playing to win unilever supply chain · playing to win unilever supply chain pier luigi sigismondi...
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Playing to WinUnilever Supply Chain
Pier Luigi SigismondiChief Supply Chain Officer
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The Recent Past ...
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A Cost Driven Supply Chain …
678717
810
2006 2007 2008
SteadySC SavingsSC Savings
€€’mil’mil
ContinuousRestructuringRestructuring
18 1714
2006 2007 2008
# sites# sitesclosedclosed
17%17%17%16%
21%
23%
Best in ClassFixed AssetsFixed AssetsProductivityProductivity
1999 2003 2009
FA%TO
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With many Pockets of Excellence …
Regional ScaleRegional Scale
Efficiency
CompetitiveConversion CostConversion Cost*
100
91 90
Ind av. Best UL
Great PeoplePeoplewith Rigour &
Discipline
*2008 McKinsey benchmarking study
SustainabilityPrograms
BestPractices
PerformanceCulture LeanLean
Structure*100
70 67
Ind av. Best UL
SC IndirectsSC IndirectsIndexIndex
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But not Winning the game …
Gross MarginsGross Margins
2005 2006 2007 2008
Inventory DaysInventory Days
64 6464
6768
Q4
06
Q2
07
Q4
07
Q2
08
Q4
08
19.6 20.0 20.019.1
2005 2006 2007 2008
VolumesVolumes
€€’Mil Tonnes’Mil Tonnes
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A fundamental Change required …
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I. Restored Robust Foundations …
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Renewed Focus on Quality …
--52%52% YTD reductionon Product IncidentsProduct Incidents
--10%10% YTD reduction
on Consumer ComplaintsConsumer Complaints
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
CarelineCareline
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Stepped up Cost Savings …
ImprovedImprovedGross MarginGross Margin
2009 2010
SC SavingsSC Savingsoffsetting InputInput
cost increasecost increase
ReRe--investinvestin A&Pto fuelgrowthgrowth
CentralisedCentralisedCommodity RiskCommodity RiskManagement …Management …
0.70.7
0.8
1.1
2006 2007 2008 2009 2010
€€1+ bn1+ bnSC SavingsSC Savings
+1
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Increased Customer focus …
+510bps+510bpsOOn SShelf AAvailability
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
6 Consecutive6 ConsecutiveQuartersQuarters
Best SupplierBest Supplierof our Customers
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Example: Customers Recognition
#1
#1
#1 #1
#1
#1
#1
#2
#2
#2
#3#4
#1
#3
11
#1
#2
#3
#4#3
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Sustained Cash Delivery
improvements…
ContinuedNegativeNegative TWCTWC
-5%
0%
5%
Q109
Q409
Q310
Q210
Q110
Q309
Q209
Q109
Q409
Q310
Q210
Q110
Q309
Q209
Q109
Q409
Q310
Q210
Q110
Q309
Q209
MAT TWC%TOClosing TWC%TO
- 7 DebtorsDays
++ 1111Creditors Days
- 99 StocksDays
54
56
58
60
62
64
66
68
70
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
70
72
74
76
78
80
82
84
86
88
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
30
32
34
36
38
40
42
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
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II. A new Inter-dependent team
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Simplified our Structure …
From:Just HPC &&
FOODS
To:8 CATEGORIES8 CATEGORIESSC UnitsSC Units with
Depth andFocus
LeanLean Structure
CSCOCSCO
ONE GlobalONE GlobalSC Org.
