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Sign upTowards Strategic Sourcing: The Unilever Experience
Unilever has embraced strategic sourcing and reports early benefits
Internet-enabled strategic sourcing could well emerge as one of the success stories of the new economy. As a part of a new strategic plan, Unilever has embraced strategic sourcing and reports early benefits.
In September 1999 Unilever announced its “strategy for growth”, a strategic plan to increase annual topline growth to five per cent and operating margins to 15 per cent by 2004, a marked acceleration on earlier targets.
Strategy for growth was built on a refined and focused portfolio of 400 brands (reduced from more than 1,600) supported by an equally targeted procurement and manufacturing base. Niall FitzGerald, cochairman of Unilever Group, declared: “We are determined to deliver a step-change in Unilever’s growth rate and further improve its operating performance. We are pursuing changes that mobilise the entire organisation behind our brands to drive growth and margin improvement”.
Since the mid-1990s Unilever had seen consistent improvements in operating margin. These improvements owed much to the adoption of regional manufacturing strategies and a consequent programme of plant rationalisation. Under strategy for growth Unilever planned to continue this rationalisation with some 150 key manufacturing sites targeted for investment and development. These sites would be selected from among 380 existing plants worldwide with the overall aim of servicing the 400 brands in a cost-effective way. But strategy for growth went beyond manufacturing consolidation.
