Hindustan Unilever

A
Report
On
Hindustan Unilever Limited Supply Chain
Birla Institute of Technology and Sciences, Pilani
January-May 2021
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Birla Institute of Technology and Science, Pilani

1
Project Details
Course: Supply Chain Management
Course No. : MF F421
Project Name: Hindustan Unilever (HUL) Supply Chain
Group Number: 1
Group Members and Work Distribution:
Name BITS ID Work Done
Shruti Kumari 2017B2A11052P Supply chain and Product configuration
Raunaq Jiandani 2017A1PS0716P Strategic Fit
Utkarsh Dixit 2017B1A10403P Logistical & Cross Functional Drivers

Recent Issues
Chandan Pandey 2017B1A21011P Logistical & Cross Functional Drivers
Meghna Gupta 2018A1PS0476P Introduction, Pricing (Cross Functional Drivers)

Supply Chain Coordination and Obstacles
Gaurav Bellal Natesh 2018A1PS0027P Supply Chain Coordination and Obstacles

Recent Issues in the Supply Chain (COVID-19)
Ayush Kumar 2017B1A20382P SWOT Analysis
Aman Saurav 2017B1A20494P SWOT Analysis
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2
Table of Contents
Introduction 5
Product and Supply Chain Configuration 6
Product Configuration 6
Food and Beverages Division 6
Personal Care Division 6
Other Businesses 7
Supply Chain Configuration 8
Structure 9
Portfolio 9
Marketing strategy 9
Strategic Fit 11
Logistical Drivers 16
Inventory 16
Inventory Turnover Ratio 17
Inventory Days 17
Facilities 18
Transportation 20
Cross-Functional Drivers 22
Information 22
Sourcing 23
Pricing 25
Supply Chain Coordination & Obstacles 26
What is Supply Chain Coordination? 26
Reimagine HUL Initiative 26
Picking up consumer signals 27
Demand Generation 27
Demand Capture 28
Demand Fulfilment 29
HUL’s IT system & processes: A boost towards Coordinated Supply Chain 30
Obstacles to Supply Chain Coordination and how HUL tackles them: 31
Incentive Obstacles 31
Information Processing Obstacles 32
Operational Obstacles 32
Pricing Obstacles 33
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3
Behavioural Obstacles 33
Recent Issues in the Supply Chain - Issues due to COVID-19 34
Demand Uncertainty and Volatility 34
Complete Disruption of the Supply Chain due to the Pandemic 35
Measures taken by HUL to combat issues faced during the pandemic 36
Other Issues faced by the company 39
Product Mimicry 39
Strengthening the Brand Portfolio 39
SWOT Analysis 40
Strengths 40
Weaknesses 41
Opportunities 42
Threats 43
References 45
Introduction 45
Product and Supply Chain Configuration 45
Strategic Fit 45
Logistical and Cross-Functional Drivers 46
Supply Chain Coordination and Obstacles faced 47
Recent Issues in the Supply Chain 47
SWOT Analysis 48
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4
Introduction
With a goal of creating long-term value by employing sustainable business strategies, HUL, a
subsidiary of Unilever, continues to serve in India with over 8 million outlets and 4500+
distributors, becoming India's largest FMCG company selling more than 40 billion units a
year. HUL has been ranked as the No. 1 Dream company to work for in 2021. On every
given day, nine out of ten Indian households use their goods to feel better, look better, and get
more out of life, providing them with a once-in-a-lifetime chance to shape a better future.
With over 44 brands spanning four distinct categories of beauty and personal care, home
care, water purifier, and food and refreshment, the Company is a part of the everyday life of
millions of consumers in India. Its portfolio includes leading household brands such as Axe,
Bru, Clinic Plus, Cornetto, Horlicks, Knor, Lakme, Lifebuoy, Vim, and Pureit.
The Company was formed in 1933 and now has about 21,000 employees working in around
31 factories and 15 Offices, with its headquarters in Mumbai. They believe in fairness,
transparency and accountability. With the major CSR initiatives of Water Conservation and
Harvesting, Project Shakti, Lifebuoy Swastya Chetna (LBSC), Happy Homes, Fair & Lovely
Foundation, Ankur, Anbagam and countess others, HUL has created a positive brand image
like no other by giving back to the community.
HUL has tried to improve its performance by resorting to a more focussed approach on a few
selected brands, reducing the costs by changing the system of outsourcing, greater integration
of supply chain operations, entering into new areas and centralized material and media
buying. With heavy investments in Big Data, AI etc. and more than 80 ongoing digital
experiments, HUL is determined to expand its scope in India.
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Meghna Gupta 2018A1PS0476P 5
Product and Supply Chain Configuration
Product Configuration
Food and Beverages Division
Within the F&B division, the company markets --
1. Ice creams : Unilever, the world's largest ice cream maker, has a presence in India,
with a range of its brands available in more than 90 countries. Carted' Or, Cornetto,
Magnum, Solero, and Vienetta are examples of international labels. Other labels, such
as Kwality-Walls in India, Algida, Langnese, Ola, and Wall's in Europe, and Ben &
Jerry's, Good Humor, and Breyers in the United States, are more international.
2. Tea : It sells Red Label, Taaza, Al, 3 Roses, Super Dust, Top Star, and Ruby Dust under
seven different labels. Yellow Label and Green Label teas are also available, as well as
New Lipton Taaza and FX Tazgi Dust Tea.
3. Coffee : In India, the Bru Instant Coffee and Deluxe Green Label Roast & Ground
Coffee businesses are the industry leaders. Bru Espresso is a unique coffee premix that
produces a creamy, frothy cup of coffee. Brooke Bond Green Label Classic, a new
premium-segment roast and ground coffee offering, was also launched to increase the
company's share of the premium-segment roast and ground coffee market.
4. The Kissan line of culinary items, which includes jams, squashes, tomato ketchup,
purees, and cooking pastes, is part of the F&B division. To attract new customers, the
company has introduced sachet packs of jams and squashes. Contract farming in Punjab
and Karnataka supports the company.
Personal Care Division

