Wenerios Tsagkalidis, VP Supply Chain at Unilever - How to run a cost effective, responsive & innovative supply chain
Wenerios TsagkalidisVP Supply Chain
Unilever Ice Cream SC EuropeWednesday, February 20, 2013
Unilever Supply Chain JourneyPast 2006 Present• Localised supply chain • Establishment of • Regional supply chain (make, source, plan, European SC operations deliver) • Single IT platform • Global functions created
Unilever Sustainable living plan We aim to double the size of our company while reducing our environmental impact and increasing the positive social benefits of our business.Sustainability initiatives in the Supply Chain:• Sustainable sourcing (e.g. Rain Forest Alliance Chocolate)• New IC Cabinet energy consumption reduced by 25%• Combined heat and power plants in factories• Reducing water usage focusing on factories in water scarce areas• Effective logistics (improving truck fill, intermodal transport, warehousing hubs)
Challenges in Ice Cream Sales Pattern 30% Innovation 70% sales in 5 each year months 1 2 3 4 5 6 7 8 9 10 11 12Balance between Highly weather capacity and sensitive stocks Ensuring quality through the cold chain
Safety at the heart of all we do• 150% Reduction in accidents in 6 years• Safety led from the top• Large behavioural and machine safety programs in place for ALL employees
End to End Quality Always in focusTHE COLD CHAIN PRIMARY DISTRIBUTION SECONDARY DISTRIBUTION Focus from design, through supply chain, point of sale and consumer.
Customer service is keyCustomer service journey on metrics • Case Fill CF • Measure availability of stock in our warehouse • Customer Case Fill On TimeCCFOT • Measure timeliness of deliveries to customers • On Shelf Availability OSA • Measure availability of our product on shelves
• Case Fill CF • Measure availability of stock in our warehouse • Customer Case Fill On Time CCFOT • Measure timeliness of deliveries to customers • On Shelf Availability Maximising service through European network OSA • Measure availability of our product on shelves• Factories act on a local, regional and global level • Supply into local markets, giving flexibility to be close to demand. • Supply innovations and specialist technology on a regional level. •Supplying specialitiesPlanning function mirrors supply and set up products for market tests on • Mix of local, regional and global a global level. planning • Optimise capacity usage • Manage seasonal fluctuations
• Case Fill CF • Measure availability of stock in our warehouse • Customer Case Fill On Time CCFOT • Measure timeliness of deliveries to customers Service through responsiveness OSA • On Shelf Availability • Measure availability of our product on shelves1. Segment portfolio based on SKU importance (volume and GM)2. Align SC flexibility (lead time for more and uplift) to product segmentationExamples of actions:• Aligning raw and pack safety stocks to market needs• Develop substitute sourcing options• Lead time reduction programs with suppliersBenefits:• Take advantage of short term sales opportunities• Improvement of service metrics
• Case Fill CF • Measure availability of stock in our warehouse • Customer Case Fill On Time CCFOT • Measure timeliness of deliveries to customers • On Shelf Availability OSA • Measure availability of our product on shelves Improving on Shelf Availability• TPM “5 Step” approach with major retailers on loss reduction from back of store to cabinet• Improved packaging design allowing easier identification of Unilever products back of store• Perfect store initiative: Unilever task forces sent to visit POSs and improve brand and product visibility.
Managing stock vs assets• With high seasonality we need an effective tool for balancing the trade off between stock and assets. Two extremes:1. High capacity; low utilisation; low stocks2. Low capacity; high utilisation; high stocks Solution: Calculate 50,0 Total cost (Fixed + variable + trasport Base capacity requirements 49,0 + storage + IWC + FC) Additional capacity minimising total supply 48,0 Proposed 47,0 chain cost. 46,0 60,00 65,00 70,00 75,00 80,00 85,00 Line Utilisation in %
Improving competitive cost• 34% reduction in business waste in 4 years• Alignment of marketing, customer development & supply chain to solve obsolete risks.• Improved forecasting through technology and planning processes.• Top class manufacturing through best practice and benchmarking:• Manufacturing excellence programs• Regional Virtual Sites• Technology platforms