Unilever’s Operations Management, 10 Decisions & Productivity

Unilever operations management, 10 strategic decisions, areas of OM, productivity, consumer goods case study and analysis
The Unilever building and Marco Polo tower in HafenCity, Hamburg, Germany in 2011. Unilever’s operations management considers the 10 strategic decisions for optimal productivity in all areas of the consumer goods business. (Photo: Public Domain)

Unilever’s operations management (OM) is responsible for keeping high productivity throughout the global organization of the consumer goods business. Operations managers develop procedures and processes to support the organization in achieving higher performance in the 10 strategic decisions pertaining to operations and productivity. Unilever’s operational performance directly supports financial performance. Thus, it is essential for the company’s operations management to address concerns in these strategic decision areas to maintain high productivity. As a leading consumer goods firm, Unilever has evolving operations management approaches to keep the business productive.

In the 10 strategic decision areas of operations management, Unilever focuses on high productivity through effectiveness and efficiency in business processes. The resulting high performance ensures Unilever’s long-term success in the global consumer goods market.

Unilever’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. The objective in this strategic decision area is to develop products that suit the organization. Unilever’s operations management attends to product development issues and challenges. Success is achieved through continuous innovation to address consumer expectations. In Unilever’s marketing mix, the high variety of consumer goods creates a complex set of needs for this decision area. For example, the company must maintain high productivity in developing new variants of soaps and lotions, while keeping beverage development highly productive. Operational requirements are based on these productivity and process needs to support the development and production of Unilever’s consumer goods. Operations managers at Unilever ensure design for effective output levels. These output levels correspond to market demand and organizational capacity.

2. Quality Management. In this strategic decision area, operations managers deal with satisfying consumers’ expectations on product quality. Unilever’s approach involves implementing quality standards in operational processes to satisfy product quality requirements. For example, the company applies a threshold for defects and related issues in production operations. These operations management standards are derived from Unilever’s market research data, as well as conventions in the consumer goods industry. To maintain high productivity in quality management, corporate standards and local standards are applied for certain product lines to support the company’s generic and product development strategies (Read: Unilever’s Generic Strategies & Intensive Growth Strategies).

3. Process and Capacity Design. The objective of operations management in this strategic decision area is to ensure adequate resources and develop processes to support production. Unilever applies robotics and automation in most of the production processes under its control. This approach maximizes operational efficiency and productivity. For example, Unilever’s automation of the production of its home care products prevents inconsistency in quality. Operations managers can also adjust production capacity to address fluctuations in demand based on seasons and special occasions. Moreover, Unilever conducts regular evaluations of processes and capacity requirements to keep the business productive, while minimizing issues in operations.

4. Location Strategy. Efficiency and cost-effectiveness of locations of operations are the objectives in this strategic decision area of operations management. Unilever aims to minimize production costs and transport costs of its consumer goods to reach target markets. The company’s operations managers maintain facility locations that optimize proximity to labor markets, suppliers, and target consumers. For example, Unilever’s production hubs are typically proximal to the largest consumer goods markets. The company also avoids locations that have political and cultural issues that adversely affect operational productivity. This approach contributes to keeping Unilever’s business processes productive.

5. Layout Design and Strategy. Efficient movement of information and resources is the operations management objective in this strategic decision area. Efficient flow of information is achieved through computing technologies and networks in Unilever’s facilities. For example, operations managers easily access pertinent data through mobile and online consoles. Such data is applied to decide on business process adjustments to ensure productivity in Unilever’s facilities. Also, the company’s operational requirements are the direct basis for layout designs. For instance, Unilever maintains productive inventory operations through aisle layouts that minimize the travel distance of consumer goods across distribution facilities.

6. Job Design and Human Resources. This strategic decision area of operations management considers the sufficiency of human resources to support business operations. Operational efforts in this area support Unilever’s organizational culture of performance. For example, operations managers ensure job design and corporate culture alignment to support productivity and business performance. In this organizational aspect, Unilever’s operations management directly influences human resource capacity and the financial performance of the consumer goods business.

7. Supply Chain Management. In this strategic decision area, operations managers must ensure that the supply chain supports business strategies. Unilever’s consumer goods supply chain is extensively automated. The company’s operations management approach leads to high productivity. For example, managers focus on decisions based on supply and demand variations in Unilever’s target markets. Minimal managerial time is consumed in addressing information flow for parties involved in the supply chain because online databases enable easy access to pertinent supply chain operations data. Also, operational efficiency of Unilever’s supply chain is maintained through regular monitoring and proactive problem solving. The resulting productive supply chain supports business performance and adds to the company’s strengths (Read: Unilever’s SWOT Analysis: Strengths, Weaknesses, Opportunities & Threats).

8. Inventory Management. Optimal inventory ordering and holding are the objectives in this strategic decision area of operations management. Unilever is concerned with maintaining an adequate inventory of consumer goods to enable the business to respond to changes in the market. For example, the company’s inventory size is sufficient to address sharp increases in demand. Thus, operations managers must accurately determine how much materials and consumer goods are needed in Unilever’s inventory. These amounts must sufficiently support the company’s productivity goals in its operations. To do so, Unilever applies the perpetual method and periodic method of inventory management. In addition, operational goals for the inventory are met through just-in-time (JIT) inventory management. JIT minimizes holding time and corresponding costs in Unilever’s inventory operations.

9. Scheduling. This strategic decision area focuses on short-term and intermediate schedules for resource utilization. For human resources, Unilever relies on localized operations management to address needs in local or regional consumer goods markets. For example, regional operations managers implement and adjust schedules based on regional market conditions. This approach makes Unilever’s operations flexible in satisfying target consumers. The flexibility also contributes to high operational productivity.

10. Maintenance. Operations managers aim at high reliability and stability of business processes in this strategic decision area. Unilever maintains redundancy measures to ensure process capacity when demand suddenly peaks. Also, the company’s operations management involves a flexible scheme that allows some degree of organizational movement of personnel within facilities. For example, Unilever assigns designated personnel to other areas for sufficient capacity and productivity when demand fluctuates in the consumer goods market. In addition, operational issues are proactively addressed through regular monitoring, evaluation and problem solving. For instance, Unilever has dedicated teams that analyze business processes to preventively implement solutions that keep operations highly productive.

Productivity Criteria at Unilever

The productivity of Unilever’s operations is evaluated using a number of criteria or measures. With a global consumer goods organization and a diversified product mix, a wide variety of these measures are used to support operations management decisions. The following are some notable productivity criteria used at Unilever:

  1. Batches shipped (Distribution facility productivity)
  2. Units produced (Manufacturing productivity)
  3. Inquiries addressed (Unilever’s consumer advisory service productivity)
References
  • Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH.
  • Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making9(3), 310-327.
  • Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge‐based decision support tool for production operations management. Expert Systems11(1), 3-11.
  • Unilever – Investor Relations – Annual Reports and Accounts Overview.
  • Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management decisions. Production Planning & Control12(6), 605-620.