1. Haircare: Clinic, Sunsilk, Lux, and Organics shampoos, as well as Clinic Plus, Clinic
All Clear, Cococare, and Nihar hair oils, are among HUL's hair care brands in the
HPC Division.
2. Oral care sector: Close-up and Pepsodent toothpaste, toothbrushes, and tooth
powders are part of the division's portfolio. Oxi Fresh Close-up was first introduced
in 1999..
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Shruti Kumari 2017B2A11052P 6
3. Skincare: Fair & Lovely skin cream and lotion is Hindustan Lever's best-selling
skincare product in India. Pond's, Vaseline, Lakme, and Pears are the other main
skincare brands. Color cosmetics, for which the company markets the Lakme,
Orchids, and Elle-18 brands; and deodorants and fragrances, for which the company
markets the Rexona, Ivana, Shie, Elle-18, and Rexona Ivana.
Other Businesses
However, the ‘Other' company, which primarily consists of bottled water, grew by
27.6% in 2009, with Pureit becoming a billion-dollar brand (l million units) (15
months). Despite stable operating income and lower tax provision throughout the
quarter, the net profit only rose by 3.7 percent due to unusual things, such as
incremental provision for retirement benefits, restructuring costs, and provision for
site remediation.
In the first quarter of the 2009 financial year, HUL recognised down-trading as one of
the reasons behind slower volume growth and eroding market share in a few
categories. However, management remained optimistic that by growing grammage
and impacting price cuts in mass brands, it would be able to drive profitability and
reclaim lost market share.
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Supply Chain Configuration
The entire network is push-based, but supply chain digitization is accomplished by GPS
monitoring, electronic document logistics, and vendor controlled inventory, which is a
mechanism that allows material suppliers to handle as many aspects of the supply chain
as possible. The buyer enables the supplier to decide the order size by sharing this
information. They have a distributed production network, which makes the supply chain
be more flexible and open. Their IT-enabled end-to-end framework allows for dynamic
real-time replenishment and faster response times. The size of the procurement,
manufacturing, and distribution network aids in cost reduction. This provides them with a
strategic advantage.
CRM and process robotics are used as a model for handling a company's relationships
with existing and potential customers. It entails organising, automating, and
synchronising sales, marketing, customer care, and technical support using technology.
The Material Requirements Planning (MRP) framework is used by the HUL supply
chain. It is a planning and decision-making method used in the manufacturing process
that analyses existing inventory levels vs. production capacity and the need to produce
products based on forecasts. MRP plans production according to bills of materials while
reducing inventory. It employs a centralising contract strategy.
The centralised quality accidents method is used in the second stage of the supply
chain, which has paperless factories. If the data quality is called into question, statistical
quality events occur. Centralization aids the organisation in lowering overall costs and
improving the efficiency of the supply chain. Material in stock, warehousing, and
increased transparency are all areas that can be enhanced. At the retail level, a strategy of
continuous replenishment is implemented.
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The goods are transported to depots or central warehouses via primary transportation, and
then to smaller warehouses via secondary transportation.
HUL plans for future endeavours includes modification in:
1. Structure
● India being a heterogeneous country, has diverse demographics, different media
habits(rural and urban mobile usage penetration), differential category adoption
(market share of different products in different states is not the same).
● WiMI (Winning in many Indias) : Creating distinctive strategy at a cluster level,
customized product proposition and media deployment for every cluster, Empowering
cluster heads enabling faster decision making closest to the point of action.
● In order to build a stronger sense of empowerment and ownership, HUL has created
multifunctional representations in CCBTs ( country category business teams) which
are responsible for marketing, customer development, finance, supply chain and
research and development.
● This is a merger strategy of brand development and brand building which is
responsible for delivering in-yean P&L. In order to focus on the long term goals,
building new business models, greater focus on talent and capabilities, explore
inorganic growth opportunities, and coach and mentor CCBTs.
2. Portfolio
● Strengthening the core
By the strategy of focus on driving penetration and weighted distribution, constantly
innovating and renovating the core, Focused SKUs at cluster level to address
demands, offering multiple value additions across the core portfolio.
● Building natural product portfolio
These products are growing 2.5X of HUL of overall average product. For example:
indulekha, vim (lemon, pudina), closeup (mint), ayurvedic face washes, noodles, tea.
3. Marketing strategy
● Building a brand with purpose and differentiated content : digital video, social media,
influencers, e-commerce. Innovative campaigns like Vim Ghar Ghar Challenge,
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Lifebuoy Swastya Chetna, SmartPick(wherein HUL offers free trial samples of its
products), Community Dental Health Campaign (carried out for 3 years, promoted its
toothpaste Pepsodent, targeted more than 100 million people) and countless other
programmes/ campaigns have increased HULs brand awareness and reputation,
increasing HULs market share in the country.
● Consistently evolving the brand communication and building iconic engagement
platforms: Surf excel -- from Daag Acche hai to Haar ke Harao ; Brooke bond --
from a Cup of Motherly Tea to Taste and Togetherness
● For brand-new products, HUL has devised a bundling approach in which a small
sample is packaged with the main product. (including the fact that the products are
not in the same segment or have the same brand name) This reveals how HUL
markets its goods as part of its marketing mix.
● HUL had realized that in order to penetrate and reach the smallest villages in India, it
would have to work together with the local Self Help Groups (SHGs) who were
known across their respective villages. HUL devised Project Shakti, a commission
based income generation scheme, targeted initially at women. HUL roped in local
female members of the SHGs, who were called Shakti Amma’s whose role was to
create awareness about HUL products in their localities and also sell directly in their
communities.
Through this initiative, HUL was able to reach out to and actively engage rural
consumers which would have been possible through traditional advertisement
strategies which do not reach rural areas due to the dearth of mass media. Project
Shakti was a win-win situation for both the stakeholders as HUL provided ease of
access to microcredit to its Shakti Ammas giving them credibility to take loans from
banks and this program has given shape to the company’s vision of sustainable living
and community building. As of today 1.2 Lakh Shakti Ammas (women
micro-entrepreneurs) are associated with HUL over 18 states.
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Strategic Fit
Prior to 2014, HUL had a four branch framework wherein the division of sales-marketing,
supply chain and financial strategies and goals were organised into four geographical
regions of India, namely, North, South, East and West. Corresponding to these four regions,
there were four headquarters in the metropolitan cities of Mumbai, Delhi, Chennai and
Kolkata. This framework worked well for HUL for many years, however, over the years,
there was a significant growth in the consumer base of HUL and it was no longer centered
around the metros, but had also penetrated tier-2, tier-3 cities and villages. Infact, rural
India was responsible for 55% of its private consumption(1). Also, through their internal
studies, it was understood that even within the individual regions (of North, South, East and
West), there was a lot of heterogeneity in terms of consumer preferences and
requirements, owing to which HUL decided to change its strategy.
In September 2014, HUL put forth its new initiative called “Winning In Many Indias”
(WiMI). As the name suggests, it involves framing different plans for the “many small
Indias”(2) within the whole country, which was now divided into 14 groups or 14 “consumer
clusters”(as shown in the figure below). Also, they introduced the concept of CCBTs
(Country Category Business Teams), wherein each CCBT was given full authority to handle
the affairs of its division. The C-suite of the company would mentor the CCBT heads to
achieve their goals. Apart from this, another headquarter branch was established in Lucknow
to look after India’s heartland comprising the states of Bihar, Rajasthan, Chhattisgarh and
Madhya Pradesh. As an example of the heterogeneity, Uttar Pradesh prefers powder and/or
bar forms of Surf Excel and Rin while in Tamil Nadu, liquid formulations are more desired(3).
One can try to make logical guesses regarding the changes which HUL might have
implemented. For example, it is reasonable to say that the locations of factories would remain
the same (until long term) irrespective of whether the product is in high demand in that
particular region or not. The easiest way to then adapt to the different preferences of the
different regions would be to increase warehouses for maintaining higher inventories in
the corresponding region.
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Raunaq Jiandani 2017A1PS0716P 11
It is known that HUL is a tremendously huge organisation with numerous brands and further,
a variety of products within a brand. Different products target different income groups,
require different levels of innovation, different extent of variety and have different
levels of Implied Demand Uncertainty (IDU). As one would expect, a single supply chain
strategy cannot work, hence, it adopted a ‘tailored strategic fit’ for its different products and
brands.
● Products like Lifebuoy handwash and Surf Excel washing powder being essential
commodities, their demand uncertainty as well as IDU is expected to be low. For such
products, HUL can focus on being more efficient in its supply chain operations
thereby reducing the cost.
● On the other hand, products like Lakme and TRESemme are primarily for high income
groups and thus, have a high margin. Also,the expected level of variety among
consumers for such products is higher. Moreover, to survive in the cosmetics market and
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have an edge over the competitors, innovation is surely required. All these characteristics
imply that the IDU for the products of these brands would be very high. Thus, the supply
chain for these products would focus on being more agile and incur higher costs so as
to earn higher profits.
● Other brands of HUL, for example Kissan, Knorr, Glow and Lovely, etc should more or
less fall in between the two extremes discussed above and thus have a strategy in between
perfectly efficient and perfectly agile. A further attempt can be made to decide the
relative positions of brands in the IDU spectrum.
● For example, in the ice-cream segment, HUL owns Kwality-Walls as well as Magnum.
The latter brand being more expensive is directed towards higher income class, while the
former suits the needs of the general public. It can thus be said that Kwality-Walls would
be relatively towards the left as compared to Magnum.
On the basis of the above discussion, the following IDU spectrum can be drawn along with
the supply chain strategy:
As per Mr. Sanjiv Mehta, the C.E.O. of HUL, the main emphasis of the organisation in recent
years has been to focus on being more agile and flexible(4). Their aim for achieving ‘World
Class Manufacturing’ (WCM) i.e. targeting the reduction of all types of waste and damage,
with the end goal of achieving zero injuries, waste, breakdowns, and inventory is also in line
with the above given goal. In 2017, HULs Haridwar plant also won a bronze medal at WCM
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awards(5). The way in which HUL has managed its different logistical and
cross-functional drivers, inventory in particular, also shows their focus on being more
responsive (details can be found in the next section of the report). It can be hypothesized that
their manufacturing technologies and other stages have attained maturity over the years.
Thus, now, the scope of increasing responsiveness is greater than that of increasing
efficiency. However, as discussed in another section of the report (Supply Chain
Coordination), HUL has also invested considerably in IT and analytics, which as we know,
help in increasing efficiency as well as responsiveness simultaneously.
Since competitive strategy includes everything done by a company/brand so that consumers
buy their products in preference to other brands, it is also worth discussing how HUL has
created a place for itself in consumers’ lives.
In the words of Paul Polman, the C.E.O. of Unilever in 2009(6):

