Unilever: Boosting Efficiency in its End-to-End Supply Chain

Across most fast-moving consumer goods (FMCG) businesses, products make their journeys from factory to shelf in a very similar manner. 

Once a product has been made, trucks pick up pallets of goods from a factory and drop them off at a distribution centre, where they're unloaded, organised and stored.

From here, and once an order has been received, items are picked, loaded onto another truck and shipped to the retailer.

There are a host of reasons why this conventional, tried-and-trusted approach works for FMCG giants like Unilever. 

For the most part, Unilever’s customers order a mix of products from its five Business Groups: Beauty & Wellbeing, Personal Care, Nutrition, Home Care and Ice Cream. These originate from different factories, but the company’s distribution centres hold all products in a vast warehouse before picking, packing and shipping them out as a single delivery.

However, in a bid to make the logistics process even more efficient, Unilever is increasingly implementing a practice known as ‘direct dispatch’, where items are distributed straight from factory to customer.

How direct dispatch adds value

Unilever believes direct dispatch offers a number of benefits, hence its rollout across the organisation’s logistics network.

The first – and relatively obvious – advantage is speed. Once the customer has ordered a product, it’s then delivered straight to them, eliminating the need to load, unload and store products at a separate distribution facility. 

Then there’s the sustainability potential. Direct dispatch invariably reduces the distance Unilever’s trucks are travelling, given only one trip is being made – from the factory directly to the customer. This saves fuel and reduces the output of greenhouse gas emissions, while also cutting down on touch points to improve cost efficiency. 

“Direct dispatch is a way for us to increase efficiencies in our end-to-end supply chain and help deliver on the cost savings and sustainability aspects of our Growth Action Plan,” explains Michael O’Connor, Home Care Global Supply Chain Strategy & Long-Term Planning Manager.

“It reduces travel time and distance, lowering our carbon footprint, while at the same time ensuring excellent service to our customers. It’s a win-win for us and our retailers.”

The numbers do most of the talking when examining the extent to which Unilever is putting its faith in direct dispatch. In 2018, just 8% of its deliveries were sent using this method; this has since doubled to 16% and the aim is to reach higher than 25% by 2026. 

A global rollout

As one might imagine, the viability of direct dispatch relies on sending full shipments of just one or two product lines from a single factory, meaning it suits Unilever’s largest customers.

The practice lends itself to the delivery of products from the Home Care department as they tend to be bulkier than those from other divisions. For example, one retail partner may order enough bottles of laundry detergent in one go to fill an entire truck.

Already, Unilever is using direct dispatch across the globe, with the highest number of factories doing so located in Latin America and South Asia.

Plans are in place to ensure its largest factories can support the model, which involve building infrastructure and enhancing capabilities in numerous other areas over the coming years. Major projects are under way in Europe, North Asia, Indonesia and South East Asia.

“This is about finding what works best for each customer and tailoring the solution accordingly, whether it’s direct dispatch or a traditional model,” adds Michael.

“We’re constantly evaluating more sites and routes all over the world and, where it makes sense, implementing at speed. Each one we add to the list is another step in our logistics operation becoming more efficient, productive and sustainable.”

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