MGT804 Value Chain Management: Unilever Case Analysis

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MGT804 Value Chain Management Assessment 1 T2 (Case Study Analysis)
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Table of Contents
Introduction......................................................................................................................................3
Value chain analysis of Unilever.....................................................................................................4
The value chain of Unilever.........................................................................................................4
Target customers..........................................................................................................................5
Key suppliers................................................................................................................................5
Partners of Unilever.....................................................................................................................6
Competitors of Unilever...............................................................................................................6
Evaluation of the performance of Unilever logistics and supply chain.......................................6
Conclusion.......................................................................................................................................7
Recommendations............................................................................................................................8
References........................................................................................................................................9
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Introduction
Supply chain management is a significant concept for any company striving at the attainment of
high customer value. Supply chain encompasses all the processes and activities required for
transforming the raw materials into finished goods and transmission of these goods to the
customers. The report aims at throwing light on the significance of the value chain within the
supply chain of selected company Unilever. Originated as a British-Dutch company, Unilever is
a transnational establishment operates in the consumer goods industry. The report will analyze
Unilever’s value chain and identify target customers, key suppliers, partners and competitors. It
will also undertake an evaluation of the performance of Unilever’s logistics and supply chain.
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Value chain analysis of Unilever
The value chain of Unilever
Unilever’s supply chain considers as one of the world strongest and effective supply chains as
per Gartner’s top list. Value chain refers to the set of activities and processes undertakes mainly
for adding value to a product or services including marketing, promotion and after-sales service
and so on. Sustainability and innovation are the key ingredients of Unilever’s value chain that
aims at developing long-term value for the entire stakeholders' group. The purpose of Unilever
identified to develop a sustainable living commonplace (Unilever, 2019). Unilever’s vision is
business growth with the coupling of environmental footprint and enhancing social impact. The
value chain of Unilever is characterized by the key components of consumer benefits, minimized
environmental impact, enhancing health and well-being; top and bottom-line growth and
improving livelihoods. Different stages of Unilever’s value chain are identified as:
(Figure: Value Chain of Unilever)
(Source: By Author, 2019)
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InnovatioSourcingManufacturiLogisticsMarketingSalesConsumerUConsumerIns

The value chain of Unilever enables the company to focus on consumer insights and these
insights drive innovation within the company. This value chain helps Unilever in identifying the
issues and problems arising within the supply chain. In sourcing, the company brings raw
materials for producing goods and services. The manufacturing process transforms these raw
materials into finished goods and services for making them usable by consumers (Caplan, et. al.,
2013). Through logistics, these finished goods are transmitted to distribution centres and then
company undertakes marketing activities for the promotion of products. These marketing tactics
encourage sales and after-sales, the consumers use these products. After consumption, the
consumers provide their feedback and views and based on these, the company promotes
innovation within the company. The company follows a simple or uncomplicated process of
creating and enhancing value for consumers.
Target customers
Unilever owns a wide customer base due to its varied ranges of products and services. The
company places a significant emphasis on customers while developing strategies. The target
customers of Unilever are divided into numerous categories. The target customers are
categorized based on geographical, behavioural, psychographic and demographic factors. The
company targets mainly the people of urban and sub-urban areas. Its customer base includes
people belong to middle and higher social class along who prefer expensive as well as imported
products (Okeudo, 2013). The customers of Unilever are mainly belonging to the age group of
16 to 45 years. The company focuses on integrating quality in products and services for
attracting targeted customers. It includes male and female population, people who prefer buying
themselves, live with families and alone, educated and earns high and middle-level income.
Recently, the company integrates sustainability into corporate strategy due to the increased
pressure from environmental and socially conscious people.
Key suppliers
The suppliers in Unilever are the main constituents of raw material sourcing for manufacturing
products and services. Unilever makes sure sustainable sourcing for the suppliers. The company
partners with farmers and agricultural organizations for ensuring agricultural raw materials
sourced mainly for minimizing environmental impact. Suppliers of Unilever help in innovation,
value creation, delivery of quality and service; and driving market transformation. It owns raw
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materials from these suppliers for undertaking commercial operations and making its factories
capable of continuous improvement and manufacturing products and services in more than 100
countries (Sodhi & Tang, 2014). As an instance, the tea suppliers of Unilever are located in
Kenya, Japan, Sri Lanka, Vietnam, Tanzania, Malawi, India and Switzerland and so on. The
palm oil suppliers of Unilever range from Foreb Agro Products Nig Ltd, Godrej Group, Adani
Wilmar Limited and Mitsubishi Corporation.
Partners of Unilever
The key partners of Unilever are wide in number. These partners are identified as providers
supporting supply chain, farmers, investors, retailers, regulators, acquisitions, distribution
network and advertising agencies and media. Sustainability has always been at the forefront for
Unilever and it makes sure to establish long-term relationships with not only its suppliers but
with other partners as well. Currently, the company partnered with Veolia for enhancing the
waste collection as well as recycling infrastructure (Cooper, 2018). The main aim of this
partnership identified as the development of the circular economy for minimizing plastic waste.
The company seeks to establish global partnerships for ensuring its sustainable living plan goals.