“I do not work for the shareholder, to be honest; I work for the consumer, the
customer. I discovered a long time ago that if I focus on doing the right thing for the
long term to improve the lives of consumers and customers all over the world, the
business results will come…I’m not driven, and I don’t drive this business model by
driving shareholder value. I drive this business model by focusing on the consumer
and customer in a responsible way, and I know that shareholder value can come''.
HUL has also done good work on the social front that has helped it to leave a positive
impact on minds and hearts. Through its ‘Help a Child Reach 5’ campaign, it conducted a
study to find the correlation between washing hands with Lifebuoy and decreasing the death
of children out of diarrhea and pneumonia. It was found that the occurrence of diarrhea in the
given village decreased from 36% to 5%(7). Similar efforts have impacted the handwashing
habits of 58 million people in India and 183 million people across 16 countries. By 2016,
Lifebuoy crossed revenue of 2000 crores, a feat achieved by very few of HUL’s other
brands(6). On another occasion, to add on to the World Toilet Day in 2013, HUL came up with
the Domex Toilet Academy with the aim to cover 1200 villages of Orissa and Maharashtra
and to build 24000 toilets by 2015(8). Through their initiative ‘Prabhat’(9), they brought a
positive change in the livelihood, hygiene, health of the communities living around their
manufacturing sites. They also contributed to water conservation in those areas. Similarly,
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other social activities of HUL have been discussed in the section of Supply Chain
Configuration.
Lastly, we would briefly discuss the acquisition strategy adopted by HUL. Acquisitions
done by Unilever globally have also helped HUL to deal with competition offered by other
players (both local and international) in the Indian market.
● In 2010, Unilever acquired Alberto Culver (owner of brands like VO5, TRESemme),
which helped HUL launch the products of TRESemme(10), thereby challenging P&G,
L’Oreal.
● With the rise in demand of natural/ayurvedic products in India, HUL relaunched Lever
Ayush. HUL also took over the Ayurvedic hair care brand Indulekha(6). These efforts
helped it tackle competition offered by Patanjali, Dabur, Himalaya, etc.
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Logistical Drivers
By achieving the strategic fit, we try to strike the perfect balance between the responsiveness and
the efficiency displayed by HUL. The performance of this supply chain in terms of the two
parameters mentioned above then relies on the interaction between these logistical drivers, which
are namely, Inventory, Facilities and Transportation. The outcome expected of these drivers is to
increase responsiveness at the lowest possible cost. This would result in a supply chain surplus
and improve HUL’s financial performance, thus affecting financial measures. This should also
provide the firm with internal and external integration within the supply chain, starting right
from the procurement phase.
Inventory
HUL also deals with the high volatility in business operations related to input costs, demand
trends, commodity prices, inflation and interest rates by reducing the lead times and
providing discounts. HUL focuses on reducing the mismatch in demand and supply by
having shorter planning cycles and shorter response periods which reduces inventory loss.
HUL has reduced the number of stock-keeping units for more dynamic response and higher
agility and shifted to a continuous monthly planning cycle instead of the previous discreet
annual stocking cycle. The reduction in stock-keeping units comes as a brilliant stroke in
COVID times where consumers focus more on necessities. Thus, the products with a lesser
household reach are removed, and the overall efficiency of the supply chain is increased.
HUL also focused on a decentralized system to adhere to the customer demands in the local
markets by providing tailor-made products like Rin to save water in water-scarce areas (like
North-west India); this also increased the system’s responsiveness.
HUL focuses on increasing its value for the shareholders, which is done by strengthening the
financials. If we analyse the difference between the inventory financials on a 10 year scale,
we can witness the firm’s commitment. At the end of 2009, the inventory was valued at Rs.
2528 crores with a PBT of Rs. 3025 crores, and it rose to Rs. 6080 crores with the inventory
valuation at Rs. 2422 crores in 2k19.[3] This shows the profit being doubled at a 10-year time
scale and can be attributed to its increased market penetration, investment in technology and
market expansion; this success is attributed to the localization strategy implemented by
dividing the country into 14 focused clusters. The primary outcomes accomplished here were
defining the size, reducing the cost and efficient handling of the inventory. Furthermore, the
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Utkarsh Dixit 2017B1A10403P | Chandan Pandey 2017B1A21011P 16
orders are placed after the stock depletion while any demand fluctuations are settled via the
safety inventory system.
The improvements which can be inculcated should be in terms of digitalization to attain live
monitoring and gather data for analysis while reducing any accumulation in the inventory
which is undesired. This should also give a competitive advantage over other firms if HUL
manages to be the early bird in the system.
1. Inventory Turnover Ratio

Inventory turnover ratio is a quantifying term showing how many times a company has
sold and replaced inventory during a given period. By analysing the ITR value, we can
assess the overall inventory utilization capacity; ITR value was 6.96 in 2011 and steadily
increased to 15.8 in 2019[3]. HUL has taken several steps toward building an integrated
supply chain, which means it actively facilitates relationships with all of its vendors and
coordinates all procurement and logistics operations through a single structure rather than
various processes within the company. According to Little’s law, the ITR is inversely
related to the inventory days, the details of which have been covered in the very next
section.
2. Inventory Days
Inventory days essentially means an efficiency ratio that measures the average number of
days the company holds its inventory before selling it. If we look at the figure below, we
see that since 2014 the inventory days have been on a steady decline, resulting from
HUL’s ability of greater conversion of products into sales to the consumers in the recent 6
years(7). This also tells us that a greater conversion denotes a quicker response time in
combination with
increasing demand which
can be attributed to its
increased market
penetration, investment
in technology and market
expansion.
Additionally, the strategy
around inventory
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planning is to be lauded, which serves multiple markets with a central facility to decrease
time delay and increase the ITR, thereby reducing the Inventory days to keep up to
HUL’s primary goal: customer satisfaction.
Facilities
Facilities form the physical presence of a company where products may be manufactured,
stored or assembled while the company has to decide a tradeoff between cost increment and
response time reduction. We can divide the facilities into two main categories, as production
or storage sites. HUL procures raw materials from around 3k various suppliers and has a
distribution channel funnelling out with over 3.5k distributors in the network, providing the
warehouses and the retail outlets/convenience stores to reach the consumer directly. In total,
HUL has around 40 of these facilities with over 30,000 logistical workers across the
country[6], the distribution of which can be seen in the image provided below.
By taking a closer look, we can deduce that the location of all of such facilities is centered
around major cities and demand centres to increase the response time and decrease the
transportation cost simultaneously while supplying to the retail outlets in these areas.
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HUL is committed to becoming a safe place without injury organization. They have managed
to constantly reduce the workplace injury levels or total recording rate (TRFR) from year to
year from 2019. WCM (world class manufacturing) Security access was performed at all
factory locations, i.e. the smallest TRFR can be maintained and the severity of injuries can be
further reduced. The central system regularly reviews the company's security performance.
The Committee on Safety, Health and the Environment, which is made up of everyone the
members of the Management Board are also chaired by the President and CEO. The WCM
(World Class Manufacturing) aims to decrease the unnecessary spendings via the elimination
of Non-value added activities, minimizing material handling and improving the machine
productivity. The saving parameters and its effect in terms of total cost perimeter is shown in
the image below. More cost cutting is achieved by Unilever via outsourcing its warehouses to
other giants like Amazon.
Warehouse management forms an integral part of the facility system in HUL. They have
incorporated the fundamentals of RS (Redistribution Stockist) to provide for as distribution
units as salesmen with about seven thousand RKs. These represent the company and
shoulder the demand stimulation for HUL subsidiaries, refilled with what were called as
Company Depots. Later these Depots were converted into a third party system under the
heading, “C&FA” or the CArrying and Forwarding Agents, with around 50 of these present
across the country[3]. The advantage received by HUL is in terms of cost saving in
transportation, increased the response speed and decreased the out of stock instances (due to
the presence of the buffer stock points). Additional responsibilities of the RS may include
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providing manpower, promoting the brand/marketing, screening for transit damages,
providing service to the retailers and many more.
Transportation
The choice of transport made by the company affects its responsiveness and efficiency; an
expensive/faster transportation would be highly responsive making it unnecessary to stock
large amounts of inventories and have lesser number of facilities. Moreover, based on the
kind of transport chosen also helps the company to find the sweet spot between the location
of facilities and the amount of inventory to store in them. For Unilever Pureit HUL follows
a quicker transportation mode with less number of inventory while for Lifebuoy it keeps a
higher amount of inventory with more cost effective transportation with the facilities nearer
to the consumer stores. Being an FMCG, Unilever faces a lesser implied demand
uncertainty and is certainly the biggest in terms of market valuation. The transportation
chosen will depend on the kind of product being transported, if it is a perishable good with a
short expiration date than a faster delivery route is chosen while for non-perishable goods a
more cost efficient method is chosen.
The cycle starts from the suppliers and manufacturers which use primary routes like
railways and trucks to transport goods. The next step involves the distribution network with
transport via the road transport from the dealer to the redistribution stockists (as shown in
the figure above) and finally to the consumer stores through local modes of transport in the
city. A tag system is employed by HUL where use of live tracking of the shipment as most
of the end mile logistics depends on third party transportation; this is done to enhance the
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penetration to the Indian villages where the bulk of the Indian population lives. Unilever
also employs a “load more and travel less” strategy where the plan of action required it to
reduce the number of travel vehicles by including larger vehicles in their arsenal. This plan
of action reduced the total distance travelled by the aggregate of all vehicles, thus reducing
the travel cost.
To further reduce the operating costs, Unilever shifted to an online service system as
opposed to the 100% business through the retail outlets. There were, however, other
constraints on the road to achieving a competitive advantage. Longer transit time increased
the transport costs and made the firm hold extra inventory as safety stock. The proposal to
solve this came through following the data-based analysis and deductions. The shortening of
transit time required to lessen the unnecessary stops made and route clarification with
real-time updates. The result was the transit time to reduce even up to less than a day in
some cases. A better supply chain predictability was established, which indicated to lower
the inventory holding to save inventory costs. At the same time, a more efficient
Turn-Around-Time was an added advantage.
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Cross-Functional Drivers
Unilever decided to make significant changes to its supply chain of 380 manufacturing plants
worldwide by focusing on 150 key factories.
The major thrust areas were:
1. Implementing executive purchasing.
2. They are attracting, developing and retaining world-class supply management executives.
3. Professionalizing the purchase of non-production items.
4. They are enabling e-sourcing in all worldwide facilities.
5. Accelerating and leveraging simplification of the supply chain.
Information
● Bullwhip Effect
HUL has a well-established system in which it collaborates with the different partners of
the supply chain. Despite being a push-based supply chain, the recorded sales fluctuated,
but the variability observed was certainly not excessive for its best selling product, Surf
Excel.
On the other hand, while examining the distributors’ orders, there was a tremendous
spike in the degree of variability. While the consumers were consuming diapers at a
steady rate, the demand order variabilities in the supply chain were amplified as they
moved up the supply chain.
● Picking up Customer Signals

