The Challenges of Managing
Unilever’s Global Supply Base
“Building a Sustainable
Business Process”
Workshop EIPM 13th-14th march 2008
Petar Sobic – Unilever Global Supplier Assurance Director
Unilever - You may not know us, but you know our brands...
The reputation of our brands are hard to build but
easy to loose……….
The Corporate Brand: “Doing Well by Doing Good”
? Unilever’s
Community Programmes
? ~ € 90 mio. spend in 2007
? Unilever’s
Code of Business Principles
? Process of Positive Assurance
? Vitality driven Brands
? Business
Partner Code Assurance
? Sustainability Initiatives - Water, Agriculture etc.
? Crop Round Tables (RTSPO etc.)
Increasingly our attention is turning to our suppliers throughout
the value chain by the deployment of Responsible Sourcing
Responsible Sourcing : The Challenge to Procurement
?How to embed Responsible Sourcing practices into
the ‘daily work of buyers’ ?
?What processes can be used to manage this in a
proportionate manner ?
– > 10,000 suppliers of ingredients & packaging
– Comprising > 100 countries
?What tools and practices can be leveraged to
optimise its efficiency ?
Responsible Sourcing in Unilever
• The Programme Scope
• The Process
• Using Risk Assessment
• Focus on Continuous Improvements
• The future
• Alignment with Peers and Customers
The Unilever Business Partner Code (BPC)
? There shall be compliance with all applicable laws and regulations of the country where
operations are undertaken.
? There shall be respect for human rights, and no employee shall suffer harassment, physical or
mental punishment, or other form of abuse.
? Wages and working hours will, as a minimum, comply with all applicable wage and hour laws,
and rules and regulations, including minimum wage, overtime and maximum hours in the country
concerned.
? There shall be no use of forced or compulsory labour, and employees shall be free to leave
employment after reasonable notice.
? There shall be no use of child labour, and specifically there wi ll be compliance with relevant ILO
standards.
? There shall be respect for the right of employees to freedom of association*.
? Safe and healthy working conditions will be provided for all employees.
? Operations will be carried out with care for the environment and will include compliance with all
relevant legislation in the country concerned.
? All products and services will be delivered to meet the quality and safety criteria specified in
relevant contract elements, and will be safe for their intended use.
? There shall be no improper advantage sought, including the payment of bribes, to secure delivery
of goods or services to Unilever companies.
Programme Scope:
1. There shall be compliance with all applicable laws and regulations of the country where
operations are undertaken.
1. BUSINESS INTEGRITY
2. There shall be no improper advantage sought, including the payment of bribes, to
secure delivery of goods or services to Unilever companies
3. There shall be respect for human rights, and no employee shall suffer harassment,
physical or mental punishment, or other form of abuse.
4. Wages and working hours will, as a minimum, comply with all applicable wage and hour
laws, and rules and regulations, including minimum wage, overtime
andPillars
maximumof
hours
4 key
in the country concerned.
Responsible Sourcing
2. LABOUR
STANDARDS
5. There shall
be no use of
forced or compulsory labour, and employees
shall be free to
Programme
leave employment after reasonable notice.
6. There shall be no use of child labour, and specifically there will be compliance with
relevant ILO standards.
7. There shall be respect for the right of employees to freedom of association.
8. Safe and3.
healthy
working
conditions will be provided for all employees.
HEALTH
& SAFETY
9. Operations will be carried out with care for the environment and will include compliance
4. ENVIRONMENTAL
MANAGEMENT
with all relevant
legislation in the country
concerned.
10. All products
and services
will
be delivered
to meet
the quality
and safety criteria
(Managed
by
QA
Function
–
not
in
scope)
specified in relevant contract elements, and will be safe for their intended use.
Programme Scope:
Deploying New Capabilities for Supplier Assurance
ONE UNILEVER
PROCESS & STANDARDS
LEGAL
TECHNICAL
CAPABILITY
QUALITY
COMPLIANCE
& CONSUMER
&
SAFETY
BUSINESS
LABOUR
HEALTH
STANDARDS
&
&
HUMAN RIGHTS
SAFETY
INTEGRITY
Existing
New
4 KEY PILLARS
ENVIRONMENT
MANAGEMENT
Responsible Sourcing in Unilever
• The Programme Scope
• The Process
• Using Risk Assessment to Set Priorities
• Focus on Continuous Improvements
• The future
• Alignment with Peers and Customers
The Process:
Risk Assessment: Setting Priorities
Materiality Factors
e.g.
•Finished Goods Mnfg.
