Sustainability Logistics and Supply Chain Management in Unilever

Moodle Code

5Z7V0035_2324_1F

Student’s ID

23702524

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 TABLE OF CONTENTS

Cover Page…………………………………………………………………………………..1

Table of Contents……………………………………………………………………………2

Abstract……………………………………………………………………………………...4

1.0 Introduction………………………………………………………………………….......5
2.0 Sustainability Logistics and Supply Chain Practices of Unilever……………………….6
2.1 Overview of Unilever as a Case Study………………………………………………….7
2.2 Sustainability Logistics and Supply Chain Practices of Unilever…………………….…7

2.3.1 Warehouse Management and Sustainable Practices in Unilever………….…………..8

2.3.2 Benefits of Warehouse Sustainable Practices………………………………………...10

3.0 Transport Network and Logistics Optimization………………………………………..11

3.1 Unilever’s Sustainable Efforts on Shipping Operation and Freight Services……….…11

3.2 Switching to Electric Delivery Vehicles in Logistics Delivery………………………..12

4.0 Analysis of Findings…………………………………………………………………..13

4.1 Effect of Sustainability Supply Chain Practices on Unilever Business Performance…13

4.2 Sustainable Supply Chain Management SC Dynamic Capabilities and Enterprise

Performance……………………………………………………………………………….14

4.3 How Unilever Achieve SSC and Performance (The Triple Bottom Line) (TBL)…….15

5.0 Conclusion and Recommendation…………………………………………………….17

LIST OF FIGURES

Figure 1: Unilever Brand Logo……………………………………………………………..7

Figure 2: Unilever Compass Strategy……………………………………………………..10

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Figure 2: Sustainable Supply Chain Management SC Dynamic Capabilities and Enterprise
Performance Framework………………………………………………………………………14

APPENDICES

Appendix 1: Unilever Brand Logo………………………………………………’’…………20

Appendix 2: Unilever Compass Strategy………………………………………………….…20

Appendix 3: Sustainable Supply Chain Management SC Dynamic Capabilities and Enterprise

Performance Framework………………………………………………………………………21

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 Abstract

Due to the advent of industrialization, there has been a great impact on business operations on
the global environment, climate, and the whole global ecosystem. The company operations that
involve resource sourcing, production, and distribution of products to consumers have been
considered as a major area that firms need to pay attention to. However, many companies around
the world have begun to formulate new management strategies and integrate them into practices
to attain sustainable supply chain operations. Consequently, this study aimed to evaluate and
analyze sustainability practices in the scope of Unilever, thereby considering the Corporate
Social Responsibilities practices and ethical issues of the sector. Hence, the study found that the
company has formulated sustainable management strategies and implemented them in its logistic
and supply chain operation, which contributes significantly to the performance of the company
and promotes a safe environment. Therefore, the study recommends that Unilever and other
companies should embrace and maintain sustainable supply chain operations. By the utilization
of innovative technological tools that support sustainable distribution, sustainable raw materials
sourcing, and transportation of products. Moreover, the study suggested that Unilever and other
firms should ensure smooth communication with all the players in their supply chain channels to
ensure they maintain the companies’ sustainability operational standards, furthermore, the study
recommends that organizations in the supply chain sectors should contribute their quota to the
society by carrying CSR activities and paying adherence to safety ecosystem policies and
practices to save the present and future generations. .

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3.0 Introduction

In the present world, sustainability practice has become a prevalent issue among local and
multinational companies (MNCs) (Elzarka 2020). Due to the environmental impact of the
extraction of raw materials, production, and supply of goods through logistics operations, many
companies around the world have begun to devise new management strategies and integrate
them into practices for sustainable supply chain operations. The advent of industrialization has
critically affected the environment, some of which includes; greenhouse gas emissions, chemical
waste emissions, toxic pollutants release, toxic gases generated from production and
transportation, as well as climate change (Wiguna Rachmawati, Rohman & Setyaning, 2021;
Widowati, 2021), hence, these affect the sustainability of industries.

Consequently, demand for the accessibility of more sustainable goods and services is increasing
among consumers (Brito, 2016), and many companies are adopting management practices that
are more environmentally friendly and sustainable in supply chain operations. Herrmann,
Barbosa-Povoa, Butturi, Marinelli and Sellitt (2021) established that 70% of global leading
companies pay attention to their sustainability agenda. This has raised companies' awareness to
initiatives put efforts into environmental concerns, and therefore, addressing the issues to gain
competitive advantage ((Nadeem & Siddiqui 2017).