With the digital integration and the efficient use of technology and data, the company has
enhanced its capability to pick up consumer signals in real-time. They can now use their
channels to read consumer feedback and hence act in a much more responsive manner.
● Generating Demand
A fully integrated supply chain is vital for driving precision marketing to efficiently
communicate with the consumers, identifying their drastically changing needs. How a
supply chain curates, the cohorts can be easily contrasted between a company that has
efficiently used its information and technology with the one that has not.
● Demand Capture
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The Connected Stores Program by HUL has now been coming of an age, the company has
managed to create a complete ecosystem across shoppers, stores and retailers covering demand
generation, capture and fulfilment. Programmes like Humrashop program have certainly evolved
the way of communicating with the customers. It has tremendously helped focusing on how a
customer’s shopping experience can be improved through faster delivery and great user
interface.[16]
Sourcing
HUL’s sourcing ideals are guided by four global principles to achieve strategic sourcing.
These four principles have proved to be essential so as to establish a stable foundation for
it’s discipline ultimately helps in serving as the guidelines for the supply chain’s daily
routine and how it interacts with the external suppliers.
● Best Total Value

The decisions made for sourcing are ideally based on the best value offered as per the
company requirements, this quoted value is dependent on the factors like the total cost of
ownership, the overall responsiveness of the supplier, the quality of goods and services
provided, speed or time-to-market, minority/women ownership, localized supply, and
supplier willingness to share risk/provide resources.
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● Externally-Linked Solutions
HUL aims to find solutions that are most effective in the scenario by bringing their
knowledge of the market, supply, resources and relationships to its suppliers around the
globe.
● Competition and Collaboration

HUL efficiently applies the strategic use of competition, collaboration or a mixture of the
two in its approach towards managing their supplier relationships. Through the decades,
the company has had a long-held belief that any sort of healthy competition would always
help initiate a positive cycle of innovation and efficiency from the supply base that would
ultimately prove to improve the overall working of the supply chain. Collaboration with
suppliers to access and engage their core competencies, capabilities, and resources to
support themselves in creating value for consumers and customers has also been one of
the prime agenda of the company.
● Supplier Incumbency
The company prefers current relationships with incumbent suppliers as it believes they
give lower long term costs and a higher value to the business. The company applies
incumbency to various aspects including HUL’s business needs, costs for startup,
qualification and past performance & future potential of the supplier.
HUL also planned to partner with indian vendors to source supplies, these partnerships
were a part of Unilever’s Partner to Win programme which was launched in the year
2011, this was aimed to working closely with the key suppliers to improve the overall
efficiency of the supply chain.
HUL has dedicated procurement teams that are fully invested in promoting the various
programmes and are constantly purchasing from a vast network of around 160,000
suppliers worldwide. The mentioned programme was key to Unilever’s ambition of
doubling the size of its business while halving the environmental impact of its
products{15}
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Pricing
1. HUL being in the FMCG sector, having its reach to almost every sector of the community
has targeted the sector having lower incomes with low cost products instead of giving
discounts giving it an edge over the other competitors without diminishing its value.[8]
2. HUl has a dynamic pricing model meaning, the pricing of its products differs in different
states. These prices mainly differ because of the difference in local tax structures and the
extent of competition with other substitutes available. Wheel being one of the products
which faces tough competition from Nirma, the company has leveraged dynamic pricing
in addition to segment targeted innovations in order to gain a stand alone business. [12]
3. If and when the company decides to offer discounts, its strategy is to cut down the
marketing and advertising expenditure to neutralize the net profit per product sold
which would have decreased due to discounts. This strategy works as we generally know
that during the discount periods demand for a product increases. [13]
4. HUL has had a history of compensating costs across its different products.
In 2010, HUL increased the costs of the
soaps Lifebuoy (+ 6.7%), Liril (+ 5.2%),
Dove (+ 3 %), Pears (+ 4 %) and Lux (+ 10
%) to mitigate the increasing cost of palm
oil which is used as a raw material. [14, 15]
In 2019, prices of soaps were reduced, but
prices of face washes were increased by
4-14 percent across the Pears, Dove, Ponds,
and Fair & Lovely brands. [14]
5. One of the major problems the FMCG
industry faces is the price cutting wars and cut-throat competition owing to the presence
of too many players in the industry. In response to this HUL has changed its approach by
dropping its luxury positioning strategy for a few of its brands in favour of cost cutting
in order to deal with P&G and other major competitors. [15]
6. The company tries to reach out to the maximum number of people from all segments by
introducing a variety of packages and, as a result, a wide range of prices, despite the fact
that the product remains the same. [16]
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Meghna Gupta 2018A1PS0476P 25
Supply Chain Coordination & Obstacles
What is Supply Chain Coordination?

