Analysis

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

International Business Strategy

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.

• Objective 1:To analyze the international strategy of Unilever’s Dove
• Objective 2:To understand the global supply chain and its fit with international strategy of Dove
• Objective 3:To analyze the various elements of global supply chain of Dove
• Objective 4:To provide recommendations for bridging gap in global supply chain of Dove

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.   

Supply Chain Strategy

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.

International Supply Chain Network of Dove Brand

                                                                     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.  

1. Analyze facilities:Facilities within the supply chain distribution network comprises of plants and manufacturing units (Kroes & Ghosh, 2010). While Unilever’s Dove is available across multiple countries globally, its facilities is based in certain locations only. Unilever owns 500 factories worldwide, amongst which 200 factories are for detergents and personal care products and 305 are for food products. After the brand acquired Bestfoods, it had additional 70 factories additionally. Unilever has most factories 160 of them located in Europe with 110 factories in India. There are few factories which have shut down and few factories that have currently opened across various countries. Each of the factory have an associated head office with distribution facility. Capability of the units manufactures approximately 120,000 tonnes of various soap in each year.  
2. Sourcing/Procurement:The Company has fixed sets of suppliers for each of its facilities. The Company makes tie-up with suppliers based on its own raw material standards, then asks the suppliers to provide such standardized raw materials for its finished products.   Unilever has a supplier selection criteria and allows their suppliers to grow sustainably with them. In order to manufacture Dove, Unilever sources synthetic surfactants, vegetable oil mainly palm kernel and animal fats such as tallow. The soap is a non-vegetarian one and sources its raw materials from local suppliers. A brief lists for Unilever’s supplier for all raw materials is available in the Company website.
3. Inventory:The inventory of the company is located close to its facilities. Dove makes non-perishable items which are stored in inventory in batches.   The inventory facility of the Company is located at all places where the Company’s manufacturing are based.
4. Transportation/Distribution: The Company has its own transportation facilities which it uses for transporting its finished products to distributors. In case of any returns or damaged materials, the same transportation brings back the product from its distributor. The Company’s transportation is used in its procurement as well.  
5. Information sharing:Information is shared across the entire supply chain framework for Dove. Information flow is both ways, implying downward as well as upward. Information flow assures that each member of the supply chain network is aware regard product and process flows.

                                                Figure 4: Distribution Supply Chain Network

                                                                          Source: Author

Gaps in Supply Chain Network

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.  

• More Inventory Locations:With 21 inventory locations, the Company supplies it products across 80 countries, this ratio could be increased which would transform into supply chain efficiency. The Company can establish inventory location for the product as it is a non-perishable item, which will in can get supplied to other locations.  Unilever need to set up manufacturing locations across other Asian countries and in Australia as well as New Zealand. 

                                                                  Figure 6: Unilever’s Global Presence

Recommendations

                                                             Figure 7: Global Distribution In world Map

• FlexibilitySupply Chain Networks: The Company can adopt a flexibility in its supply chain network which functions according to demands and supply. A flexible system is able to easily respond to variability in demands, as in winter, Dove can supply more off Moisturizer and stop body wash production.
• Accommodating RFID inSupply Chains: The Company can adopt RFID technology to track its product along the supply chain network. Steady flow of products ensures that there is product availability across the entire supply chain and it is able to respond to any changes in demand preventing any unforeseen losses from occurring.

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:

Andersen, P.H. and Christensen, P.R., 2005. Bridges over troubled water: suppliers as connective nodes in global supply networks. Journal of Business Research, 58(9), pp.1261-1273. Accessed from https://www.sciencedirect.com/science/article/pii/S0148296304000475

Chitakornkijsil, P., 2012. BRAND INTEGRITY, ADVERTISING AND MARKETING ETHICS AS WELL AS SOCIAL RESPONSIBILITY. International Journal of Organizational Innovation, 4(4). Accessed from https://www.ijoi-online.org/attachments/article/30/FINAL%20ISSUE%20VOL%204%20NUM%204%20SPRING%202012.pdf#page=109

Chopra, S. and Meindl, P., 2007. Supply chain management. Strategy, planning & operation. In Das summa summarum des management (pp. 265-275). Gabler. Accessed from https://link.springer.com/content/pdf/10.1007/978-3-8349-9320-5_22.pdf

Coe, N.M., Dicken, P. and Hess, M., 2008. Introduction: global production networks—debates and challenges. Journal of Economic Geography, 8(3), pp.267-269. Accessed from https://academic.oup.com/joeg/article-abstract/8/3/267/941665

Ellram, L.M., Tate, W.L. and Billington, C., 2008. Offshore outsourcing of professional services: A transaction cost economics perspective. Journal of operations Management, 26(2), pp.148-163. Accessed from https://www.sciencedirect.com/science/article/pii/S0272696307000502

