Globalization and advent of technology have made companies provide their products and services across national borders (Oshri, I., Kotlarsky, J. and Willcocks, L., 2008). Various consumer goods companies have expanded their operations to include newer areas in which they cater to. In the current essay discussion regarding, Unilever, a leading consumer goods company’s international strategies and supply chain strategies will be analyzed. Unilever is a British Dutch multinational consumer goods company and it is one of the largest multinational companies. The Company is headquartered at Rotterdam, Netherlands and London, United Kingdom. The Company offers a wide range of food products and beverages, which comprise of 40% of its revenue. Other products of the Company include personal care products and cleaning agents. The Company was founded in 2 September 1929. The products of the Company are available across 190 countries worldwide, with the Company owning over 400 brands (Kotlarsky & Oshri, 2008). The Company employs around 169,000 employees worldwide. The Company has an extensive network of supply chain around the world that is focused on providing its products to its customers even at remote place. The Company has multiple brands and products that it provides across various international markets. As the number of products and brands offered by Unilever is broad, for the purpose and scope of discussion Dove brand will be considered. Dove is a leading soap brand across the world, the brand grows over a 100% each year and is one of the leading products of Unilever. It is regarded to be one of the favorite women’s cosmetic brand with 3 5 market share. Amongst world’s most favorite consumer brand in personal care Dove follows Sunsilk. The product was selected for this analysis due to its worldwide acceptance and fame.
Figure 1: World’s Leading Consumer Brands
Source: Statistica
The Company’s expanding global supply chain network allows the Company to be recognized to be as one of the most profitable company’s in consumer goods (Ellram, Tate & Billington, 2008). Its integrated network of supply chain provides the Company its key values. The aim of the current report is hence; To analyze the international supply chain network of Unilever’s Dove brand. In order to attend to the aim, the following objectives will need to be attended.
Globalization in the past decade have allowed companies to cross national boundaries and operating in multiple countries (Coe, Dicken & Hess, 2008). Companies operating across multiple countries are termed as global businesses, multinationals, transactional companies and international firms. Barlett & Ghoshal (1989) clustered such businesses according to two criteria’s, global integration and local responsiveness. These factors lead to four distinct types of strategies according to which companies might operate, such as global strategy, transnational strategy, international strategy and multi-domestic strategy, as highlighted below (Oshri, Kotlarsky & Liew, 2008).
Figure 2: Dove’s Fit in the International Business Strategy
Unilever undertakes international business strategy such that it can build plans for commercial transactions to take place between entities. The Company with multiple products and brands designs unique strategy for each market (Ho, 2010). Dove is a flagship brand in personal care and skincare by the FMCG giant Unilever and was introduced in the year 1957. The brand was initially launched for women segment and has later extended to include men’s product and baby’s products. Currently, the product is manufactured and sold across 21 countries globally; it is sold and marketed by Unilever across 80 countries worldwide. Dove was a global brand which adopts a multi-domestic strategy which has gradually transformed from International Strategy (Oshri, Kotlarsky & Willcocks, 2015).
An international strategy of low integration and low responsiveness was followed for Dove. Earlier Unilever for Dove visualized little need for local adaptation and global integration, with standardization of the product. Dove for the purpose of local adaptation is including varied strategic marketing for their products. As for example, for its bar soaps it often offers package of 3 soaps for a bargain deal. Dove also offers various types of packaging for varied countries. For example, in less developing or developing countries it has 100 gram crème packs on the contrary in developed countries it offers larger sized bottles such as 500 grams.
The Dove brand of Unilever was accepted as a premium bathing soap for women hence it was accepted across most countries. Unilever felt there was no need for local adaptation and global integration, the company was operating on export strategy, by exporting the product to desired locations (Laseter & Weiss, 2008). With few manufacturing locations, the Company was exporting the products of Dove to other countries. Majority of the value chain activities was conducted at the headquarters of the Company. The company had subsidiaries in host countries which acted as channels through which products used to get sold to customers. Dove is a globally accepted brand which led to spreading of the company’s market beyond home country-based operation. Unilever moved to become a multi-centered company for its Dove brand, though its marketing and brand standardization is taken care of centrally. Unilever had to open multiple manufacturing locations due to the high demand for the product. The products once manufactured at these locations are supplied to multiple locations where they are sold end customers. The entrepreneurial subsidiaries at multiple locations of Unilever shares same financial governance, with identity and interests of the parent company, Unilever. Earlier the company with its international strategy had low local responsiveness and global integration, but currently it has high local responsiveness and global integration. Each manufacturing location produces the product based on the location that it caters to. In order to expand into newer locations and make a shift to multi-domestic strategy, Unilever for Dove is creating low cost manufacturing bases and then tapping supply areas nearby, which can enhance its local responsiveness further.