The supply chain involves every corporation that falls in contact with a particular product.,
including companies that accumulate, package, and transport parts or raw materials to the
manufacturer (Nidumolu, Prahalad & Rangaswami, 2009). Supply Chain is the network of
entities involved in the different processes and activities that deliver value in the form of goods
and services distributed to the final consumer. Moreover, Bowersox and Closs (1996)
conceptualized a supply chain as “activities associated with the transformation and flow of goods
or services from materials sources to the end consumers including the implementation of those
activities internal and external to the organization.’

Consequently, the sustainable supply chain is the sequence and the systematic procedures that
are involved in the production and distribution of goods or services. Many organizations pay
attention to ethical issues and are responsible for the environment where they operate.

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Hence, this study aims to critically assess the influence of sustainability supply chain practice in
Unilever. Moreover, this study was conducted in Unilever. Also, the goal of the study is to
evaluate the company’s ethical awareness, environmental sustainability, and corporate social
responsibility efforts as they affect the business performance and the wider society at large.

2.0 Sustainability Logistics and Supply Chain Practices of Unilever

2.1 Overview of Unilever as a Case Study

Unilever is a multinational established on 2 September 1929 (Chandra & Jatmika, 2021), it is an

end-user goods company; serving a wider market with products such as food and beverages,
personal care products, and cleaning agents. The firm major operations include; manufacturing,
planning, logistics, procuring, quality, and safety customer service is powered by the End-to-end
supply chain of the company. Unilever established and controls over 460 warehouses and 260
factories in 190 countries, and it serves about 2 billion customers (Unilever, 2023).

Moreover, Nestle spends 2.5 percent of its total turnover on development and research
development, and also spends 1.5 percent on Corporate Social Responsibility (Wanyonyi, 2013).
Unilever is a very popular household brand; about 150 million people use Unilever products to
meet their daily needs. Unilever manufacturers and supplies some of the world’s leading food
products, household provisions, and personal care products such as margarines, Blue Band and
Flora margarines, knorr and Royco, Ice cream, Close up, Lipton tea, Lifebuoy, Sunlight, and
Omo; Lux, Geisha, Vaseline and many more (Unilever, 2016)

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Fig. 1: Unilever Brand Logo

Source: Stock Images (2023).

2.2 Sustainability Logistics and Supply Chain Practices of Unilever

The concept of sustainability is based on three elements, which are; social, environmental, and
economic development. Thus, integration of sustainability into organizational management
practices creates a high level of several advantages (Reilly, 2009; Kumar & Goswami, 2019).
This initiative enables the company to be responsible for its business and customers. Bowers
(2010) contributes that a firm with proven records in terms of global and local sustainability can
generate income through investments as a result of its positive public reputation.

Moreover, (McPhee, 2014) established that incorporating sustainability into a company’s

strategy as a single cohesive model can add both economic and financial value and boost the
resilience of the company against future changes. However, sustainability is not only restricted to
the environment but also to supply chain concerns. Considering the context of Unilever, the firm
also embraces the sustainability approach thereby integrating it into its management practices
and operations (Wanyonyi, 2013).

The sustainability efforts of Unilever incorporate environmental factors as well as increase the
experiences of its workforce and actors involved in its supply chain network. Part of the
company’s efforts in ensuring sustainable practices is the reduction of carbon emissions from its
manufacturing sites, and warehouses by driving recycling and efficiency (Mirvis, 2011).

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Global leading multinational firms have already launched a series of sustainable supply chain
management (SSCM) strategies and practices, aimed to enhance their sustainable advantages.

Unilever launched a project titled “The Unilever Sustainable Living Plan” in 2010, which
improved the health conditions of close to one billion people globally. The company had
successfully reduced the impact on the environment and accomplished purchasing 100%
agriculturally sustainable raw materials (Du, 2012).

Moreover, the company not just includes environmental factors but also increases the
experiences of workers and employees who are involved in its supply chain.

To be more sustainable corporate citizens, the company is aiming to drive recycling and
efficiency and reduces carbon emissions from its manufacturing sites. It is evident that Unilever
sourced 14% of agricultural supplies sustainably in 2010, which has now increased to 48%
(Sunlight, 2014). It indicates that the company has well understood and applied the sustainability
concept, which is seen through its different operational activities.

Further, Unilever aims to drive efficiency and recycling; and at the same time reduce carbon
emissions from all its manufacturing sites. Unilever sourced 14% agricultural supplies
sustainably in the year 2010; this has now increased to 48% (Sunlight, 2014). This shows that the
firm is aware of the importance and necessity of sustainability and therefore applies it throughout
its different and complex business operations.

