Extracting Value from Global Procurement:

an Executive View from Unilever

Dr. Uwe G Schulte
September 200
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Extracting Value from Global Procurement: an Executive View from Unilever 2
#ur mi$$ion
Unilever%$ mi$$ion i$ to a&&
Vitalit' to life. (e meet ever'&a'
nee&$ for nutrition) h'giene an&
per$onal care with bran&$ that
help people feel goo&) loo* goo&
an& get more out of life.
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Extracting Value from Global Procurement: an Executive View from Unilever +
Unilever Global Scale
,he -merica$ . /0+.2bn . ++1
2008 Turnover . /!0.2billion
Europe . /02."bn . +21
-$ia3-4E,35EE . /0!.2bn . +21
06!.000 Emplo'ee$ . 260 manufacturing $ite$
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Extracting Value from Global Procurement: an Executive View from Unilever !
Skin
Other
HPC
Savoury
Spreads
Dressings
Ice Cream
Home Care
Beverages
Hair
Deos
Unilever Profile
oods! "#$ HPC! #%$
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Extracting Value from Global Procurement: an Executive View from Unilever 2
4aterial Spen& per 7egion
,he -merica$ . +!1
Europe . ++1
-$ia3-4E, . ++1
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Extracting Value from Global Procurement: an Executive View from Unilever 8
(hat &oe$ Going Global -ctuall' 4ean9
:
Geographic 5overage

;ow much i$ global9

:
Single point contact to Suppl' 4ar*et$
:
Scale leverage of compan' material$ $pen&
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Extracting Value from Global Procurement: an Executive View from Unilever 6
Going Global: ,he <$$ue$=<
:
#perating >ramewor*
:
Global Suppl' 4anagement Director$ capabilitie$
:
Data ? <nformation management
:
5haracteri$tic$ of Suppl' @a$e
:
Supplier relation$hip management
:
Specification$
:
(orl& tren&$:

>inancial 5ri$i$ A Supplier <n$olvencie$

Emergence of 5hina ? <n&ia

<ncrea$ing volatilit' of global mar*et$

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Extracting Value from Global Procurement: an Executive View from Unilever "
Going Global: ,he <$$ue$=<<
:
5ultural &ifference$
:
5ontractual framewor*
:
Exchange rate$
:
5ommunication$
:
,ravel
:
4anaging acro$$ time Bone$
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Extracting Value from Global Procurement: an Executive View from Unilever
,ac*ling ,he <$$ue$: Data ? <nformation
4anagement
Data tran$parenc' ? con$i$tenc' i$ vital
Develop organi$ation culture towar&$ owner$hip ? u$e of a $ingle
information $'$tem
7e&uction in c'cle time for information facilitate$ more effective
&eci$ion ma*ing
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Extracting Value from Global Procurement: an Executive View from Unilever 00
Global Data Structure for <nformation
ISIS
Spend
&na'ysis
Technica' inancia'
Speci(ication
System
)Simatic*
+
,
P
s
-ni'ever
Data
.arehouse
Supp'ier
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Extracting Value from Global Procurement: an Executive View from Unilever 00
Global Direct Spen& Data
5overage: C 01
Do. of Supplier$: "000
Do. of 4aterial$: 60)000
-D. Coverage / -D. 0 P&
01
201
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801
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F0GF2 2002 H-$
of F2 2002I
F0GF2GF+ 2002
H-$ of F+ 2002I
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Extracting Value from Global Procurement: an Executive View from Unilever 02
Global U$age of <nformation $'$tem
Chi'e! 1
2e3ico! 4
-S&! #"0
Canada! #
S5eden! 6
7ether'ands! 60"
-nited 8ingdom! 628
Be'gium! 60
rance! #8
Spain! #
Portuga'! 6
9hana! 6
Bra:i'! 61%
&rgentina! #
South &(rica! #"
S5it:er'and! 64
&ustra'ia! ;
9ermany! 28
Po'and! "
Ita'y! 66
Turkey! 6
China! 28
Pakistan! 4
India! #"
Sri <anka! 1
Bang'adesh! 6
Indonesia! 8
2a'aysia! 1
Singapore! 1
Phi'ippines! 68
=apan! 8
>ietnam! 4
Thai'and! 16
8orea! 2
Israe'! %
+gypt! 1
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Extracting Value from Global Procurement: an Executive View from Unilever 0+
Going Global: #rgani$ational Proce$$
9S2D
9S2D
T2s
T2s
T2s
GS4D$ propo$e
global material
$trategie$
@u$ine$$ lea&er$ of
all region$ $ign=off
$trateg'
GS4D$ empowere&
to execute global ?
regional negotiation$
9S2D / 9'o?a' Supp'y 2anagement Director
T2s / Team 2em?ers
9S2D
T2s
T2s
9S2D
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Extracting Value from Global Procurement: an Executive View from Unilever 0!
Going Global: Some @enefit$
:
Eeverage $cale with $upplier$
:
-voi& bi&&ing again$t one$elf
:
Deeper $uppl' mar*et *nowle&ge ? un&er$tan&ing
:
Enabling global innovation an& $implification
:
4ore effective management of $uppl' con$traint$
:
Diver$e ? exciting role$ for Suppl' 4anager$
P'an
)Screening*
Check )&udit*
&ct
)Corrective
&ctions*
Do )&ssess*
@PDC&A
Site screening
Site
Se'(
&ssessments
,isk &ssess
Prioritise
Site
&uditsB
9ap &na'ysis
Corrective
&ctions
H
H
2
Detai'
Concept
Going Global: 5orporate Social 7e$pon$ibilit'
Supp'iers Buyers
The Pro?'em
5ommon
-pproach
?
S'$tem
Supp'iers Buyers
The So'ution
E$tabli$hing an <n&u$tr' >orum
: +((iciency A information collecte& once an& $hare& $everal fol&
: Credi?i'ity A u$e of Jin&u$tr' $tan&ar&$K ? metho&$.
: Consistency A &eplo'ment of common metho&$
: Best practices A &evelope& an& $hare&
: airness A Governance involve$ all $ta*ehol&er$
The Bene(its
Going Global: 5orporate Social 7e$pon$ibilit'
What its Objectives?
A forum sponsored by both CPG/FMCG industry associations (AM in
!urope and the GMA in the "#$ to deve%op and imp%ement common
methods of eva%uatin& Corporate #ocia% 'esponsibi%ity (C#'$
performance (ithin the supp%y chain)
+ to improve the effectiveness and efficiency of the eva%uation process
(ith the u%timate aim of raisin& C#' performance (ithin the supp%y chain
and reduce the burden of audit over%oad amon&st supp%iers) ,
nitiators-

