Improvement in Supply Chain and Inventory Management at Unilever

Running head: SUPPLY CHAIN MANAGEMENT
Supply Chain Management
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:....................................................................................................................................2
Part 1. Planning of improvement:....................................................................................................2
Part 1.1. The supply chain planning techniques and technologies to be applied:.......................3
Part 1.2. Project planning approach:............................................................................................5
Part 2. Risks associated with the improvement and proposed mitigating actions:..........................6
Part 3. Use of financial concepts and range of financial evaluation techniques techniques to
inform the decision whether to engage in this project:....................................................................7
Part 3.1. The differences between capital and revenue expenditure:...........................................8
Part 3.2. Application and evaluation of appropriate investment appraisal techniques:...............8
Conclusion:..................................................................................................................................9
References:....................................................................................................................................10

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Introduction:
Improvement project in supply chain and inventory management have require immense
planning, financial investments and risks. Multinational companies improve their respective
supply chains and inventory to gain efficiency in their manufacturing process as well as
marketing of goods. In other words, these two aspects lead to revenue generation and
competitive advantage in the global market. The paper would visit a supply chain and inventory
management strategy which multinational companies apply to boost their manufacturing and
marketing operations. The research would take into account the application of just in time (JIT)
in the global FMCG giant Unilever Plc to boost its supply chain and inventory management. The
research would draw its strength from the article titled ‘Unilever’s Supply Chain’ published in
May 2018 (Unilever.com. 2019).
Part 1. Planning of improvement:
Unilever uses techniques and technology using JIT to manage and improve supply
chain and inventory management. Lai and Cheng (2016) in his book titled ‘Just-in-time
logistics’ defined just in time or JIT as the operational process which manufacturing firms
undertake to eliminate unwanted steps in the entire manufacturing process so as to shorten the
manufacturing cycle, use raw materials more efficiently and reduce wastage of raw materials.
Boyce et al. (2018) mention in their work that JIT can also be used to monitor agricultural sector
as well. These two pieces of literature can be be synthesized to point out that just-in-time can be
used in fast moving consumer goods companies like Unilever because they source a major
portion of their supplies of raw materials from the agricultural sector of different nations. It can
be pointed out that Unilever markets four main types of products namely, homecare, personal
care, food and refreshments and water purifiers. It can be pointed out that the home care products

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and food products which the firm manufactures and markets require sourcing of raw materials
like palm oil, milk and coffee, all of which are raw materials derived from farmers. Considering
the global demand for Unilever products, it can be pointed out that the company has to ensure
strategic management of its global supply chains to ensure continuous supply of high quality raw
materials into its manufacturing facilities in appropriate quantities. This business requirement to
ensure uninterrupted production of high quality products necessitate Unilever to incorporate just-
in-time strategy to manage its supply chain and inventory management.
Part 1.1. The supply chain planning techniques and technologies to be applied:
Unilever uses advanced technology and techniques to manage its supply chain and
inventory management. ‘Unilever’s Supply Chain’ mentions that the multinational company
manages its supply chain using six approaches. The first criterion which the company considers
while managing its supply chain is operating with purpose. This means that company aligns its
SCM with its business requirements. The company takes into account the market demands for
different goods it markets to decide the amount of finished goods to be produced. The company
then uses digital monitoring of supply chain to ensure sourcing of raw materials from suppliers
located in different markets at economic rates. de Jong et al. (2017) point out that this use of
digital technology to manage its global supply chains enables the company to acquire raw
materials at economies of scale which result in low costs of production. The pie chart below
shows that about 32 percent suppliers are based in Asia followed by Europe, Americas, Middle
East and Africa. This means that the company has to mobilise funds towards management of
supply chains in these markets in the same order. The company uses advanced technology like
cloud computing to manage the suppliers. The apex management based in London and
Rotterdam hold meeting with the regional offices situated in these markets to ensure efficient