Unilever in order to keep pace with the growing demand of Dove has developed several manufacturing locations. The company for its Dove brand has expanded its manufacturing locations to cater to increased number of international locations. The manufacturing locations act as central distribution system for certain regions from which products are shipped to various locations (Ivarsson & Alvstam, 2005). At the manufacturing locations, the Company enters into a tie-up with a local brand and then supplies its products to multiple locations. The global supply chain strategy of the Company is thus focused on multiple locations which need to be in tune with the international strategy adopted by the Company.
Efficiency helps retain profits and increase savings for the business. Efficiency in supply chain is crucial for the business’ bottom line. An efficient supply chain allows products of the Company to reach their destined location in a cost-effective manner, to maintain competitiveness in today’s global marketplace (Oshri, Kotlarsky, Rottman & Willcocks, 2009). As Unilever’s supply chain costs are the major part of the overhead costs, it requires to be efficient to maintain competitiveness within the market. Unilever’s responsive supply chain allows being responsive to the needs of the customers and along with the needs of the Company (Andersen & Christensen, 2005). The Company has its manufacturing locations at less developed countries which allow the Company to manufacture Dove at low costs. The Company has sourced low costs suppliers of raw materials at its manufacturing locations as well, this allows the Company to manufacture the product and package it at competitive rates. Information sharing in downward and upward flows of the supply chain allows supply chain responsiveness within the cost framework. As responsiveness comes at reduced cost efficiency, generally firms incur more costs for making such trade-offs. However, at Unilever through global integration, they are able to achieve such trade-offs without any additional overhead costs, as earlier discussed supply chain activities increases overhead costs. The integration of the supply chain allows its responsiveness at no additional costs providing trade-off. The inventory and warehouse unit of these manufacturing units are centrally located such that they can reach their distributors easily (McIvor, 2009). Moreover, all the transportation to the distributor is undertaken by Company owned vehicles, which reduces costs significantly.
Figure 3: Supply Chain Network
Source: Author
As for example, in the Middle East, Unilever has a plant based in Dubai Industrial Park. Dubai acts as a central location to distribute products in various parts of the Middle East, as it is easily assessable by roadways and waterways (Chitakornkijsil, 2012). When an order is triggered in Abu Dhabi, immediately warehouse in Dubai is able to supply it and distributor in Abu Dhabi does not have to wait for imports from Britain or Amsterdam to arrive. Not only this strategy helps the Company save on costs but also allows it to have a responsive trade. Through a responsive trade-off, Dove is able to increase its revenues significantly. Yet there are a few gaps which exist due to inventories. Due to the central location of facilities, often orders are delayed which causes customers to switch over to other products. The company hence needs to maintain adequate quantities of the stock (Oshri & Kotlarsky, 2010).
The global supply chain of Unilever for Dove is highly integrated amongst its various components. The five elements of global supply chain comprises of facilities, sourcing/procurement, inventory, transportation, and information (Chopra & Meindl, 2007). These elements need to be in line with their global supply chain strategy so as to minimize any relevant gaps present. The analysis of the elements of global supply chain strategy with gaps is as follows.
Figure 4: Distribution Supply Chain Network
Source: Author
The global distribution network design of Unilever is supported by its supply chain framework. The five elements of the supply chain framework comprising of consideration facilities, sourcing/procurement, inventory, transportation, and information ensures that the global distribution network design is adequately integrated (Mitra & Bhardwaj, 2010).
Figure 5: Global Distribution Network Design
Source: Author
The diagram above reflects that one element of the distribution network cannot over exceed the other. This implies that once the supplier of raw materials have provided the necessary products, facilities can start production and thereafter goods can reach the inventory. From the inventory various transportation carries products of the Company to each of their distributor in various countries. The transportation systems are heavily engaged in this model for distribution and the entire global distribution network is dependent on them. From varied inventory locations, transportation carries them into various countries, which in turn supports the multi-domestic international strategy of the Company. Each process is dependent upon the other process that precedes it, thus the Company through appropriate communication is able to integrate its global distribution network.
The ever growing and expanding supply chain network of Unilever and acceptance of Dove across world markets is contributing to its revenues immensely. Unilever thus has to focus on improving its global supply chain further such that there are no longer any gaps that are existing. The Company needs to accommodate the following recommendations for its global supply chain network.
Figure 6: Unilever’s Global Presence
Figure 7: Global Distribution In world Map
Conclusion:
Companies operating on a global scale devise their supply chain strategies in accordance to their international strategies. The core aim of the supply chain strategies is to be able to integrate major international locations and to cater to them at substantially lowers costs. Through effective and efficient management of supply chain it is possible for the supply chain to emerge as effective and be efficient in nature. In highly competitive market, supply chain has to guarantee a quick delivery. The order needs to be accurate and complete so that distributor and in turn customer satisfaction can be guaranteed. In case of business highs and lows, sales might be impacted, in such cases also the supply chain needs to accommodate for sales volume. Communication is another aspect that enhances the efficacy for the entire supply chain and guarantees customer satisfaction. International businesses especially FMCGs invest highly to maintain strategic fit of their supply chain into the business to maintain sustainability and profitability.
References:
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