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Unilever is developing its supplier collaboration programme to further improve performance and innovation over the next three years.
In an exclusive interview with SM, the company’s vice president of procurement Biswaranjan Sen said the ‘Partner to Win’ programme began three years ago for “a much deeper level of collaboration with our supplier partners”.
He said the scheme centred around five pillars - innovation, sustainability, service, value and capacity. Unilever identified 200 of its most important suppliers who it decided to work with “much more closely”.
“In the three years, about 70 per cent of our innovations have been contributions from our suppliers,” said Sen. “Significant amount of costs have been taken out of our end-to-end value chain. And about €1.3 billion (£1 billion) worth of capacity investment by suppliers for us. So it’s been quite a successful journey for us in the way that these collaborations have played out.”
He explained in the fourth year of the programme, the team decided to tweak the strategy. To develop further innovation, Sen said Unilever is working to encourage its suppliers to work together, instead of in a one-on-one relationship with the company.
“Historically we were operating in a model where Unilever sits at the middle of the innovation chain and we have one-to-one relationships with our supplier partners,” he said. “One of the things we’ve just started initial work on is working with three or four suppliers who are working on the biggest opportunities we have in our business, and at the same time they are working collaboratively amongst themselves, so Unilever is not the hub in the middle.”
The second development is to “change the value discussion in taking costs out in a structured fashion, by applying principles of lean and fixing the interface to remove long value-added costs”. Sen explained Unilever is working with select suppliers to look at whether there are areas where the company can buy better than they can, and what the business can do to help them with manufacturing. This allows an “integrated value chain approach which allows us to look at end-to-end cost structure”.
The final update for the programme is in terms of capacity in emerging markets. Sen said capability needs to be taken into consideration because this is one of the big challenges suppliers face as emerging markets become increasingly important.
“We recognise that 57 per cent of our turnover comes from developing and emerging markets, and by 2020 we will possibly have 70 per cent of our turnover from developing and emerging markets,” he said. “If this is to happen, one needs to create capacity for, and in, these emerging markets. The challenge is not just about creating capacity, it’s about creating capability, because it’s not just about the capital it’s also [ensuring] the capability that is created is run and operated in a reliable manner with quality and service.”