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Unilever ups investment in more efficient logistics to make retailer interaction simpler

Unilever says that the rollout of its new ‘direct dispatch’ logistical model to ship products from factories to retail customers has demonstrated significant improvements across several operational efficiencies.

Targeting its end-to-end supply chain, the company says that the new system helps to cut travel time and distance, while reducing touchpoints, improving the carbon footprint, and providing an enhanced and speedier service for its retail customers.

The company says that the rollout—currently underway in Europe, Northern Asia, Indonesia, and Southeast Asia—is just beginning and will be significantly expanded worldwide over the next few years.

Although direct dispatch is not entirely new to Unilever, evidence of its advantages has led to a wider rollout. In 2018 an estimated 8% of its deliveries relied on direct dispatch, with current estimates at 16%, and the projected uptake forecast to hit over 25% by 2026.

Direct dispatch meant a complete redesign of the old dispatch system

The conventional logistics system used by Unilever shifts products onto pallets via a distribution centre. This entails loading and unloading, as well as organising and storing before the products are then shipped to retailers. This invariably results in using a wide mix of products across different categories that meet retailers’ exact needs.

However, Unilever’s logistic team realised that several product categories are better suited to direct dispatch, distributing straight from the factory to the retailer. The benefits are numerous, including savings in fuel and energy to cut carbon emissions, with the added bonus of reduced delivery time, giving perishable products a longer retail shelf-life.

“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,” said Michael O’Connor, home care global supply chain strategy & long-term planning manager, at Unilever.

The model is best suited to larger retailers and bulkier products

Unilever says the viability of the direct dispatch depends on sending full shipments of just one or two product lines from the factory to larger-scale retailer outlets. Equally, it is best suited to bulkier items, which means retailers could order one batch of boxed cereal in just one delivery truck, in turn filling the stock and store shelves rapidly and efficiently.

The sustainability benefits are mainly focused on energy savings, with truck fuel being amongst the biggest savings. All of this contributes to a significant reduction in greenhouse gas emissions and the overall carbon footprint of Unilever's supply chain.

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

Unilever has streamlined the business to enhance its logistical operations

Unilever’s June 2023 Supply Chain Report highlights the huge extent of the multinational supply chain, which is estimated to include around 52,000 suppliers and extends to a total investment of €43.2 billion. Of that total spend, 7% is attributed to logistics and operational costs, the equivalent of just over €3 billion.

In recent years the company has implemented several initiatives to help boost efficiency and make its processes more eco-friendly. Many of those improvements have come about from digital innovations and processes with these goals in mind.

The biggest changes have included the move away from a matrix operation to make the logistical processes more streamlined. This move saw the company split into better-defined business groups that include Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream.

The shakeup also saw the company’s supply chain and IT divisions united under Unilever Business Operations, to support logistics on a global scale while also enhancing operational efficiencies.