P7#Gramme for
7ESpon$ible
Sourcing
What is it ?
Going Global: 5orporate Social 7e$pon$ibilit'
5ommon
4etho&:
Se&ex member$
agree to u$e a
common $elf=
a$$e$$ment
Lue$tionnaire) to
be complete& b'
the $upplier.
5ommon
4etho&:
Se&ex member$
agree to a
common au&it
format) which can
be u$e& b' an
au&it agenc'
Step 0:
<nitial
Determination
<n&epen&ent
-ctivit':
Se&ex member$
in&ivi&uall'
&etermine which
$upplier$ are
reLue$te& to
regi$ter
<n&epen&ent
-ctivit':
Se&ex member$
ma' have
&ifferent criteria
to &etermine
corrective
improvement
plan$
Step 2:
Supplier Self
-$$e$$ment
Step !:
-u&it
Vali&ation
Step +:
7i$*
-$$e$$ment
Step 2:
5orrective
-ction
Plan$
<n&epen&ent
-ctivit':
Se&ex member$
ma' have &ifferent
criteria to
&etermine which
$upplier$ will be
au&ite&
Evaluation 4etho& A (hat%$ 5ommon an& (hat%$ Dot
Going Global: 5orporate Social 7e$pon$ibilit'
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Extracting Value from Global Procurement: an Executive View from Unilever 0
Going Global: Eeverage Scale Example
5reate incentive$ for *e' $upplier$ to &evelop globall'
4ar*et for a *e' material wa$n%t internationall' competitive in one region
Supplier influence& to e$tabli$h operation$ in the region
Dew level of competitivene$$ create& which force& price$ &own
+01 re&uction out of a $pen& of /200m
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Extracting Value from Global Procurement: an Executive View from Unilever 20
Going Global: U$ing Global Suppl' for @ac*=up
Effective bu$ine$$ re$pon$e to global material$ $hortage$
Single point Suppl' 4anagement interface to wor* with bu$ine$$ partner$ on
ri$* management
Global overview facilitate$ an un&er$tan&ing of all the ri$*
5entrali$e& &ataba$e enable$ proper $toc* control ? allocation
Securit' of pro&uct $uppl' in *e' mar*et$ i$ a$$ure&
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Extracting Value from Global Procurement: an Executive View from Unilever 20
Going Global: Securing Suppl' in a 5ri$i$
4anagement of countr'3regional economic cri$i$
-rgentina economic collap$e
Un=interrupte& &eliver' of raw ? pac*aging material$ from external $upplier$
were a$$ure&
J(in = (inK $ituation wa$ create& for the -rgentinian bu$ine$$ an& the
Supplier$
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Extracting Value from Global Procurement: an Executive View from Unilever 22
Going Global: Saving$
Since 200+ 'ear on 'ear $aving$ increa$e& from 21 to +1 p.a.
,o Mu&ge $uch a number) a clear &efinition i$ reLuire&:
2arket 2ovement
ProCect Savings
Buying Per(ormance
)Bottom <ine* Price
2arket movement
F0 F2 F+ F! F0
Price
Buying per(ormance
ProCect Savings
B< Price
ProMect N 2=+ 1 a 'ear
)Price ?e(ore / a(ter proCect imp'emented* 3 annua' vo'ume
on'y capturing &ctivities (or their (irst 62 months
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Extracting Value from Global Procurement: an Executive View from Unilever 2+
Going Global: #utloo*
Oe' -rea$ to be a&&re$$e&
A
7i$* 4anagement HDi$ruption) 7eputation) 5a$h) Event$I
A
Supplier 4anagement H<nnovation) 7i$* ) Point <mprovementI
A
5a$h 4anagement H<ntelligent Supplier >inancingI
A
>oreca$ting HGive bu$ine$$ a $oli& forwar& viewI
A
Su$tainabilit' H Paper) (ater) 5arbon >ootprintI
A
;e&ging 3 4anaging Volatilit'
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Extracting Value from Global Procurement: an Executive View from Unilever 2!
&mericas
Overvie5
,han* 'ou