2.3.1 Warehouse Management and Sustainable Practices in Unilever

Warehouse sustainable practices have gained significant traction in recent times. Sustainable
warehousing embodies a harmonious blend of eco-conscious awareness and practices and the use
of technological innovations within the logistics and supply chain management sector. A
structured transformative method to de-carbonization—driven through warehousing and enabled
by investors, consumers, and governments will drive sustainable living through the
accomplishment of global de-carbonization commitments (Trivedi, 2023).

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The proper storage of inventory, finished products, and raw materials is also very pertinent to
companies’ performance. In today’s business operation, there has been a global focus on
environmental responsibility; firms are looking for means and strategies to ensure their supply
chain operations are more sustainable while also integrating technological advancements for
efficiency gains (Srivastava, 2007).

Additionally, warehouse operations produce packaging waste in the supply chain. However, the
usage of standard recyclable containers and materials is a solution for reducing costs incurred
and reducing waste. Dubey, Gunasekaran, Papadopoulos, Stephen, Shibin, & Wamba, (2016)
contribute that some of the efficient ways to manage a warehouse are; minimizing storage and
retrieval costs, minimizing energy usage maximizing storage area utilization.

Due to the rising demand for eco-friendly business practices, warehouses are embracing
sustainable operational strategies to work in adherence to environmental and ethical policies on
sustainability Soosay (2015). In the efforts to key into sustainable warehouse practice, firms
begin to utilize energy-efficient technologies, implementing green packaging solutions
promoting recycling and waste reduction (Trived, 2023). As sustainable warehousing renders
business to be cost-effective, it also minimizes environmental impact and improves brand
reputation in the long run.

Consequently, Unilever operates several warehouse across Europe with several different logistics
partners, currently, the company has adopted technological innovation to ensure energy

use is minimized. Unilever also pay adherence to proper waste disposal to ensure a safety
environment. It recorded in Climate Transition Action Plan ((CTAP) that steps we will take to
reduce the greenhouse gas emissions impact of its products, per consumer use by 2030, and also
to achieve net zero across its value chain by 2039 (Unilever, 2023).

More also, in Unilever recoded that its warehouse, factories and research laboratories reduced its
emission by 68% which was channeled to achieve its interim target of a 70% Green House Gas
reduction by year 2025. The Compass Strategy set out by company as shown in figure 2 below
was designed and targeted to double the size of the firm and at the same time reducing its
environmental footprint and increasing its positive social impact.

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Fig. 2: Unilever Compass Strategy

Source: Unilever (2023).

2.3.2 Benefits of Warehouse Sustainable Practices

Sustainable warehouse operation significantly contributes to the reduction in waste generation

emissions and energy conservation (Trivedi, 2023). These practices protect ecosystems from
extinction, and disaster and also contribute to a healthier planet.

i. Economic Advantages

Aside that warehousing sustainable practices contribute to environmental safety, it also offers
economic advantages. Firms can also experience a reduction in energy costs, enhance their
supply chain resilience, and optimize the distribution of resources.

ii. Social Benefits

Application of technologies can also provide several social benefits to smart warehouses such as
enhanced product quality, improved workers' safety and welfare, and decreased business
operational costs, hence, offering cheaper products for consumers (Trivedi, 2023).

iii. Environmental Benefits

Sustainability practices in the Warehouse are highly effective in safeguarding the physical
environment from possible pollution generated from waste disposal, carbon emission, water

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contamination, and atmosphere pollution originating from toxic waste. Many companies like
Unilever have embraced sustainable warehouse practices through proper waste disposal, usage of
resalable packaging materials adoption of sustainable energy equipment.

3.0 Transport Network and Logistics Optimization

Transportation is a very vital part of logistics operations. Thus, Dubey, Gunasekaran,

Papadopoulos, Stephen, Shibin & Wamba (2016) observed logistics optimization as the
“optimization of the route, speed, load and nature of transport; usage of alternate fuels instead of
fossil fuels; logistics collaboration; reverse logistics, etc. as this will significantly contribute to
the profitability and controlling of greenhouse gas emission of the business organization.

Furthermore, the company needs to implement energy-efficient logistics and supply chain
systems to attain sustainability and decrease the global carbon footprint. Also, it is very pertinent
for firms to develop reverse logistics networks (Gonzalez-Torre, Adenso-Diaz & Artiba, 2004),
as this will help increase the use of resources and for the recycling and reuse of the product and
materials.

