Unilever Operations and Process Management Assessment Answer

Introduction

Unilever is a firm that specialises in fast-moving consumer goods (FMCG). Headquartered in London, the firm was started in 1890 as a soap manufacturer in the UK. The primary activities of Unilever include the production, marketing and distribution of consumer goods in the categories of personal care, nutrition and hygiene. Personal care, foods, refreshments and home care are its 4 operating segments in consumer goods. The firm owns more than 40 brands and operates in more than 190 countries in the world. Some of the well-known brands owned by Unilever include Dove, Vaseline, Lipton and Ben & Jerry’s. The personal care segment of Unilever includes brands like Dove, Lux, Axe and Pond’s, and offers products for skin care, oral care, hair products and deodorants (McFarlane 2021). Moreover, the food segment offers products like soups, snacks, spreads and salad dressings. Furthermore, the refreshment segment of the company includes brands like Cornetto, Magnum, Kibon and Solero that offer products like ice cream, tea-based beverages and staple foods. In addition, the home care segment includes soap bars, laundry and cleaning supplies. The business model of Unilever involves well-known and high-quality brands that consumers trust in order to enable a competitive advantage for the firm in the competitive global consumer industry. The main competitors of Unilevers are Nestle, Johnson & Johnson, Procter & Gamble and Pepsico (McFarlane 2021). The personal care segment of Unilever earns the most revenue for the firm and the food and refreshments segments are expanding with the highest growth rate. Overall the firm earned US$63 billion in 2022 and aims to expand in key markets like the US, China and India. However, the core markets of the firm continue to get impacted by the disruptions caused by the COVID-19 epidemic and the subsequent economic slowdown (GlobalData 2021). 

The packaging process of Unilever has been significantly impacted by external disruptions. This has led to several issues in the packaging process for the firm which needs improvement. Packaging is a crucial process for Unilever as an FMCG firm. The primary purpose of packaging is to physically protect the products from exposure and damage. Packaging ensures that products are effectively transported, distributed and stored from the point of packaging to the point of sale (Ma et al. 2020). Another function of packaging is to communicate product information to the consumers, which can help them in making the purchase decision. This information includes mandatory food labelling, directions for use, storage instructions and any mandatory warning. Furthermore, packaging can be used to make aesthetically pleasing packages that can attract the attention of consumers and build brand value. Additionally, companies can use innovative packaging to enhance usability and convenience of usage (Ma et al. 2020).

One of the key materials used by Unilever in packaging is plastic. However, the disruptions caused by the global pandemic and the subsequent economic slowdown has severely impacted the global supply chain of plastic. The global coronavirus pandemic led to restrictions, which severely impacted the productivity of plastic processing plants despite the growing demand for plastic products. This has severely impacted the plastic industry, with plastic manufacturers impacted by labour shortages and increased tax on plastic resins, which is the primary plastic material utilised for packaging. Thus, continuously increasing prices have further forced firms to reduce their workforce, increase prices on finished plastic goods or stop production. As a result, organisations throughout the world face disruptions in the supply chain of plastic (Vakil 2021). On the other hand, major fire damages and leaks in plastic processing plants in the US, Germany, the UK and South Korea further disrupted the production and delayed the backlog in order deliveries (Scheunemann 2021). In addition, increasing inflation after the economic slowdown caused by the pandemic further increases the costs involved in plastic packaging (Benson and Evatz 2023). Thus, the use of plastic packaging not only delays other processes but also leads to increased operational costs for Unilever. Therefore, there is a need for improvement in the packaging process of Unilever.

In addition to these issues, another factor impacting plastic packaging of Unilever is sustainability. In the contemporary environment, there has been an increase in awareness towards environmental sustainability among organisations around the world. Business activities and initiatives focused on sustainability not only promote environmental change but also facilitate the overall success of the organisation. A significant reason for these benefits is that focus on sustainability enhances the image of a company as a purpose-driven organisation, which can attract a skilled workforce as well as investors (Chladek 2019).

The present report aims to discuss improvements in the plastic packaging process of Unilever in order to increase its competitive advantage in the global market.

Critical Analysis of the Process

Process Flowchart

Figure 1: Process flow chart of plastic packaging

The process flowchart in Figure depicts the plastic packaging process of Unilever. The flowchart depicts that Unilever receives the processed plastic through inbound logistics. The firm moulds this plastic and assembles empty packages of different shapes and sizes for different products, as per packaging design. Each of the products has a different packaging line. The firm then labels the plastic as per the packaging design for different types of products to display brand information, product information or other mandatory information. The labelled packaging moves further in the packaging line to package the products into its final packaged form that we see at the store shelf. The packaged products are then grouped together and shrink wrapped, which are then stacked, palletised and transported to warehouses. The outbound logistics then transports the packed goods to the point of sales, where the products are displayed individually at the shelf (Rizkovic 2023). 

