How Unilever is creating a web of partnerships
Unilever: a beacon of the business community that the world has come to look up to as a true pioneer of long-term sustainability strategies.
Its Sustainable Living Plan aims to guide the company in decoupling its ambitious growth plans with environmental impacts. And progress has been positive, with Unilever making strong moves to increase sustainable sourcing and reduce its waste to zero across multiple global sites, among many other things.
But what about the impact outside of its direct control, along the supply chain? It works with some 76,000 suppliers and more than 1.5 million farmers who in turn support communities of 7 million people. And with more than 400 brands, 13 of which generate sales of over 1 billion euros a year, it has a huge reach and purchasing power to influence the performance of this huge value chain.
I caught up with the company’s chief supply chain officer, Pier Luigi Sigismondi to find out how he manages this huge task (albeit supported by 110,000 people in 190 countries working in the supply chain teams at Unilever, nearly two-thirds of the total Unilever employee base).
Tom Idle: You began your career as an industrial engineer, working in the aerospace and automotive industries. How much of that experience did you bring to the work you're doing right now?
Pier Luigi Sigismondi: There are obvious synergies in that we have a very large and very complex manufacturing base and supply chain. But it’s also about having a mind-set to always strive to be better, to push the boundaries of what is possible and keep learning from others who are leaders in their field.
I always try to think ahead and set ambitious goals - but at the same time recognise our limitations and where we need to improve.
Opportunities only ever really open up or can be fully realised if you approach them with preparation. What we’re doing at Unilever is quite unique. I feel privileged to work in an environment where every day we strive to become a better business.
Idle: What constitutes a great supply chain? What are the ingredients you look to include?
Sigismondi: Well, an organization’s supply chain is its back bone and plays a vital role in everything, from sourcing raw materials to manufacturing and delivering the end product.
What we have done is transform from a local, largely tactical and cost-driven operation back in 2009 to a unified global organization today. It’s about hitting the sweet spot between creating an efficient supply chain that delivers profit, and using your scale and influence to create positive change – whether it be reducing our environmental impacts or by enhancing the livelihoods of the millions of people who work with us.
It’s also about partnering with the right people to deliver quality products and programmes that have impact and drive action – from suppliers, to NGOs and experts and other companies
And of course it’s about employing the right talent, because when times are tough, having the right talent is a real differentiator between success and failure.
Idle: And of these elements, what's the hardest thing for a company like Unilever to get right?
Sigismondi: Probably retaining local integrity and solving local issues while operating at a global scale.
We recently achieved zero waste to landfill across our entire factory network, which shows how a global ambition can be translated into individual successes across 67 countries. There are huge differences in the way countries manage their waste. In places like the UK, we have facilities for recycling. But in countries like Cote D’Ivoire, we’ve started from scratch, working with local entrepreneurs and small businesses, for example, to create low-cost building materials out of waste.
Idle: As a major player with such huge reach, buying power and potential impact, do you feel a weight of responsibility to lead from the front?
Sigismondi: Yes, absolutely. But that’s a positive because we have a strong strategy in the Unilever Sustainable Living Plan which is central to our business because the market and consumers are increasingly concerned about sustainability. Being at the cutting edge of addressing issues like deforestation through our work as one of the founders of the the Roundtable on Sustainable Palm Oil (RSPO) is vital for our future growth.
Responsible consumption products will account for 70% of total grocery growth in the US and Europe over the next five years.
Idle: Getting your suppliers to collaborate with you is a key component of your activities. How do you get them to do this?
Sigismondi: We work with about 76,000 suppliers and in 2014 we launched our Partner to Win platform which will help us move from a series of one-to-one relationships to a web of partners working together and jointly shaping the horizon.
It’s a unique opportunity for us to unlock value, to strengthen collaboration and to improve overall end-to-end operational efficiency.
Idle: Fostering that supplier collaboration is notoriously tough. What are the biggest barriers that you are having to overcome?
Sigismondi: Well, the point of Partner to Win is to make sure that we are aligned behind our five strategic priorities: capability and capacity; quality and service; innovation; value; and responsible and sustainable living. So, as we grow, we want our suppliers to grow too - and we can’t do this unless we’re aligned with them.
This is why we are developing joint business development plans with suppliers and driving open innovation through R&D and new partnerships through platforms like the Foundry.
Idle: We know that more and more companies are acknowledging that some of the big social and environmental challenges can't be solved by one company alone. So, how are you working with other businesses, and where do you draw the pre-competitive line?
Sigismondi: We have always said that transformational change cannot be achieved alone, which is why we need alliances with peer companies, governments and NGOs.
In 2002, we worked with Nestlé and Danone to establish the SAI Platform which now has 50 food and drinks companies involved in it, sharing best practice and aligning standards. We are also involved in other multi-sector groups and coalitions, such ash as the Consumer Goods Forum and the Tropical Forest Alliance.
Also, following the achievement of our zero waste to landfill work, we held an event in London to share how we achieved this. Some of our competitors were there.
This is not necessarily about “drawing the pre-competitive line”. This is about creating structured environments where companies can both learn from and challenge each other. Ultimately, we can’t have a healthy business in an unhealthy world, so we need to work together.
Idle: Which are the corporate supply chain programs that you look to for inspiration, or that you most admire and point to as best practice?
Sigismondi: There are several that inspire me or that have inspired certain methodologies and systems that other companies use, such as Fiat and Apple.
On an ongoing basis we exchange information and ideas with other companies that we believe we can learn from. A few weeks ago we visited Nike’s supply chain team to look at different approaches to managing global operations and on-demand production.
Idle: Are you happy with your current progress in tacklnig some of the big supply chains, like deforestation?
Sigismondi: Well, our progress towards our ambitious 2020 goals is encouraging. But we are under no illusions about the scale of the challenges.
We are making good progress where issues are in our direct control - things like increasing sustainable sourcing, advancing human rights with suppliers, although there is much that remains to be done in this area, and of course the zero waste program.
But tackling climate change requires shifts to the whole system. So we are focusing our resources, skills and advocacy on helping to eliminate deforestation from the world’s commodity supply chains to combat climate change. By working with others, considerable progress has been made in signing up traders, producers, manufacturers and retailers to zero or zero net deforestation commitments. And we’re confident we can help drive a shift in the sustainable sourcing of palm oil.
Idle: How important are these partnerships, and what makes a great partnership work?
Sigismondi: Partnerships are needed to create ‘tipping points’ where sustainable models become the norm.
Take, for example, the sourcing of palm and soy oil. Although we purchase 3% of the world’s palm and 1% of the world’s soy, we cannot end deforestation by ourselves; we need the wholesale transformation of supply chains towards more sustainable models. And so we are working in partnership with other businesses, governments and civil society to achieve sustainable development while conserving forests. For instance, we were the leading private stakeholder behind the development of the New York Declaration on Forests, a commitment to halve deforestation by 2020, end it by 2030 and restore 350 million hectares of degraded land.
Partnerships need to be both structured and open if we are going to achieve real change.
Idle: What's the best thing about your job?
Sigismondi: Getting to work with such a mix of people across the world who are both intellectually sharp and who have the energy to drive change.
Idle: What do you hope to be remembererd for?
Sigismondi: I would hope that all of us who work in Unilever’s supply chain now can be remembered for driving sustainable and profitable growth for the company and for achieving something that allows us to tell our families that we made a real and positive difference to the world.
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