Supply chain coordination is the concept of working together with the aim of improving
the performance of the entire supply chain by aligning the plans and goals of individual
stakeholders in an integrated manner.
A good indicator of the level of coordination in the supply chain is through the measure
of bullwhip effect in the supply chain.(1) Bullwhip Effect refers to the amplification of
demand variability on moving from the lower members (downstream members) to the
upper members (upstream members) of the supply chain due to information distortion
which in most cases is a result of a supply chain having too many push processes. Large
magnitudes of bullwhip effect corresponds to the absence of supply chain coordination.
Lack of coordination in a supply chain eventually results in a severe impact on factors
such as costs associated with manufacturing, inventory, transportation, shipping; lead
times and product availability.
In this section of the report, our objective is to cover the general obstacles to coordination
that any supply chain faces and we will seek to understand the levers and measures taken up
by HUL to tackle each one of these obstacles and any possible scopes for improvement.
Reimagine HUL Initiative

Physical channels and the digital world are constantly converging leading to
unprecedented changes in companies strategies of carrying out their business. HULs
answer to these tectonic shifts was the implementation of a visionary ‘Reimagine HUL’
program wherein HUL has heavily invested in the development of a robust,
state-of-the-art and unbelievably powerful information network system. This has helped
HUL in ensuring information visibility and accuracy in its supply chain which is very
vital to achieve coordination. The salient features of this program are discussed below.(6)(7)
Reimagine HUL’s main goal is to make HUL a future-fit organisation that continues to
deliver competitive growth by leveraging data, AI, automation and other emerging
technologies to digitally integrate its value chain from end-to-end. There are 4 essential
building blocks in this program:
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Gaurav Bellal Natesh 2018A1PS0027P | Meghna Gupta 2018A1PS0476P 26
1. Picking up consumer signals
Through the implementation of a social analytics program, ‘TrendsWatch’, HUL has
developed capabilities to pick up consumer signals in real-time from online blogs,
reviews, social media and search trends. This constant monitoring provides insights about
potential products that the company can launch as well as the popularity and
performance of existing products in the market. This data is integrated with the existing
market information into what is called the People Data Centre (PDC) where an analysis
is performed to provide meaningful consumer insights into the business which helps
different stakeholders of the supply chain to make informed decisions. (6)(7)
One such example is of ‘Lipton Japanese Matcha Tea’. It is believed that the traditional
researchers would have never picked up this product, while with inputs from PDC,
Matcha tea was recognised as a beverage that was gaining popularity among
health-conscious customers, and HUL responded to it by launching a matcha tea product
in just nine months.(8)
2. Demand Generation
HUL focusses on demand generation by Data Driven Marketing (DDM) enabling
engagements and personalised communications with consumers. HUL has many
initiatives such as BeBeautiful, Cleanipedia, MyKirana to ensure demand generation for
its wide range of products.(6)(7)
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MyKirana in particular is an excellent initiative that has enhanced information visibility
in the supply chain. MyKirana is a hyperlocal fulfilment platform enabling shoppers to
gain access to their neighbourhood HUL-registered Kirana Store. The inventory of each
retail outlet is made discoverable by digitizing their in-store inventory helping them
track and fulfil orders via a mobile application. Since the inventory of each retail outlet is
known in real-time, replenishment decisions can be made by the suppliers easily avoiding
overstocking or understocking situations. Thus demand variability dampens upwards of
the supply chain resulting in the reduction of the bullwhip effect.
3. Demand Capture
HULs Connected Store program provides a brand agnostic platform for retail stores to
go digital and capture online orders from its shoppers. It also helps the store to digitise
their billing and offers digital payments. Digitisation of billing ensures that the demand
information of the downstream member can be transmitted upstream quickly, enabling
the retailers to make decisions regarding inventory management accordingly. This not
only helps HUL in establishing a one on one relationship with the customer but also helps
them generate more revenue by upselling and cross selling of products. In whole this
helps in achieving coordination in the supply chain by leveraging data and algorithms.(6)(7)
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4. Demand Fulfilment
HUL has invested heavily in digital capabilities and automation to digitize its distribution
channel and factories which has significantly reduced lead times. This is made possible
by an agile planning method that relies on machine learning for forecasting and
optimization. This investment in technology has improved demand forecasting and has
helped alleviate the bullwhip effect. Jarvis, HULs one-of-a-kind AI software represents
the epitome of the company’s efforts.(6)(7)
Jarvis
It is HULs in-house bayesian network AI based data
science capability for integrated cross-lever planning and
optimization based on multiple marketing levers. Jarvis
enables HUL to understand the patterns of their
customers visiting Kirana Stores and retail outlets
predicting and forecasting its customer grocery needs. This allows HUL to make
well-informed restocking decisions reducing the problem of excesses and shortage in
inventory. Using Jarvis, HUL is able to extract details such as who visited a particular
grocery store over the last 3 months and what is the customer likely to buy the next time.
Moreover, Jarvis also tracks trends on social media and the internet which it also includes
in its analysis. Thus, HUL is able to gauge demand, volume, sales and profit scenarios
under different simulations. The software keeps improving itself and the company has
(9)
reported that the errors in the demand forecasts are barely 3-4 % . This is really
transformative forecasting as with such a small error percentage, HUL is able to predict
demand patterns with a much higher accuracy. Decisions regarding restocking of
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inventory are done by the different members of the supply chain which are now based on
these accurate forecasts thus reducing the bullwhip effect.(6)(9)
Despite being a push-based supply chain, with the help of Jarvis, HUL with its accurate
forecasts has been able to reduce the bullwhip effect, something most push supply chains
struggle with. The scope of Jarvis is being expanded and is expected to cover around 6
lakh villages and 1 crore retail outlets by 2028, making HUL a pioneer in achieving
supply chain coordination through its heavy investment in Big Data in the near future.
HUL's fulfilment centres are now rewiring to sell directly to retail with higher stock
accuracies and unparalleled delivery turnaround, supported by a nimble logistics and
distribution network. This helps stores to order more efficiently and cater to real-time
demand with a wider assortment and shelf space. All players of the supply chain thus
carry necessary inventory only.
HULs factory networks are operated by IoT and guided robots, allowing them to get the
most out of available capacity. and ultimately contribute to the reduction of the lead time.
Further, by utilizing the technological advancements of digital twining and 3D printing
HUL has shortened the innovation and testing cycles, leading to a shortened time for a
product to reach the market.
HUL’s IT system & processes: A boost towards Coordinated Supply Chain

HULs entire supply chain is end-to-end IT enabled, making the flow of information
from any one member to the other very fast, hence, improving coordination. It has
worked hard to make its factories and distribution network paperless which has helped in
integrated corporate decision making and manufacturing shop-floor in real time by
connecting machines, work-places and systems, as intelligent networks along the entire
value chain that can control each other autonomously.(2)
Through its IT system, HUL has implemented the concept of Vendor Managed
Inventory (VMI) in its distribution network. Through VMI, vendors (suppliers) are able
to continuously monitor the inventory levels of retailers and are constantly updated about
actual sales or warehouse shipments and commit to replenishing these sales without
stockouts and without receiving replenishment orders. The benefits of the continuous
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replenishment system enabled by VMI are reduced inventory levels, reduced stockout,
bullwhip effect minimization and improved customer service.(10)
HUL has ensured the implementation of EDI (Electronic Data Interchange) across its
value chain that has resulted in efficient and effective supply chain management, as EDI
can help reduce lead times, save documentation processing and interpretation cost,
eliminate procurement errors, clarify inventory status information and enhance strategic
alliances across the supply chain.(2)
The company has also invested strategically in various GPS tracking systems such as
Roambee and Numadic which help in tracking shipments on a regular basis. This
provides end-to-end visibility on the status and tracking of shipments throughout the
supply chain.(2)
Obstacles to Supply Chain Coordination and how HUL tackles them:

In general, any supply chain faces 5 kinds of obstacles that prevent coordination in the
supply chain. In this section, we cover these different obstacles and explain how HUL has
revamped and restructured its supply chain over the years to deal with each obstacle.
1. Incentive Obstacles
Incentive obstacles often come in the picture when one member of a supply chain offers
incentives to another member of the supply chain which leads to an increase in
variability. As covered in the previous section, HUL has managed to establish a vendor
managed inventory system complimenting its continuous replenishment system which
eliminates and defies the purpose of luring downstream members into taking actions
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which would offset the variability. This is also applicable while countering the sales force
incentives. In addition to VMI and continuous replenishment, HUL has an end-to-end
information visibility in its supply chain which would force the members to base the sales
force incentives on sell through (quantity sold to the final customer) and not on sell in
(quantity sold to manufacturers or retailers). This leads to an overall optimization of
supply chain instead of local optimization, increasing the supply chain profitability and
eliminating order variability.
2. Information Processing Obstacles