1. Process inputs: The primary input involved in the packaging process include different types of processed plastic that is used for the purpose of packaging, like polyethylene terephthalate (PET) used for packaging food items, high density polyethylene (HDPE) for plastic bottles and low density polyethylene (LDPE) for shrink wrap (Damewood 2019). Other inputs include artificial colouring, adhesives and computer generated packaging design. This packaging design includes the size, shape, and label of the packaging. The quantity of input depends on the number of products of each type produced by Unilever on the basis of perceived demand in a period of time (Ma et al. 2020).
2. Process outputs: The output is the palletised goods that are ready for warehousing and outbound logistics. The quantity of output depends on the type of product, demand as well as capacity of the firm (Ma et al. 2020).
3. Activities: There are seven activities that are involved in the packaging process. These include the supply of raw material, packaging design, moulding and assembly, labelling, packaging of products, shrink wrapping and palletising. The supply of raw materials can take upto a week after the placement of an order, which is collected in bulk. The supply of raw materials is maintained by a logistics team of two to three individuals. Moreover, the process of packaging design may take from a week upto a month by a team of 4 to 5 individuals. This is a continuous process with regular changes in design and label of packaging. Furthermore, the process of moulding and assembly, labelling and packaging is a streamlined process done through automated machines with many products packed in a given time. These processes require about 2 to 3 individuals at each stage to oversee the automated process (Ma et al. 2020: Rizkovic 2023).

Capacity Analysis

Capacity planning refers to the utilisation of available resources to meet the customer demand in terms of the quantity of goods produced in a particular period (Slack et al. 2013). Unilever adopts a lead strategy for capacity planning, which means that the firm increases or decreases the capacity in advance on the basis of estimated demand forecasts (Bridges 2021). However, the disruptions caused by the pandemic and other external factors have led to bottlenecks in the packaging process in the form of delays in the supply and increase in the cost of raw plastic (Vakil 2021). This not only increases operational costs for Unilever but also leads to delays in fulfilling orders, which hampers the profitability of the firm. In order to mitigate this issue, Unilever needs to reduce wastage, redesign packaging and implement the use of recycled plastic in its packaging process.

To reduce wastage of raw plastic, Unilever can implement the use of Enterprise Resource Planning (ERP) that can facilitate data utilisation for streamlining the workflow and optimising the packaging process. This will also make use of consumer data to carry out demand forecasting for efficient planning of capacity (Herath and Wijenayake 2019). 

While redesigning the packaging for a variety of its products, Unilever should reduce the size of plastic bottles and containers into a minimal design that holds the same or enhanced utility as well as quantity. Moreover, Unilever should change the packaging material from plastic to either paper or cardboard wherever possible (Bauer et al. 2021).

In addition, Unilever should implement the use of a plastic recycling plant at its packaging facility to recycle the scrap plastic for reuse in the packaging process. This can also be facilitated by acquiring recycled plastic from third party sources to meet its packaging needs while maintaining operational costs (Soares et al. 2020).

References

Bauer, A.S., Tacker, M., Uysal-Unalan, I., Cruz, R.M., Varzakas, T. and Krauter, V., 2021. Recyclability and redesign challenges in multilayer flexible food packaging—A review. Foods, 10(11), p.2702. https://doi.org/10.3390/foods10112702

Benson, M., and Evatz, D. (2023). Plastics Industry: Five Factors to Watch in 2023. Available from https://www.plasticstoday.com/business/plastics-industry-five-factors-watch-2023 [accessed 14 April 2023]

Bridges, J. 2021. Capacity Planning: Strategies, Benefits and Best Practices. Available from https://www.projectmanager.com/training/3-capacity-planning-tips-teams [accessed 15 April 2023]

Chladek, N. (2019). Why you Need Sustainability in your Business Strategy. Available from https://online.hbs.edu/blog/post/business-sustainability-strategies [accessed 8 April 2023]

Damewood, C. (2019). Six Types of Plastic Used for Packaging. Available from https://bizfluent.com/13657035/six-types-of-plastic-used-for-packaging [accessed 15 April 2023]

GlobalData (2021). Unilever Plc: Overview. Available from https://www.globaldata.com/company-profile/unilever-plc-gd33882/ [accessed 8 April 2023]

Herath, H.M.R.P. and Wijenayake, S.I., 2019. The strategic importance of enterprise resource planning (ERP) systems implementation in the fast moving consumer goods (FMCG) industry in Sri Lanka. International Journal of Recent Technology and Engineering (IJRTE), 8(2S9), pp.2277-3878.

Ma, X., Park, C. and Moultrie, J., 2020. Factors for eliminating plastic in packaging: The European FMCG experts’ view. Journal of Cleaner Production, 256, p.120492. https://doi.org/10.1016/j.jclepro.2020.120492

McFarlane, G. (2021). How Unilever Makes MoneyHow Unilever Makes Money. Available from https://www.investopedia.com/articles/markets/012916/how-unilever-makes-money-ul.asp#:~:text=Unilever%20is%20a%20global%20consumer,is%20currently%20growing%20the%20fastest [accessed 8 April 2023]

Rizkovic, A., 2023. Plastic Packaging Waste Management by L’Oreal and Unilever: A Circular Economy Perspective. Journal of World Trade Studies, 7(1), pp.60-75. https://doi.org/10.22146/jwts.v7i1.4816

Scheunemann, C. (2021). Plastics Shortage – What’s the Impact for Supply Chains? Available from https://sphera.com/blog/plastics-shortage-whats-the-impact-for-supply-chains/ [accessed 14 April 2023]

Slack, N., Brandon-Jones, A. and Johnston, R., 2013. Operations management. Pearson education.

Soares, C.T.D.M., Ek, M., Östmark, E., Gällstedt, M. and Karlsson, S., 2022. Recycling of multi-material multilayer plastic packaging: Current trends and future scenarios. Resources, conservation and recycling, 176, p.105905. https://doi.org/10.1016/j.resconrec.2021.105905

Vakil, B. (2021). The Latest Supply Chain Disruption: Plastics. Available from https://hbr.org/2021/03/the-latest-supply-chain-disruption-plastics [accessed 14 April 2023]

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