Ho, J.K., 2010. A Hypermap for Supply Chain Management. World Academy of Science, Engineering and Technology, 66, pp.1178-1181. Accessed from https://waset.org/publications/13090

Ivarsson, I. and Alvstam, C.G., 2005. Technology transfer from TNCs to local suppliers in developing countries: A study of AB Volvo’s truck and bus plants in Brazil, China, India, and Mexico. World Development, 33(8), pp.1325-1344. Accessed from https://www.sciencedirect.com/science/article/pii/S0305750X05000793

Kotlarsky, J. and Oshri, I., 2008. Country attractiveness for offshoring and offshore outsourcing: additional considerations. Journal of Information Technology, 23(4), pp.228-231. Accessed from https://link.springer.com/article/10.1057/jit.2008.17

Kroes, J.R. and Ghosh, S., 2010. Outsourcing congruence with competitive priorities: Impact on supply chain and firm performance. Journal of operations management, 28(2), pp.124-143. Accessed from https://www.sciencedirect.com/science/article/pii/S0272696309000618

Laseter, T.M. and Weiss, E.N., 2008. Structural supply chain collaboration among grocery manufacturers. In Supply Chain Analysis (pp. 29-44). Springer, Boston, MA. Accessed from https://link.springer.com/chapter/10.1007/978-0-387-75240-2_2

McIvor, R., 2009. How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of operations management, 27(1), pp.45-63. Accessed from https://www.sciencedirect.com/science/article/pii/S027269630800017X

Mitra, A. and Bhardwaj, S., 2010. Alignment of Supply Chain Strategy with Business Strategy. IUP Journal of Supply Chain Management, 7(3). Accessed from https://search.ebscohost.com/login.aspx?direct=true&profile=ehost&scope=site&authtype=crawler&jrnl=09729267&AN=53528054&h=p%2F9gLgI5bZuK%2Fn5bvuMgaEBmQrREB0yBAbIniMJkVNMNRJqIkTFUgilHobrRuytLrxNJNd9poX1WiFl5zKf15w%3D%3D&crl=c

Oshri, I. and Kotlarsky, J., 2010, March. Realising the real benefits of outsourcing: measurement excellence and its importance in achieving long term value. In International Workshop on Global Sourcing of Information Technology and Business Processes (pp. 250-270). Springer, Berlin, Heidelberg. Accessed from https://link.springer.com/chapter/10.1007%2F978-3-642-15417-1_14

Oshri, I., Kotlarsky, J. and Willcocks, L., 2008. Outsourcing global services: Knowledge, innovation and social capital. Springer. Accessed from https://books.google.co.in/books?hl=en&lr=&id=9fxs7BnVL1MC&oi=fnd&pg=PP1&dq=Oshri,+I.,+Kotlarsky,+J.,+%26+Willcocks,+L.+P.+(2008).+Outsourcing+global+services:+knowledge,+innovation+and+social+capital.+Palgrave+Macmillan&ots=aNH87GdB5H&sig=UiGFvFBsbAfL_MSaUNtVhUJbEdQ#v=onepage&q=Oshri%2C%20I.%2C%20Kotlarsky%2C%20J.%2C%20%26%20Willcocks%2C%20L.%20P.%20(2008).%20Outsourcing%20global%20services%3A%20knowledge%2C%20innovation%20and%20social%20capital.%20Palgrave%20Macmillan&f=false

Oshri, I., Kotlarsky, J. and Willcocks, L.P., 2015. The Handbook of Global Outsourcing and Offshoring 3rd Edition. Springer. Accessed from https://books.google.co.in/books?hl=en&lr=&id=X7LIDAAAQBAJ&oi=fnd&pg=PR1&dq=Oshri,+I.,+Kotlarsky,+J.,+%26+Willcocks,+L.+P.+(2015).+The+Handbook+of+Global+Outsourcing+and+Offshoring+3rd+Edition.+Palgrave+Macmillan.+&ots=biLu78zXXA&sig=-7YuP–v-Ktcbts8h8fO4Po2eEQ

Oshri, I., Kotlarsky, J., Rottman, J.W. and Willcocks, L.L., 2009. Global sourcing: recent trends and issues. Information Technology & People, 22(3), pp.192-200. Accessed from https://www.emeraldinsight.com/doi/abs/10.1108/09593840910981400

Oshri, I.L.A.N., Kotlarsky, J.U.L.I.A. and Liew, C.M., 2008. Four strategies for offshore ‘captive’centers. Wall Street Journal, 12. Accessed from https://www.researchgate.net/profile/Ilan_Oshri/publication/265526777_Four_Strategies_for_Offshore_’Captive’_Centers/links/54b39aa50cf28ebe92e2ee4d/Four-Strategies-for-Offshore-Captive-Centers.pdf