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Poole College of Management 
Supply Chain Resource Cooperative

Unilever's End-to-End Sustainability Push: Hitting all elements of the supply chain…

August 13, 2012

Unilever’s Corporate Sustainability Report came out in the last month, and was received with great fanfare.  Some of the highlights identified in the first year of its Sustainable Living Plan released to  media and partners at events in the UK, Netherlands, India, US and Brazil include:

  • 24% of agricultural raw materials are now being sourced sustainably, versus 14% in 2010
  • Over 90% of Unilever’s leading spreads now contain less than one-third saturated fat
  • Renewable energy now contributes 20% of total energy use
  • Pureit has given 35 million people access to safe drinking water

But this isn’t enough.  Unilever’s supply chain team has higher ambitions, and is beginning to drive sustainable thinking as an integrated business strategy across multiple tiers in the supply chain, across all five elements of the SCOR framework:  DESIGN, SOURCE, MAKE, DELIVER, PLAN, and SELL.

Paul Polman, Unilever’s CEO, is seeking to make sustainability a core part of the overall Unilever business strategy and vision.  He has created a challenge to the business to double their volume, and maintain the current carbon footprint, which is impacting every single workstream in each value chain.  This is part of the PLAN element, that sets targets and objectives for every business in terms of sustainable products.

There are many challenges that occurred during this transformation, as executives discovered several attributes associated with the carbon footprint of their products, associated with the SELL part of the supply chain.  One big insight is that 68% of the carbon footprint impact is NOT in the supply chain – it is during the consumer use process – and disposal use process.  For example, if a bag of tea has 100 points of sustainability impact- 68% of those points are from boiling water for tea, with only 40% from factories, and trucks delivering it.  So how do you get consumers to act differently, and how do you reduce that?  Now think about their other products used by consumers and their carbon impact:  shampoo, soap, conditioner, toothpaste, etc.

How do you get people to reduce the amount of heated water and water they use when they take a shower, and how to convince consumers to take colder and shorter showers? These are the types of questions their product designers in groups at Unilever are struggling with in DESIGN.  For example, how do we get faster rinsing products in laundry, and laundry liquids that lower temperatures in your washing machine?  Chemical engineers and product producers are working to identify solutions to these issues.

Of course, Unilever has many other efforts that are not just in product design and consumer use.  For example, in the MAKE sector, they are using less materials, and are working on supply chain metrics in their factories to reduce their energy used, and have even developed  “cookie cutter” factories that with LED lighting and energy-efficient processes and waste disposition elements that can be used anywhere in the world.  They have cut 600,000 tones of CO2, and 20% of energy is from renewable energy, with zero waste in 1/3 of their sites.

On the SOURCE side, procurement has done a huge amount of work in tea sourcing, through their Rainforest Alliance project to help meet goals for rain forest team in Kenya.  Over 50% of tea in Lipton brand tea is Rainforest Alliance certified, and 1/4 of agricultural products are sustainably sourced.  For palm oil, they have turned out suppliers who do not use sustainable harvesting processes, and in this case have turned around a number of growers who suddenly realized how serious Unilever was in their intent.  Same goes for cartons, where sustainable metrics have moved the needle to 60% sustainable content in cartons.

In DELIVER, Unilever is continuing to optimize their supply chain network, on top of efficient transportation planning.  They regularly consult suppliers as they move production closer to customers, not just in North America, and Europe, but in emerging countries.  And as they do so, they continue to emphasis labor and human rights requirements with close monitoring of labor conditions and hiring practices.  As a result, they are not always the lowest cost supply chain, but certainly the most sustainable.

And that means a lot to consumer in this day and age.