Unilever has been considered an example in sustainability and supply chain management for years. The question is what remains of that after the takeover attempt by Kraft Heinz. To fend off new takeover attempts, Unilever wants to please its shareholders more and accelerate profits. Help prevent short-term thinking from triumphing over long-term thinking. Let's all buy Unilever shares.
My shock was great when Kraft Heinz made a takeover bid for Unilever. The frustrations came less than a week later, when Unilever announced it was changing strategy and accelerating profit growth. In this way, Unilever is trying to satisfy shareholders and avert another takeover attempt. Will short-term thinking now win out over long-term thinking after all?
Unilever was an exception on the stock market for a long time. Whereas almost all listed companies let their policy be determined by the development of the share price, Unilever put the focus on the long term. Telling is Paul Polman's decision to stop giving quarterly forecasts. The ceo preferred to put his energy into sustainability initiatives.
As a result, Unilever tops Dow Jones Sustainability Index for manufacturers of household and personal care products. It was the first time in 2016 that Unilever topped this category. Before that, the company had been ranked in the food producers category, where it had topped for 15 years.
At the same time, Unilver tops the Gartner Supply Chain Top 25 ahead of companies such as McDonald's, Amazon.com, Intel and H&M. This is no coincidence: sustainable operations and a good supply chain go hand in hand. It is not for nothing that supply chain management is one of the criteria in the Dow Jones Sustainability Index.
Unilever's long-term focus is evidenced by, among other things, investments in sustainable cultivation of raw materials such as tea and pam oil. "Sustainability has everything to do with securing these raw materials. By investing in sustainability, we ensure that these raw materials are renewable," Vincent Wijers spoke in Supply Chain Magazine a few years ago. He was vice-president of supply chain at Unilever Benelux at the time. More than 60 per cent of agricultural raw materials are now sustainably sourced. Weijers: "It is the consumer who gives us the 'licence to grow'. We can only grow if consumers have a preference for our products, and sustainability is becoming increasingly important in this respect."
Unilever has also invested a lot in supply chain optimisation. In 2007, for example, the company centralised transport planning in Europe, for which it set up its own 4PL organisation in Katowice. This organisation set up an efficient network with 12 hubs, allowing full trucks to be used for linehauls between hubs. This has resulted in a saving of 200 million transport kilometres, corresponding to a CO2 reduction of 15,000 tonnes.
Unilever has thus shown that it is possible to build a successful business through a strong focus on supply chain management and sustainability. The question is what remains of that as the company becomes more focused on shareholders who are only interested in short-term profits. Should the chief supply chain officer on Unilever's board now surrender power in favour of the chief financial officer? Or is it possible to combine supply chain management, sustainability and rapid profit growth?
Time will tell. Maybe it will help if all of us logistics and supply chain professionals buy Unilever shares. That will reduce the pressure from the short-term thinkers, leaving Unilever as a shining example for everyone in supply chain. Will you join us?
Marcel te Lindert - Journalist logistics & supply chain