•Strategic materials
•Industry practices
Low
Capability
(Level of Supplier
+ve assurance)
High
Country
(internationally recognised risk factors)
3rd party Analysis of Country Based “CSR Concerns”
Source: Maplecroft
The Process :
Focus on of Continuous Improvements
Concept
Detail
Site screening
Act
(Corrective
Actions)
Plan (Screening)
Prioritise
Site
Self
Assessments
H
“PDCA”
M
Check (Audit)
Risk Assess
Do (Assess)
Corrective
Actions
H
Site
Audits`
Gap Analysis
But …bespoke approaches are not sustainable
Supplier Inertia
• Requests for supplier information becoming a burden
• Suppliers are ‘bombarded’ for similar requests & audits from
many customers
Demand on internal resources
• Internal resources always ‘at a premium’
• 3rd party service providers (should) have the expertise
Supplier Information and Data management is key
• Integrated within existing SM/IT tool platforms
• Capable of global aggregation
Aligning with Industry Peers and Customers is the way forward
Responsible Sourcing in Unilever
• The Programme Scope
• The Process
• Using Risk Assessment
• Focus on Continuous Improvements
• The future
• Alignment with Peers and Customers
The Future: Alignment with Industry Peers
• “FMCG PROGRESS”
– Programme for Responsible Sourcing
– A Global initiative with our FMCG peers
• Common Evaluation methods
– 4 Key Pillars
– SAQs & Audits
• Supported by AIM (Europe) & GMA (North America)
– Formalised now as “AIM-PROGRESS”
• Deployment of the SEDEX data exchange platform
– Established, UK-founded, global system
– Externally credible
– Currently the largest platform for FMCGs and their Suppliers
The Sedex Data Exchange Platform
Operating Principles
Supplying
Companies
Buying
Companies
?Generic
–
4 Key Pillars are included
?Supplier
Common
Approach
&
System
?
Process (PDCA etc.)
owns their data
Buyer only ‘see’ their Suppliers
?Independent
–
Buyer invites their Suppliers register
?Common
SAQ completed by Supplier
?Independent
–
Prioritisation
Risk Assessments
Buyer decides on need to Audit
?Common
Audit standard using 3rd Parties
?Independent
CAPs Policy
Out of scope
External Stakeholder Communication & Reporting
Individual Sedex Members’ Supplier Codes, Policies
and Supply Decisions
In scope
Common Database
Common Evaluation Methods
Labour
Standards
H&S
Environmental
management
Supplier Operations & Facilities
Supplier Operations & Facilities
Supplier Operations & Facilities
Business
Integrity
Sedex Governance & Structure
• Not for profit organisation owned and run by members
• Founded in 2001 by group of key retailers and manufacturers to drive
convergence in ethical trade audits and practices, and to cut down on
audit fatigue
Sedex Membership
Three classes of membership:
A members – who view data ( e.g. Retailers)
B members – who maintain data ( e.g. Suppliers)
AB members – who do both ( e.g. Unilever)
A and AB Membership includes…
More than 200 retailers, brands, manufacturers, agents and importers
B Members by Geography
132 Countries
Asia & Australasia
42%
Europe
38%
Africa & ME
14%
S. & C. America
5%
North America
1%
Chile: 411
Note: Coverage in the
Americas will build now that
Unilever, PepsiCo, Kraft,
Nestlé etc. have joined
UK: 3275
France: 310
Turkey: 568
South
Africa: 958
China: 4169
India: 1130
Sri Lanka:
441
B Members by Sector
~20,000 B member sites already
registered
9,000 Foods suppliers already there!
AIM - Membership
Bacardi-Martini ? Barilla ? Beiersdorf ? Bongrain ?
Cadbury Schweppes ? Campbell Europe ? Coca-Cola ?
Colgate-Palmolive ? Diageo ? Energizer ? Ferrero ?
Freudenberg/VILEDA ? Georgia Pacific ? GlaxoSmithKline
? Groupe Danone ? Heineken ? Heinz ? Henkel ?
Johnson & Johnson ? Kraft Foods ? Kellogg ? KimberlyClark ? Leaf ? Lego ? Lindt & Sprüngli ? LVMH ? Mars
? McCain Foods ? McCormick ? Nestlé ? Oetker
International ? L’Oréal ? Osram ? Pepsi-Cola ? Pernod
Ricard ? Philips Lighting ? Procter & Gamble ? ReckittBenckiser ? Royal Friesland Foods ? Royal Numico ?
Sara Lee / DE ? SCA Hygiene Products ? SC Johnson ?
Unilever ? Wrigley
Current PROGRESS members in Red type
The Future: Alignment with Customers
• Global Social Compliance Programme (GSCP)
– Championed by major retailers
· Carrefour, Metro, Migros, Tesco & Walmart
– ‘Reference Code’ for Labour Standards is Developed
• Co-operation between Brand Manufacturers &
Retailers Championed by our CEOs
– FMCG & Retailer CEO Forum in Chicago - 09/07
• Unilever plus several peers have been invited to join
GSCP Task Force
In Summary
?Corporate Responsibility is not a new concept
to Unilever:
Responsible Sourcing is a key element & programme
?Globalisation calls for:
Increased accountability, consistency and transparency,
?It is kernel to Business Sustainability:
Will be embedded into routine business processes
? Alignment with Industry Peers and Customers
Will develop efficiency & consistency to drive sustainable
improvement
Unilever - At a Glance
• Every day 150 million people choose
our brands to feed their families and to
clean their homes.
• Our products are sold in 150 countries.
• We employ ~ 179,000 people
• Annual sales of ~ € 40 bn