Information processing obstacles often arise when a supply chain makes forecasts based
on orders received instead of demand or if the forecasts are not very accurate. As covered
in the previous section, HUL has heavily invested in developing a state-of-the-art
information infrastructure using tools such as AI, Machine Learning, etc to analyze
demand trends and make very accurate forecasts using their in-house AI powerhouse,
Jarvis. Hence, this problem does not exist in the HUL supply chain despite it being a
push-based supply chain.
Moreover, information processing obstacles might also occur if there is a lack of
information sharing between different players in the supply chain. However, HUL has
ensured end-to-end visibility in the supply chain by a robust IT system.
3. Operational Obstacles
These obstacles often arise when a firm places orders in lot sizes that are much larger
than those in which demand arises leading to magnification of variability of orders
upstream of the supply chain. Long replenishment lead times are also a huge obstacle to
achieving supply chain coordination.
HUL has successfully tackled these obstacles by structuring its supply chain along a
continuous replenishment and vendor managed inventory policy, wherein the supplier of
any stage is responsible for all the decisions regarding product inventories at downstream
members. Through VMI, suppliers and manufacturers are able to continuously monitor
the downstream members inventory levels and Point of Sale data and can replenish it
suitably in a way to avoid stockouts and excesses. This concept of Vendor Managed
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Inventory (VMI) helps in reducing the lot sizes and also the lead times. Thus, such a
system helps HUL in preventing the impact of this obstacle.(10)
4. Pricing Obstacles
Pricing obstacles arise when pricing policies of a product lead to order variability. Having
a continuous replenishment system and an end-to-end inventory level visibility it is
unnecessary for the upstream members to give lot size based discounts. Jarvis forecasts
the demand with great accuracy, enabling each stage of the supply chain to make the
decisions for an upcoming peak demand period. In addition, having a continuous
replenishment policy the forward buying does not generally take place.
5. Behavioural Obstacles
HUL has worked hard to integrate its entire supply chain through rural outreach programs
such as Project Shakti and by digitizing its supply chain to ensure coordination. Thus, no
member of the supply chain is alienated from the goals of the supply chain and HUL has
been able to leverage on the trust it has created. This has helped overcome behavioural
obstacles that often arise when there is mistrust in the supply chain or stakeholders focus
more on individual profits.
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Recent Issues in the Supply Chain - Issues due to COVID-19
The COVID-19 crisis took the whole world by surprise and this societal crisis has threatened
lives and the well-being of our society and has a potential to fundamentally restructure the
world we live in today. Nearly 90% of the world’s GDP was under lockdown for some period
of time since March 2020 and this has had far-reaching impacts on the world economy. IMF
reports suggest that this crisis may have caused a cumulative output loss of around $9 trillion.
Global supply chains were heavily impacted due to this pandemic. Unprecedented demand
fluctuations were observed as the fear of loss of jobs, dwindling earnings forced people to be
cautious about their spending. Various transport restrictions were in place with many cities
completely locked down due to the existence of hotspots. Many businesses were forced to
close down during this period and this impacted the supply of raw materials and finished
goods.
This section aims to exhibit the challenges faced by the Hindustan Unilever supply chain as a
result of the COVID-19 pandemic and what were the steps taken to overcome these
challenges.
1. Demand Uncertainty and Volatility

Imposition of national lockdowns resulted in all consumers entering into a panic-buying
mode. The primary focus of all the consumers was to maintain a sufficient stock of essential
goods such as food, beverages and personal & home hygiene products. HUL being an FMCG
company, a large chunk of its product catalogue consisted of these essential goods and hence
as a result of the lockdown, HUL saw an unanticipated surge in demand for these essential
goods. Naturally, the company had not prepared for such a situation and issues related to
stock-outs were a common feature among the various retail outlets.
Moreover, the entire product portfolio of HUL did not witness a tremendous surge in
demand. Personal and home hygiene items such as handwashes, soaps, detergents and
sanitizers witnessed a huge increase in demand as they were the absolute necessities to
combat the pandemic. On the other hand, other products such as beauty & personal care
items such as moisturizers or perfumes did not observe any surge in demand, in fact it had
reduced due to discretionary spending by customers during the pandemic.(1) Thus, there were
completely disparate demand trends for different products and HUL had to reframe its
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Gaurav Bellal Natesh 2018A1PS0027P 34
inventory and restocking policies for all these products in order to match supply with
demand. Such an unequal demand profile will also most likely exist only for the duration of
this pandemic, so significant changes in policies also had to be avoided as these were not
long-term changes and things would return to normalcy in a year or two.
2. Complete Disruption of the Supply Chain due to the Pandemic

HULs 2020 Quarter 4 volumes had declined by close to 7% and the top brass of HUL
attributed this decline to the large-scale supply chain disruption in the initial phase of the
pandemic where India was under complete lockdown. (2)
There was no production and shipping for the first week of the lockdown, that is the last
week of March 2020. It took a further period of 4-5 days to restart factories across the
country and only a 70% production capacity could be reached in April 2020. The production
could reach close to its full capacity only towards the latter half of 2020.(1)(3)
Domestic suppliers of raw materials were heavily hit due to both state-specific and
nation-wide lockdowns which imposed several curbs and restrictions on their operations
which exerted a lot of pressure on the supply side for HUL.(3) Moreover, HUL imported raw
materials and packaging materials worth a whopping Rs 400 Crore from China and this
supply also faced several disruptions owing to China being a COVID hotspot as well as tense
geopolitical relations between the two neighbours.(4)
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Measures taken by HUL to combat issues faced during the pandemic
1. Leveraging digitization to interact with customers

HUL in the past few years had invested heavily in digitizing its supply chain and it is
paying off now. Through initiatives like People Data Centre and Trendswatch, HUL
has been able to stay close to its consumers through frequent digital interactions and
through social listening as well. A good example of this ability of HUL is, there has been
heightened consumer awareness and focus on health, hygiene and nutritional needs due to
the pandemic and HUL through its constant monitoring of social media has been able to
position its healthcare, hygiene and nutritional products well to cater to these emerging
demand spaces.
2. Building resilience in the supply chain

HUL has focussed on operating with shorter planning cycles, stepping up agility,
reducing complexity and working longer shifts to build resilience into the supply chain.
Making the supply chain resilient will protect it from unprecedented situations such as
this pandemic.(6)
3. Leveraging Shikhar, MyKirana and HumaraShop to cater to customer needs

through e-commerce
The online grocery market has been booming since the pandemic hit India as consumers
are much safer ordering at home than taking the risk of visiting retail outlets. In tune with
this, HUL’s existing and new e-commerce initiatives have helped it drive sales through
the use of technology.
Shikhar is a B2B platform that helps retailers and distributors place orders directly
online easily and this app was created in partnership with SBI to simplify transactions
and to extend credit to small retailers. Shikar isn't restricted to just an order taking app, it
also lets Kirana store owners see nearby outlets, history of purchases and even product
recommendations suited for their vicinity.(7) Recent data from HUL suggests that more 5
lakh retailers across the country are ordering their supplies from the Shikhar App and in
2021, not only has the number of users increased, but the quantum of orders made
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through the app has tremendously increased. Shikhar has gone a long way to make
retailers resilient to the pandemic.
Humara Shop is HULs own e-commerce initiative similar to the likes of BigBasket and
Grofers. Its target is to connect local shops with retailers. HUL pushes its own products
on the platform with incentives while accommodating other brands as well. HUL has
entered into the last-mile delivery system through this platform by delivering goods to the
customers on behalf of the retailers. Humara Shop has witnessed a significant amount of
adoption and usage for trade and consumption during the lockdown.(8)(9)
MyKirana, HULs hyperlocal fulfillment platform has also seen increased adoption by
customers who prefer ordering online than visiting the local Kirana stores.
4. Shifting its raw materials supply base from China

HUL has begun discussions on finding possible alternatives to China for its raw materials
and packaging material supply due to China being a possible origin of the COVID-19
virus and strained geopolitical relations between the two countries. Following the
initiative of Atmanirbhar Bharat, HUL aims to source more of its raw materials from
domestic suppliers in a bid to make the country more self-reliant.(4)
5. Smaller and simpler inventories in the future

HUL is working on reducing the Stock Keeping Units (SKUs). The company believes
that this move could drive efficiency into their manufacturing and supply chain by
removing items with the lowest household penetration.(6) Reducing SKUs will also help
suppliers in reducing stock-outs and shrinkage as consumers will engage in less impulse
purchases. However, this step may make demand forecasting slightly more challenging
due to lesser differentiation in product and consumer categories. Nonetheless, keeping
smaller and simpler inventories has made the supply chain more agile.(6)
6. Partnering with the government to set up Suraksha stores across India.