Another example of Unilever partnership identified as association with Kopernik for combating
dengue and malaria in Myanmar.
Competitors of Unilever
Unilever operates in the consumer goods industry which considers as a highly competitive
industry due to a high number of players. The key competitors identified for Unilever are as
Nestle, Procter & Gamble, Johnson & Johnson and Colgate-Palmolive and many more. It would
not be wrong to consider that these competitive players are strong enough for harming the
market share of Unilever (Sandvik, & Storli, 2013). A strong force of competitors has been
realized by Unilever and this has made the company emphasize mainly on sustainability for
attracting a large number of customers.
Evaluation of the performance of Unilever logistics and supply chain
Unilever logistics begin with the distribution centres and ends at the ultimate reach to customers.
The company understands the fact that business growth would come with increased carbon
emissions from transport. The logistics process of Unilever encompasses road vehicles, boats and
trains. The company aims at improving its logistics process by ignorance of wasted journeys,
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minimizing the number of travelled kilometres and implementing more sustainable transport
options (Porter & Kramer, 2019). Recently, the company restructured its supply chain for
attaining more efficient and effective sustainable outcomes. The major restricting took place in
brand portfolio by reducing 1600 brands to 400 brands for attaining complete focus.
Unilever supply chain has topped the Gartner’s list due to its continuous commitment to
sustainability and corporate responsibility. The current performance of the company's supply
chain has achieved huge cost reductions and wide removal of carbon from the supply chain. The
restructuring of Unilever’s SCM focused mainly on key areas such as processes, supplier,
organization, technology and people (Logisticsbureau, 2016). The supply chain of Unilever has
been performing well which is evident from the customer base it attained through its sustainable
practices. The key lessons provided by supply chain management practices of Unilever are as
follows:
 It is a cost-saver initiative to adopt sustainable or green practices
 Little control in the supply chain is natural but it should not distract the company from
attaining sustainable in areas including supplier and consumer behaviour.
 Quantity of brands in the corporate portfolio should never underestimate the power of
quality of brand portfolio since it helps in attaining complete focus.
As per Unilever, it would not be wrong to consider sustainability as a feasible and effective
growth strategy for the consumer goods industry which is a fast-moving sector. However, the
company has to deal with certain challenges while adopting sustainable supply chain practices.
The sustainable practices in the supply chain come with difficulty in changing consumer
behaviour. These practices highly demand the transparency otherwise it would attract negative
publicity and may harm the brand's image in public (Logisticsbureau, 2016). Innovation requires
being a core part of sustainable practices and companies such as Unilever find it difficult to
integrate innovation within the supply chain for better outcomes. One of the major issues
identified in the Unilever supply chain was ignorance of workers regarding their wages and other
financial earnings.
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Conclusion
The report aimed at value chain analysis and for this, Unilever has been selected since it
considers as the owner of one of the world's greatest supply chain by Gartner’s list. Unilever
follows a value chain under its sustainable living plan including sourcing, manufacturing,
logistics, marketing, sales, consumer use, consumer insights and innovation. The report
identified that sustainability may ensure long-term growth and success when integrated within
the supply chain. However, companies should never ignore the importance of sustainability
within the supply chain by considering that it would exhibit slow growth.
Recommendations
The supply chain of Unilever considers a strong supply chain in the global business world.
However, this supply chain is not free from challenges even after integrating sustainability
practices. Firstly, human resource concern should always be on priority while developing
strategies or shaping new practices. Apart from this, it should adopt a business model based on
the real-time customer and other stakeholder groups’ demand insights and shaping accordingly
as well through demand-focused planning. It should integrate other tactics such as mapping of
the supply chain, base-lining supplier performance, and adopting industry-wide collaborations.
These tactics would assist the company in maintaining the sustainability of the supply chain.
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References
 Caplan, D., Dutta, S. K., & Lawson, R. A. (2013). Corporate social responsibility
initiatives across the value chain. Journal of Corporate Accounting & Finance, 24(3), 15-
24.
 Cooper, R. (2018). Unilever partners with Veolia for new recycling initiative. Retrieved
from: http://www.climateaction.org/news/unilever-partners-with-veolia-for-new-
recycling-initiative
 Logisticsbureau (2016). 4 Best-in-Class Supply Chains To Watch and Learn From.
Retrieved from: https://www.logisticsbureau.com/4-best-in-class-supply-chains-to-
watch-and-learn-from/
 Okeudo, G. (2013). The Impact of Marketing Mix (4Ps) on Warehousing Operations:
Case Study of Unilever Nigeria PLC. American Journal of Business and
Management, 2(2), 155-159.
 Porter, M. E., & Kramer, M. R. (2019). Creating shared value. In Managing sustainable
business (pp. 323-346). Springer, Dordrecht.
 Sandvik, P. T., & Storli, E. (2013). Big business and small states: Unilever and Norway
in the interwar years 1. The Economic History Review, 66(1), 109-131.
 Sodhi, M. S., & Tang, C. S. (2014). Supply‐chain research opportunities with the poor as
suppliers or distributors in developing countries. Production and operations
management, 23(9), 1483-1494.
 Unilever (2019). Who we are. Retrieved from: https://www.unilever.com/about/who-we-
are/our-vision/
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