1717 direct reportsdirect reports
GeographyGeographyVPsVPs
CategoryCategoryVPsVPs
NewNewLeadership
Team
FactoryFactoryDirectorDirector
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Global capabilities: Examples …
IInntteerrddeeppeenndedentntGGlobal Nelobal Nettwwoorrkk
ManufacturingExcellence
Led by AmericasLed by Americas
Global VirtualSites
EngineeringExcellenceLed by AACLed by AAC
Deliver Repeatable ModelsFor E2E Capital Project
LogisticsExcellence
Led by EuropeLed by Europe•Cost
•Carbon
•Service
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Global capabilities: Examples …
Customer ServiceCustomer ServiceExcellenceExcellence
Go to MarketGo to MarketSC teamsSC teams
Repository ofBest Practices
FasterRollout of
BPs
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The Journey ahead …
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Exciting growth agenda …
30+30+new plants
by 2015
Significantvolumeincrease
€€5bn5bn Capexin
next 3 years
2006 2008 2010 2012
Fixed AssetsFixed Assets
towardstowards D&ED&E …
SustainingBest in Class
AssetAssetProductivityProductivity
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In a volatile and tough environment
FierceCompetitionCompetition SoftSoft
Economies
-2%
0%
2%
4%
6%
W Europe
N America
2009 2010
-2%
0%
2%
4%
6%
W Europe
N America
2009 20102009 2010
0%
4%
8%
12%
16%
20%
Asia
LatAm
CEE
AMET
2009 2010
0%
4%
8%
12%
16%
20%
Asia
LatAm
CEE
AMET
2009 20102009 2010
DevelopedMarkets
D&EMarkets
VolatileVolatileCommodities
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We will WIN differently …
Lean, Responsive and Consumer led Value ChainValue Chain
Accountability &Responsibility
Building Talent& Teams
Bias for Action
Growth Mindset
Consumer &Customer Focus
Worldclass
service
End-to-endcompetitive
cost
Consumerperceived
quality
Flawlessexecution
Flexible,agile &
leanstructures
End-to-endcompetitive
cost SC createsvalue
through
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Quality Excellence …
protectenvironment
socialprogress
economicgrowthIntegrated
Quality CultureCulture
DESIGN DELIVER
ProductSuperiority
ConsumerConsumerRelevant Quality
Standards
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Route to market Excellence …
2010
1 Mil1 Mil
5 Mil5 Mil
2020
CustomerCollaborationsCollaborationsOOn SShelf
AAvailability
OSA 5OSA 5StepsSteps
ModernTrade
Route toMarket via
5,5005,500DistributorsDistributors
More & BetterMore & BetterServedServed StoresStores
GeneralTrade
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from 1 million (2010) to 5 million (2020)
GT MT
More stores… better stores… better served
“Perfect Stores”: D&E ambition
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E2E Competitive Cost Excellence …
First TimeFirst TimeRight Cost& Quality
TargetCosting
Low CostLow CostBusiness Model
SimplificationSimplification
- 20%SKUs
- 30%Materials
- 30%Formulas
€€26bn26bnBuyingScale
R&D
MKT
SC
MultiMulti--functionalfunctionalsavings initiativessavings initiatives
Sustainsignificant
Savings
BlendFlexBlendFlex
Formula Substitution
TM
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Example: Pureit for Latam
64 19 83
65 19 46
From
To
Cost
TargetCost
GrossProfit
Priceper ltr
TargetPrice
TargetGP
GM 40%
GM 49%
- 28% costdifferential
83
48
19
24
11
23
Co
nsu
mer
Pri
ce
Turn
ove
r
Co
sts
Gro
ssP
rofi
t
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Example: Aerosols opportunity
Value Chain benefits now available to many other starter markets
Today Future
Coster(Turkey 14M)
Thai Daizo18M
AeroEgypt
2M
India Site(65-100m cansfrom ’13 to ’15)
Today Future
Co-makers (illustrative)
India
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Long-term sustainable operations …
*by 2020 vs 1995 baseline per ton of production
** by 2020 vs 2010 baseline
Green FactoriesGreen Factories
--63%*63%* --80%*80%* --78%*78%*
WaterNeutral
SustainableSustainableLogisticsLogistics
--40% CO2**40% CO2**
SustainableSustainableSourcingSourcing
• 100% palm oil by 2015100% palm oil by 2015
•• All agricultureAll agriculturematerials by 2020materials by 2020
CarbonNeutral
ZeroLandfill
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… operating in Flawless Execution …
Bigger, Better & FasterBigger, Better & FasterInnovationsInnovations
SPEEDSPEED = Value= Value
++ €€77m77miTO / week
Capabilities for SpeedCapabilities for Speed++
Innovation PlatformsInnovation Platforms++
EmpowermentEmpowerment++
MindsetMindset
==
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With Flexibility and Responsiveness
ResponsivenessResponsiveness ––LLeadead TTimeime FForor MMoreore
Agile SupplyAgile SupplyNetworkNetwork
HalvingHalvingLeadLeadtimestimes
Customer drivenCustomer driven
Winning with SuppliersImprove
PackagingTechnologyLTFM: -64%
Safety stocksat suppliersLTFM: -75%
MultipleSourcing Units
LTFM: -56%
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So there is more to come …
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Creating Value to the business …
GrowthGrowth
ProfitsProfits CashCash
DeliveringDelivering Sustainable, ProfitableSustainable, Profitable GrowthGrowth
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We are fit to compete …
InterdependentInterdependentGlobal Network
Consumers& CustomersRecognition
InnovationInnovationSPEEDSPEED
SustainableSustainablePractices
ResponsiveResponsive,,Demanddriven SC
ConsumerConsumer
PerceivedQualityQuality
SkillsSkills &KnowKnowHowHow
GlobalScaleScale
D&ED&EFootprint
Route toMarket
CapabilitiesCapabilities
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With Passion to Win !
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In Summary …
1. Radical shift from Cost-cutting to Value-creation …
2. Performance turnaround achieved in 18 months …
3. Unique Capabilities in place: We are fit to compete …
4. … Sustainably : Speed is our Currency.
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Thank you