HUL partnered with the government to set up Suraksha stores across India to ensure
consumers have continued access to essential items and daily necessities.(5)
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7. Supporting supply chain stakeholders
HUL has taken various measures to support business partners including medical coverage
for the frontline workers. Early payments have been released to small and medium-sized
suppliers and credit has also been extended to small scale customers, distributors and
partners.(5)
8. Establishment of a crisis management system

The CEO of HUL, Mr Sanjiv Mehta very recently highlighted that HUL has been able to
develop a robust crisis management system within the company which would ensure
minimal disruption in the future. There is a back-up plan if any of the employees are
down with COVID-19 and this back-up is not restricted to the salesforce but it extends to
the entire management committee as well. HUL has ensured that 90% of its workforce
has been vaccinated and it is working to get the remaining employees vaccinated as soon
as possible. The focus on agility and resilience has ensured that factory and supply chain
operations are not disrupted and stores are operational even in places where localised
lockdowns have been enforced due to the 2nd wave of COVID-19 in India. (10)
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Other Issues faced by the company
1. Product Mimicry
One of the major setbacks faced by HUL is that due to the large stronghold of the market
and the repute of its brands, many a times the local manufacturers resort to making
similar products or in some cases even make fakes of the branded products. The latter
poses a greater threat to the company as fakes when circulated in the market are never up
to the mark and always underperform to meet customer expectations. This brings down
the repute to the original products and hence a decrease in demand is witnessed. The
phenomena is so common that HUL files about 2 cases every week on an average in
violation of its IPR (Intellectual Property Rights).
2. Strengthening the Brand Portfolio

HUL possesses a strong supply chain which prowesses a great distribution network to
most parts of the country. Having a high number of products and proliferating them
especially in the rural market should be beneficial in countering the product mimicry by
securing the customer base. Moreover having more brands in the same category and
similar price segments will give the consumers more choices to choose from and a better
penetration in the market for that particular brand.
However, this poses a difficulty in management to multiple brands under the same parent
company and possibly decreasing the revenue of its pre-existing brands in the short term,
but in the long run the overall market capitalization for HUL shall increase.
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Utkarsh Dixit 2017B1A10403P 39
SWOT Analysis
SWOT analysis(4) is an analysis performed by an organization to assess its internal strengths
and weaknesses and external opportunities and threats. It allows a firm to evaluate its
potential and understand its shortcomings which in turn help companies to plan their present
and future strategies All the successful companies spend a considerable amount of time and
resources conducting a SWOT analysis of their supply chains.SWOT analysis plays an
important role in future planning and future outcomes as a whole.
Strengths
1. Brand Visibility: With more than 35 brands across the different segments such as oral
care, personal care, home care, toiletries, packaged foods and many others helping the
company in achieving high shelf space in the shops of the retailers which results in high
brand awareness and high visibility(5).
2. Market Leader in FMCG sector: In the FMCG sector, Hindustan Unilever is the
market leader due to the market share with very few established competitors. HUL used a
selective targeting strategy to emerge as a market leader in the Indian market(4).
3. Robust IT system: HUL has a well-established IT system which ensures its internal and
external operations are successful(3).
4. Covers all Income groups: With over a million retail centers, HUL can cater to
consumers of all income levels(4).
5. Strong Financial Position: Unilever group controls about two-third of the HUL shares
making it financially strong.(4)
6. Introducing B2C platform HumaraShop: HUL had launched its first e-commerce
initiative through HumaraShop, connecting customers with their local Kirana stores and
also providing last-mile delivery. Online sales is a great avenue for HUL and the
company must focus on revamping the program and relaunching the application to
provide a seamless customer experience.(5)
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Ayush Kumar 2017B1A20382P | Aman Saurav 2017B1A20494P 40
Weaknesses
1. Huge Cost: Setting up about 7500 distribution centres to cater to Million retail points
involves enormous investment.(4)
2. Time Involved: Setting up this vast distribution network with over a million retail
centres involves a great deal of time
3. Extensive Hiring: cater to such a large customer base, many distributors and employees
are required. More hiring increases the labor cost.(5)
4. Increase in Competition: With the advent of recent competitors like ITC, Ghadi and
Nirma, there is a reduction in HUL's market share. Competitors like Nirma focus only on
particular segments, eating up HUL's share.These companies are eating HUL’s market
share.(7)
5. High Advertising Expenditure: Advertising and Promotional expenses are quite high
for the products.(5)
6. Software bugs: The HumaraShop platform(app) has not found a good level of
acceptance among the customers due to unwarranted glitches, errors and malfunctioning
of the application.(4)
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Opportunities
1. Expanding market: By expanding into the rural markets through projects Shakti and
conversion of unorganized business into organized one will lead to further expansion of
the consumer goods market as well as of the company.(3)
2. Awareness of usage rate of consumer goods: People becoming more aware and
conscious about the usage may be through advertising /word of mouth /doctor's
prescription, increasing these products' usage rate.(4)
3. Increased awareness and use of Cleaning Products: Due to Covid-19, there has been
an increase in usage of handwashes, hand sanitizers and other cleaning products all over
the country which has led to higher consumer spending in the segment.(5)
4. Increased stocking of essential products: Consumers are stocking essential products

higher than ever due to uncertainty involving the pandemic and subsequent Lockdown
which has led to stockouts in various retailers. (5)
5. Mergers and Acquisitions: Through mergers and acquisitions, the company would enter
other/new market segments and product lines with a reputable brand and an existing
client base.
In 2020, HUL completed the merger of GlaxoSmithKline Consumer Healthcare Limited
(GSKCH) with itself for a mega-deal of more than Rs 30,000 Crore. HUL now has the
opportunity to become a market leader in the nutrition segment. This deal allows HUL
the distribution of over-the-counter products such as Crocin, Eno and Sensodyne in the
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country. HUL had little exposure in the OTC and pharmacy category, but this acquisition
has given HUL a great opportunity to enter and win this category.(1)
HUL has acquired VWash from Glenmark Pharmaceuticals which is a market leader in
the female intimate hygiene segment in India. This enables them to enter into the
currently underpenetrated and rapidly growing market segment.(2)
6. Increase in purchasing power of people: With a stable political scenario, improving

literacy rate & controlled inflation of prices, the people's purchasing potential increases.
This would result in an increased percentage of spending on the FMCG segment as
observed in developed countries when compared to the developing countries .
Threats
1. Competition in the market: With increasing numbers of local, national, and

international players, HUL finds it challenging to differentiate themselves from others.
There is also a threat from counterfeit products destroying its brand image in the market
and substitutes that take away its market share. In addition various brands such as Asian
Paints and Marico have gotten involved in the cleaning products segments due to
increased consumer spending during the pandemic period.(7)
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2. Price of commodities: The rise in the price of goods will lead to a further increase in
commodities' price. The price increase further results in a decrease in sales, margins &
brand switching ,decreasing growth of HUL.(4)
3. Buyers control: With an increasingly diversified consumer goods industry where several
brands assert various kinds of advantages, it is challenging for customers to adhere to a
single brand and hence results in brand switching where customers have the control to
choose a brand depending on many factors, such as availability, suggestions from the
comparison group, choice and price.(7)
4. Changes in Norms and Regulations: Changing Norms and regulations directly affect
company policies, practices, and strategies. Sudden interstate border closure led to the
breakdown of the supply chain of essential products leading to stock outs at various
retailers exposing the vulnerability of the supply chain.(5)
5. Foreign Direct Investment (FDI): Foreign Direct Investment (FDI) in retail allows
international brands to exploit the FMCG sector which could help the competitors of
HUL to grow and eat its market share. (4)
6. Reduced Spending: With the advent of covid-19, there have been many job losses that
have led to a substantial reduction in customer spendings in terms of non-essential
products.(5)
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References
Introduction
1. https://hul-performance-highlights.hul.co.in/performance-highlights-fy-2019-20/index.ph
p (Performance Highlights| HUL)
2. https://www.hul.co.in/brands/ (Brands | HUL)
3. https://www.ukessays.com/essays/commerce/an-introduction-to-hindustan-unilever-limite
d-business-essay.php (CSR initiatives)
4. https://www.fortuneindia.com/enterprise/hul-eat-sleep-innovate-repeat/103928 (Stats)
Product and Supply Chain Configuration