The transportation network of Unilever is divided into three; The first one is; the factory's
“Sourcing Units – SU” which receives raw and packing materials from over 500 suppliers (Brito,
2016). The transport between SU and the supplier is called Inbound Transport. On the
completion of production, such products are moving to one of more than 100 Distribution
Centers in each European country (Brito, 2016). The transport between DC and SU is called
Primary Transport.

3.1 Unilever’s Sustainable Efforts on Shipping Operation and Freight Services

Unilever is one of the top multinational companies that initiate sustainable operations in logistics
transportation. The company produces millions of products daily, which requires the
transportation, movement, and transfer of finished products from the production plant to the
warehouse and point of sale.

The company embeds sustainability improvement in terms of its sea logistics through the
measuring & optimizing of C02 emissions to meet its “Sustainable Living Plan” goal Unilever

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(2022). Moreover, the company is working to reduce the emissions of waste from its transport
and distribution operations.

Thus, the reduction of environmental impact benefits Unilever in the long run, in terms of
efficient distribution of products and cost-effectiveness. The multinational company has an
ambitious goal in the area of its “Sustainable Living Plan” to enhance the CO2-efficiency of its
Logistics operations by 40% by 2020 on a 2010 Unilever (2022).

Moreover, the company has also been working to integrate sustainability measures and
improvement into logistics operations in its overland transport segment and sea freight Unilever
(2022). Moreover, Unilever collaborates with its logistics partners across the world to seek the
best possible solution for a Sustainable Business operation Unilever (2022). Hence, Unilever has
put in great efforts in ensuring its logistics transportation operations are sustainable and have
positive effects on society at large.

3.2 Switching to Electric Delivery Vehicles in Logistics Delivery

In the efforts to operate sustainable logistics services, Unilever has added one of the world’s first
heavy-duty electric trucks to its fleet, marking a significant milestone in our movement towards
zero-emission vehicles. The electric truck is a 44-tonne renewable power Volvo truck; it is the
first heavy-duty electric truck with adequate range to carry out the transportation of goods from
the company’s distribution centers to its retail customers Unilever (2022).

Also, to meet the goals of green logistics transportation, Unilever formulated strategies to help
cut greenhouse gas emissions from its logistics network by 40–50% by 2030 Unilever (2022),
thereby switching to electric vehicles to attain its sustainability goals in terms of transportation
and delivery.

Unilever has mapped out logistics sustainability strategies, the aim of these strategies is reducing
the distances it needs to drive in its distribution and ‘greening’ the miles it can’t avoid driving,
where the electric-powered delivery trucks will be utilized.

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Some of the benefits of the Unilever electric vehicle are that it’s a zero-emission vehicle, it
reduces up to 100 tons of carbon per annually compared to a regular diesel truck, as it is
renewable electricity at the company’s distribution centers Unilever (2022). Aside from the
electric delivery truck being less polluting; it is much quieter than a diesel engine vehicle, which
is good for the environment and for drivers’ working conditions.

4.0 Analysis of Findings

4.1 Effect of Sustainability Supply Chain Practices on Unilever Business Performance

Unilever is committed to sharing information with its stakeholders. It has been able to meet the
emerging desires of consumers for more sustainable products, by sharing vital information about
where its products come from. Also, the company is key to sustainable supply chain practices,
and this keeps Unilever among the top 10 supply chains globally (Fakhry, 2021).

Another segment that could produce business benefit from sustainable supply
chain improvements are high engagement of skilled labor globally. Unilever follows some well-
organized sustainable policies and practices for maintaining and holding its key staff across the
supply chain and logistics network (Vermeulen, 2010)

Furthermore, another business section that could yield to advantage from sustainable supply
chain improvements is high engagement of skilled workforce globally (Fakhry, 2021). Thus,
Unilever adheres to ethical issues and also practices well-organized sustainable policies and
practices for maintaining and holding its key workers across the supply chain and logistics
network (Vermeulen, 2010).

Employees would be allowed to have the right proficiency sets for managing and controlling the
business through a period of growth by concentrating on a sustainable supply chain (Pettit,
Fiksel, Croxton, 2010).

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4.2 Sustainable Supply Chain Management SC Dynamic Capabilities and Enterprise
Performance.

Dynamic capabilities are innovated as a multidisciplinary framework designed to explain long-

run enterprise performance (Teece, 2014). The application of DC theory in the field of SSCM is
a logical choice because Sustainable Supply Chain Management and Dynamic capability are
interconnected through similar organizational and environmental conditions (Beske, 2012).

