Purchasing at Unilever led to huge profit in 2010

9 February 2011
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9 February 2011 | Angeline Albert

Procurement improvements at Unilever saved the multinational group 1.4 billion (£1.2 billion) in 2010, its CFO announced.

In a speech made to analysts during the launch of the company’s quarter-four financial results, Jean Marc Huet said supply chain cost savings had continued to be achieved in the past 12 months.

“We continue to see strong delivery from our savings programmes, both in the supply chain costs and in our indirect cost base,” he said. “This comes after savings of a further €1.4 billion in 2009 – nearly €3 billion [£2.5 billion] taken out of our cost base in two years.”

Unilever’s CEO Paul Polman said despite rising commodity prices, the group’s supply chain optimisation work had led to the savings and he credited chief supply chain officer Pier Luigi Sigismondi with making the difference.

Polman said: “Under Pier Luigi’s leadership we have seen a steady transformation in our supply chain capabilities. We now have a globally led supply chain organisation, with executive buying authority. Our systems and processes are much improved, allowing for quicker and higher quality information availability and decision-making. In Asia Africa CEE for example, an ambitious project to harmonise our systems and processes on a single platform is nearing a successful conclusion.”

The firm’s turnover rose by 11 per cent in 2010 to €44.3 billion (£37.5 billion). The group expects to save at least another €1 billion (£848 million) in 2011.

The news follows Unilever’s pledge last year to change its procurement practices to purchase 100 per cent of its agricultural raw materials from sustainable sources by 2020.

The group, whose brands include Dove, Vaseline, Persil, Marmite, Knorr, Hellmann’s and Pot Noodle, has set itself more than 50 social, economic and environmental targets.

“By halving the total carbon, water and waste impact of our products, primarily through innovation in the way we source, make and package them, we can help people make a small difference every time they use them,” said Polman.

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