Unilever Restructures its Supply Management Practices

As part of the restructuring plan, Unilever decided to cut down its vast brand portfolio from 1,600 to 400. The reason was to enable itself to focus on these 400 key brands, which included names such as Dove soap, Lipton tea, Calvin Klein fragrances, Close Up toothpaste, Magnum ice cream, and Omo fabric detergent (See Exhibit I for major Unilever brands). Company sources expected this move to help improve supply chain efficiencies. According to Unilever Co-Chairman Niall FitzGerald (FitzGerald), "The consequence is that the tail brands will fall away in due course and we will be able to simplify and make major improvements to the supply chain and to the way in which we do business generally."

By 2003, Unilever achieved €1.6 billion in savings from its SCM and procurement initiatives. According to company sources, the focus on managing companywide procurement technologies and processes not only helped in reducing procurement costs, but also in strengthening its relationship with the key suppliers. On account of its e-procurement and technology initiatives, the company had emerged as the leader in the consumer packaged industry for technology adoption...