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 linked to 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 highly productive.
In the 10 strategic decision areas of operations management, Unilever focuses on high productivity through effectiveness and efficiency in manufacturing processes. The resulting high performance ensures long-term success in the global consumer goods market and the fulfillment of strategic objectives based on Unilever’s mission statement and vision statement.
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 business organization. Unilever’s operations management attends to product development issues and challenges. Success is achieved through continuous innovation to address consumer expectations. Unilever’s marketing mix (4Ps) involves products that correspond to a complex set of business needs and consumer expectations for this decision area. The company maintains high productivity in developing new variants of consumer goods, like soaps and lotions. Operational requirements are based on productivity and process needs, to support the development and production of Unilever’s consumer goods. The company’s operations managers ensure effective output levels to meet the design requirements of consumer goods. These output levels correspond to 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 in product development, which relates to Unilever’s generic competitive strategy and intensive growth strategies.
3. Process and Capacity Design. The objective of operations management in this strategic decision area is to ensure adequate resources and processes to support production. Unilever applies robotics and automation in many 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. The technological resources available for this area of operations management depend on current technological trends, such as the ones identified in the PESTLE/PESTEL analysis of Unilever.
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 the production costs and transport costs of its consumer goods. The company’s facility locations are optimized based on 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 and competitive against other firms, such as PepsiCo and Procter & Gamble (P&G). Thus, effectiveness in this area of operations management helps address the challenging competitive environment described in the Five Forces analysis of Unilever.
5. Layout Design and Strategy. The efficient movement of information and resources is the operations management objective in this strategic decision area. The 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 in deciding on business process adjustments to satisfy productivity goals 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. Moreover, this area of operations management accounts for layout requirements based on the divisions of Unilever’s organizational structure (business structure).
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 reinforce Unilever’s organizational culture (work culture). For example, operations managers ensure the alignment between job design and corporate culture to support objectives for productivity and business performance. In this organizational aspect, Unilever’s operations management 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, the 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 identified in the SWOT analysis of Unilever.
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 input materials and 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 manufacturing and distribution operations. Unilever applies the perpetual method and periodic method of inventory management. In addition, operational goals for 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 demand in target markets. This flexibility also contributes to high operational productivity in consumer goods manufacturing.
10. Maintenance. Operations managers aim for the 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. Effectiveness in this area of operations management optimizes productivity and efficiencies that facilitate business sustainability and the related goals of Unilever’s corporate social responsibility strategy, stakeholder management, and corporate citizenship.
Productivity Criteria at Unilever
The productivity of Unilever’s operations is evaluated using some 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:
- Batches shipped per day (Distribution facility productivity)
- Units produced per day (Manufacturing productivity)
- Inquiries addressed per day (Unilever’s consumer advisory service productivity)
References
- Chen, X., Deng, T., Shen, Z. J. M., & Yu, Y. (2023). Mind the gap between research and practice in operations management. IISE Transactions, 55(1), 32-42.
- Szwarc, E., Bocewicz, G., Golińska-Dawson, P., & Banaszak, Z. (2023). Proactive operations management: Staff allocation with competence maintenance constraints. Sustainability, 15(3), 1949.
- Unilever PLC – Form 20-F.
- Unilever PLC – Our Approach.