analyses the criteria Unilever should consider while selecting suppliers and decisions
required to be made for issues relating to the supplier selection:
High quality of raw materials:
The first criteria Unilever considers while selecting suppliers is that the suppliers
should provide the company with high quality raw materials. The purchase goals of the
multinational company is to acquire high quality raw materials which enable it to
manufacture and market high quality products. This enables the company to ensure that

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its products find a huge consumer base and earn it high revenue. The company
acquires materials using its own the Unilever Supplier Qualification System(USQS) to
select suppliers for all its raw materials(Unilever Supplier Qualification System., 2017).
This helps the management of the company to minimise the issues of low quality raw
materials that result in low quality finished products and consequent loss of consumer
loyalty. Thus, acquiring high quality raw materials remains an important criterion for
selecting suppliers. Unilever is one of the largest FMCG multinational companies in the
world which acquires materials from thousands of suppliers. The purchase managers in
the company have to decide whether the company should acquire materials from single
supply source of raw materials or multiple sources of raw materials. The managers also
have to make decisions whether the raw materials have to be acquired from overseas
or from local suppliers(Tibon & Edralin, 2016). For example, the company acquires
cocoa from the overseas suppliers of Africa and South America. This is an important
issue because it has deep impact on the purchase expenditure of the company. For
example, acquiring materials from overseas suppliers is more expensive than from local
suppliers. Thus, the purchase managers have to make important decisions regarding
sources of acquiring materials.
Sustainability:
The next important criteria which Unilever is recommended to consider while
selecting suppliers is sustainability. Unilever is a multinational company which operates
in more than hundred countries and comes under the purview of several environmental
laws Environmental Protection Act 1990(Environmental Protection Act 1990., 2017).
The customers today prefer to purchase goods from manufacturers who use

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environment friendly raw materials. Thus it makes it important for Unilever to acquire
environment friendly raw materials to manufacture environment friendly goods. It can be
pointed out that this production of eco-friendly goods are important for the multinational
company to earn high revenue by selling its products to a large base of
consumers(Akhtar et al., 2017). Thus acquisition of sustainable raw materials remains
one of the crucial purchase goals the multinational company needs to consider while
selecting suppliers to buy raw materials from. The purchase managers make important
decisions whether to acquire sustainable raw materials from overseas suppliers or local
suppliers. They have to decide whether the raw materials are easily available locally or
are difficult to obtain and have to be obtained from overseas suppliers. They usually
acquire environment friendly raw materials from all over the world, which ensures that
the company is able to offer environment friendly finished goods to its customers and
earn high revenue(Park et al., 2014).
ICT for Purchasing Operations:
The use of information and communication technology(ICT) plays a very
important role in ensuring that the Unilever improves its purchasing functions. It plays
crucial role in selecting of suppliers, entering into contract to buy raw materials, The
purchase managers have to take crucial decisions regarding using ICT to make
acquisition of raw materials better by selecting appropriate ICT tools(Cotteleer & Joyce,
2014). The following are the various ICT tools which the purchase managers need to
consider obtaining purchase goals and needs of the company:

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Supply chain organisational dynamics:
Unilever is a multinational company which acquires raw materials both from
overseas suppliers and local suppliers. It can be recommended to the supply manager
of the company to use supply chain dynamics to improve purchasing operations. The
supply dynamics consists of both software and hardware. The supply chain dynamics
help the suppliers to place orders even when multiple suppliers are involved. It allows
Unilever to place orders, manage inventory and place query to the
suppliers(Christopher, 2016).
Electronic commerce:
Purchase managers can be recommended to use ecommerce to acquire raw
materials and improve the purchase operations of Unilever. Electronic commerce allows
the purchase department of Unilever to view a wide range of products and gain
information about their attributes. Ecommerce also enables the company to
communicate with the producers of these goods and gain deeper information about the
raw materials. This enables the company to communicate with suppliers and view
products from all round the world. Ecommerce allows Unilever to procure raw materials
from all round the world at economic rates(Aghamirian, Dorri & Aghamirian, 2015). For
example, if cocoa butter for from overseas suppliers of Africa and South America while
coconut is imported from Asia. The purchase managers at Unilever, UK have to select
among the producers of these products and choose the producers who are ready to
supply high quality raw materials to Unilever at the most economical price. An analysis
of the purchase over here shows that the purpose of using ecommerce is to acquire