Moreover, Hong, Zhang, and Ding (2018) opined that the sustainable development of society to
a specific point depends on the sustainable development of the supply chain. Thus, concentrating
on SSCM is a strategic and good starting point for supply-side reform, and the result can
promote long-term enterprise performance.

Thus, as shown in Figure 2 below, there is a link between sustainable supply chain practices in
connection with supply chain dynamic capabilities which effectively lead to enterprise
performance, including; economic, environmental, and social performance.

Fig. 3: Sustainable Supply Chain Management SC Dynamic Capabilities and Enterprise

Performance Framework.

Source: Hong, Zhang and Ding (2018).

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Considering the critical research and in-depth review of Unilever SSCM practices, it can be
affirmed that the company has devised several means to maintain its competitive advantage. The
company has developed various policies and strategies to create a sustainable supply chain in all
its supply chain segments, including the production segment, Warehouse segment, Raw materials
sourcing segment, and logistics and transportation segment of the firm.

These efforts are channeled toward securing a safe environment, contributing to its ethical issues
and Corporate Social responsibilities to attain global sustainability and achieve the utmost
business performance in the industry where it operates (Fakhry, 2021).

4.3 How Unilever Achieve SSC and Performance (The Triple Bottom Line) (TBL)

Business firms can achieve competitive advantage through a sustainable supply chain, and the
successful application of SSC for firms’ performance can be accelerated through the application
of triple bottom line (TBT), thus, considering the area of economic, environmental, and social
elements is essential (Kumar, & Goswami, 2019).

In the case of Unilever, aside from the company’s motive of profit making, which is the
economic aspect of the business, it drives its operation towards attaining environmental and
social sustainability as well (Fahimnia, Sarkis and Davarzani, 2015; Tajbakhsh & Hassini,
2015).

Concerning the environmental aspect of Unilever SSC efforts, the company, through its
strategies and its designed sustainable business model, has adopted reuse and recyclable
materials, resources conservation operation, and moving towards reducing its carbon emission
footprint to net zero.

Moreover, the social aspect of TBL is linked to an ethical dimension which implies corporate
social responsibility (CSR) (Closset Speier & Meacham, 2011). CSR is a core element of
sustainability, and organizations must adhere to it. CSR entails philanthropy, ethics, human
rights, environment, diversity, and safety. Nishant, Goh, and Kitchen (2016) opined that
companies should be ethically and socially accountable to their stakeholders, consisting; of

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employees, investors, government, regulators, SC members, consumers, society as well as the
future generations.

Thus, Unilever has implemented several SSC strategies and applied them in the area of CSR
activities, which include; diversity and inclusion in the engagement of workforces, philanthropic
activities in the society, and ensuring employees’ safety and welfare; the company recorded that
accidents in the workstation have been cut down, it recorded 0.67 accidents per million hours
worked, up from 0.55 in 2021 (Unilever, 2022).

5.0 Evaluation, Conclusion and Recommendation

Sustainable logistics and supply chain practice is a very pertinent concept in business
management of the present age. The practices of SSC help secure a sustainable environment; it’s
also effective for business productivity and competitive advantages.

Since the establishment of Unilever in 1929, the company has been able to secure a top position
in the global FMCG industry. Its efforts in driving sustainable supply chain operations helped the
company maintain its brand competitive advantage. The company has devised various innovative
strategies and embraced sustainable operations throughout its supply chain channels.

Moreover, Unilever has integrated sustainable methods of operation and application of

equipment and tools that cut down energy use, reduce carbon emission, and secure the climate in
the area of its raw material sourcing, logistics, transportation, distribution, and warehousing.
These sustainable practices in the area of Unilever logistics and supply chain have contributed
significantly to the business productivity and give the company a competitive edge.

Consequently, Unilever and other companies should embrace and maintain sustainable supply
chain operations. By the utilization of innovative technological tools that support green
distribution, green sourcing, and transportation of products.

Additionally, Unilever and other firms should ensure smooth communication across all the
players in their supply chain channels, to ensure they maintain the companies’ sustainability
operational standards; including; their suppliers, wholesalers, retailers, and consumers. Unilever
and another firm should also contribute to the society by performing CSR activities and paying
adherence to safety ecosystem policies and practices to save the present and future generations.

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APPENDICES

Appendix 1: Unilever Brand Logo

Appendix 2: Unilever Compass Strategy

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Appendix 3: Sustainable Supply Chain Management SC Dynamic Capabilities and
Enterprise Performance Framework.

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