Unilever has set up a 'control tower' to monitor shipping costs © Marco de Swart/AFP via Getty Images
Unilever has set up a 'control tower' to monitor shipping costs © Marco de Swart/AFP via Getty Images

How Unilever balances agility and responsible sourcing

8 June 2021

Unilever will be changing policy to ask new suppliers to sign up to its Responsible Sourcing Policy (RSP) before they are onboarded, a conference was told. 

Dave Ingram, chief procurement officer at Unilever, told delegates at the CIPS Global Conference the Covid-19 pandemic had forced the firm to become more agile, but this had to be balanced with careful onboarding of suppliers.

Ingram said the company took products to market “from idea to distribution in days, not weeks and months”. 

He noted examples in Southeast Asia where products took 25 days in total from idea to production and delivery. 

“Agility has been a big drive across our complete business and across our supply chain in particular. We operate a supply chain in the region of 50 to 60 days of stock. We want to have a mindset that we make today what we saw yesterday. There are many challenges to get there but we are moving in the right direction,” he said. 

“The supply base is actually already quite flexible. From a supplier perspective, our main challenges are conversion through factories.”

Unilever’s collaborative manufacturing, or third-party manufacturing, is a spend area where new suppliers have had to be onboarded very quickly, Ingram added. 

He explained: “We switched on 60 to 70 new suppliers within the first few months of Covid, particularly around hygiene products. We have a responsible sourcing policy within Unilever so we have had to do that in line with our RSP principles. 

“We also needed to audit so we had to change our auditing mechanism to be virtual with people walking around with cameras through those facilities.”

Ingram said usually suppliers are signed up to Unilever’s RSP after they’ve been onboarded, but later this year suppliers will be asked to sign the RSP beforehand. 

“This will ensure that suppliers are signed up to our RSP before we do any work with them or issue a PO with them,” he added.

Ingram said that another key challenge for Unilever had been the cost and availability of sea freight. 

In order to counteract this Unilever set up a “control tower” to look at ocean freight in terms of availability and resilience. 

“We're tracking data of what's where and when. We're probably going to look to professionalise that over the course of the next 18 months to ensure availability or at least information flow. If we know there's going to be challenges, we can plan around it through alternative sourcing and management.

“I don't think we're doing anything magic. It's avoiding what everybody is facing in terms of the cost of sea freight.”

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