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products from all round the world at the most economic prices, which is not possible by
using supply chain dynamics(Ou & Perng, 2014).
Knowledge management system:
It can be recommended to the purchase manager to use knowledge
management system (KMS) to monitor and integrate the vast information about raw
materials and suppliers, which Unilever uses. The purchasing goal of Unilever here is to
ensure optimisation of purchasing functions to order the right amount of materials at a
given time and reduce acquisition cost. Using of knowledge management system or
KMS is to integrate the purchase information with the other departments like marketing
and finance(Laudon & Laudon, 2016). For example, the purchase manager can gain
information about the order sizes from the order acquisition department and available
stock of inventory from the store manager using KMS. He can then plan the amount of
raw materials to be ordered from the suppliers. This would ensure superior inventory
and material management in the company, which would prevent funds being locked in
excess inventory of raw materials and work-in-progress materials. This would also help
Unilever to optimise its purchasing operations and reduce cost of acquiring and
maintaining inventory(Heizer, 2016). Thus it can be inferred from the discussion that the
purchase manager of Unilever can use knowledge management system to select
suppliers of raw materials, the amount of materials to be ordered and purchase
materials economically by integrating knowledge from other related departments.
Purchasing cost analysis:
The purchase managers at Unilever have to use appropriate tools to analyse
purchase costs. It must be pointed that the purchase of Unilever is to acquire high

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quality raw materials at the most economic prices in order to reduce the purchase costs.
The following are the tools, which can be recommended to the purchase managers at
Unilever to analyse purchase costs:
Cost analysis:
The purchase goals of Unilever are to acquire the high quality raw materials,
work-in-progress(WIP) and finished goods at the most economic price. An analysis of
these goals show that the company is required to adopt cost analysis to analyse the
purchase costs of raw materials to ensure that it does not incur high costs to acquire
materials. The purchase manager first have analyse the actual cost of the materials
being ordered and the associated costs like taxes, freight and transportation costs to be
borne to acquire the materials. They have to consider procurement issues like whether
the materials to be acquired are available locally or have to be imported from other
countries(García-Rodríguez, Castilla-Gutiérrez & Bustos-Flores, 2013). It can be
recommended to the purchase managers at Unilever to use softwares to analyse the
costs to ensure detailed calculation of all these costs. They must also consider the
different prices at which different suppliers are ready to supply materials. They must
then choose the supplier supplying materials at the most economic rates. This analysis
of the purchase cost would ensure that Unilever does not incur unprofitable expenditure
to acquire materials(Grant, 2016).
Inventory analysis:
The next tool, which purchase managers at Unilever can use to analyse
purchase costs and ensure profitable acquisition of materials, is inventory analysis. The
purchase managers need to gain information about the inventory of raw materials and

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WIP, which are already in stock. The aim of this activity is to ensure that the company
does not spend resources to acquire materials, which are already in stock. The
purchase managers conduct an analysis of the present inventory levels to estimate the
future requirements of raw materials and the cost of acquiring them. They have to
estimate the amount inventory to be present to ensure smooth production of goods.
They also have to calculate the time when they can order the inventory to ensure the
materials are available for production. This ensures that excess funds are not blocked in
storing of raw materials and WIP goods(Ingrao et al., 2014). Thus inventory analysis
ensure that the purchase managers order materials at the correct time and in
appropriate amount to ensure smooth production and reasonable liquidity of funds.
Conclusion:
It can be summed up from the discussion that the purchase managers at
Unilever select suppliers using appropriate criteria based on high quality of raw
materials and sustainability. They use ICT to improve their supplier selection and
procurement of raw materials. They use purchase cost analysis tools like analysis of
inventory cost and material cost analysis to ensure profitable acquisition of raw
materials from suppliers at economic rates. It can said that these decisions of purchase
managers ensure that the company achieves its purchase goal of acquiring high quality
materials at the most economic rates to ensure continuous production of finished goods.
The products of Unilever are sold by a large number of retailers in Britain like Tesco,
which also sells products from other companies like Nestle. Other retail chains and
grocery shops in Britain who are competitors of Tesco sell the products of Unilever.

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References:
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application in gaining organization's competitive advantage in electronic
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Akhtar, P., Khan, Z., Frynas, J. G., Tse, Y. K., & Rao‐Nicholson, R. (2017). Essential
Micro‐foundations for Contemporary Business Operations: Top Management
Tangible Competencies, Relationship‐based Business Networks and
Environmental Sustainability. British Journal of Management.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Cotteleer, M., & Joyce, J. (2014). 3D opportunity: Additive manufacturing paths to
performance, innovation, and growth. Deloitte Review, 14, 5-19.
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García-Rodríguez, F. J., Castilla-Gutiérrez, C., & Bustos-Flores, C. (2013).
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Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson
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Retrieved 21 September 2017, from https://www.unilever.com/about/suppliers-
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