1. https://www.yourarticlelibrary.com/project-reports/hul/project-report-on-hindustan-unilev
er-limited-hul/84273
2. HUL (Hindustan Unilever) Marketing Mix (4Ps) Strategy | MBA
Skool-Study.Learn.Share.
3. Raj, Keerthana and Aithal, Sreeramana (2018): A ‘Desi’ Multinational –A Case Study of
Hindustan Unilever Limited. Published in: International Journal of Case Studies in
Business, IT and Education (IJCSBE) , Vol. 2, No. 1 (25 January 2018): pp. 1-12.
Strategic Fit
1. https://timesofindia.indiatimes.com/business/india-business/hul-rejigs-structure-to-win-in
-many-indias/articleshow/42836960.cms
2. https://economictimes.indiatimes.com/industry/cons-products/fmcg/Hindustan-Unilever-
kicks-off-new-operating-framework-of-winning-in-many-Indias/articleshow/42884268.c
ms
3. https://www.hul.co.in/Images/hul-presentation-to-investors_tcm1255-529129_en.pdf
4. https://www.livemint.com/Companies/zt24fmKKhlYhH4DeRXq1rK/HUL-CEO-Sanjiv-
Mehta-To-survive-local-competition-the-key.html
5. https://www.hul.co.in/news/news-and-features/2017/huls-haridwar-factory-wins-bronze-a
t-the-wcm-awards-2017.html
6. https://www.researchgate.net/publication/332440833
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7. https://www.hul.co.in/news/press-releases/2014/lifebuoy-reduces-diarrhoea-from-36-perc
-to-5-perc-in-thesgora.html
8. https://www.livemint.com/Companies/5T4SDu2i82fSmVyOjlIeHK/HUL-announces-laun
ch-of-Domex-Toilet-Academy.html
9. https://www.exchange4media.com/marketing-news/hul-launches-prabhatan-initiative-for-
community-development-in-villages-55602.html
10. https://www.business-standard.com/article/management/salon-ready-pitch-makes-tresem
me-a-rs-100-crore-brand-114071501266_1.html
Logistical and Cross-Functional Drivers

1. https://www.granthaalayahpublication.org/journals/index.php/granthaalayah/article/view/
IJRG17_A07_497
2. https://www.ijrte.org/wp-content/uploads/papers/v8i2S8/B14750882S819.pdf
3. https://www.hul.co.in/Images/annual-report-2019-20_tcm1255-552022_1_en.pdf
4. https://economictimes.indiatimes.com/industry/services/retail/huls-e-comm-playhindusta
n-unilever-network-tests-online-waters-with-direct-selling-switch/articleshow/46168893.
cms?from=mdr
5. https://www.hul.co.in/sustainable-living/Copy_of_case-studies/enhancing-livelihoods-thr
ough-project-shakti.html
6. https://www.hul.co.in/Images/unilever-sustainable-living-plan---hul-summary-of-progres
s-2018_tcm1255-536952_1_en.pdf
7. https://ruralmarketing.in/stories/project-shakti-more-power-to-rural-women
8. https://csrbox.org/India_CSR_news_Hindustan-Unilever-is-empowering-womenof-rural-
India-through-its-Project-Shakti-_438
9. https://stock-financials.valuestocks.in/en/hul-ratio-analysis
10. https://www.unilever.com/suppliers/working-together/partner-with-purpose/
11. https://www.indiantelevision.com/mam/marketing/brands/hul-ad-and-promo-expenses-up
-in-fiscal-2019-190506
Pricing
12. https://acasestudy.com/huls-marketing-strategy-for-nirma/
13. https://business-finance.blurtit.com/290513/what-is-unilevers-pricing-strategy
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46
14. https://www.livemint.com/industry/retail/hul-reduces-lifebuoy-lux-prices-in-latest-sign-of
-weak-demand-1566928904118.html
15. https://www.yourarticlelibrary.com/project-reports/hul/project-report-on-hindustan-unilev
er-limited-hul/84273
16. https://www.mbaskool.com/marketing-mix/products/17075-hul-hindustan-unilever.html#:
~:text=Hindustan%20Unilever%20also%20has%20various%20professional%20product
%20for,same%20category%20or%20with%20the%20same%20brand%20name.
Supply Chain Coordination and Obstacles faced

1. https://www.supplychainmanagement.in/supply-chain-management/bullwhip-effect-in-su
pply-chain.htm (Article for Bullwhip effect)
2. https://www.hul.co.in/Images/annual-investor-meet-2017-co-creating-business-competiti
veness_tcm1255-507438_en.pdf (HUL annual investor presentation)
3. https://www.thehindubusinessline.com/companies/hul-goes-online-with-humarashopcom/
article6987108.ece (HumaraShop)
4. https://www.businesstoday.in/current/corporate/coronavirus-lockdown-30-hul-expects-pa
ndemic-to-speed-up-technology-adoption-in-distribution/story/402664.htm
5. https://www.livemint.com/companies/news/hul-tells-investors-it-continues-to-focus-on-te
ch-and-data-as-growth-drivers-1559921040959.html (HULs focus on digitization)
6. https://hul-performance-highlights.hul.co.in/performance-highlights-fy-2019-20/reimagin
e-hul.php ( Reimagine HUL initiative)
7. https://www.hul.co.in/Images/re-imagining-marketing_tcm1255-523388_en.pdf
(Reimagine HUL details)
8. https://www.fortuneindia.com/enterprise/hul-eat-sleep-innovate-repeat/103928
(HULs PDC example of Lipton Matcha Tea)
9. https://www.livemint.com/Companies/T0AY6hTLNChpGbaag1xaWL/HUL-to-use-Artifi
cial-Intelligence-to-predict-your-grocery-n.html (HULs Jarvis platform)
10. https://icmai.in/Knowledge-Bank/upload/case-study/2012/Hindustan-Unilevers.pdf
(Vendor Managed Inventory program in HUL)
11. https://thecasterguy.com/wp-content/uploads/2017/09/VMI.jpg (VMI Illustration)
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47
12. https://smartboost.com/wp-content/uploads/2020/06/what-is-data-driven-marketing.png
(DDM Illustration)
Recent Issues in the Supply Chain

1. https://www.bloombergquint.com/business/covid-19-has-disrupted-supply-and-demand-h
ul-says-in-annual-report
2. https://www.forbesindia.com/article/special/hul-agm-covid19-crisis-in-focus/60471/1
3. https://www.hul.co.in/Images/covid-19-compliances---02-06-2020_tcm1255-552633_1_e
n.pdf
4. https://www.businesstoday.in/current/corporate/coronavirus-outbreak-hul-hindustan-unile
ver-mulls-supply-shift-from-china-imports-raw-materials/story/408616.html
5. https://hul-performance-highlights.hul.co.in/performance-highlights-fy-2019-20/stands-w
ith-nation.php
6. https://www.businessinsider.in/business/corporates/news/hindustan-unilever-limited-ceo-
sanjiv-mehta-says-the-product-inventory-range-will-be-smaller-and-simpler-hereon/articl
eshow/76128468.cms
7. https://www.timesnownews.com/business-economy/companies/article/huls-shikhar-app-b
ooming-during-covid-manages-to-get-around-3-lakh-outlets-onboard/700560
8. https://www.thehindubusinessline.com/companies/hul-goes-online-with-humarashopcom/
article6987108.ece (HumaraShop)
9. https://www.businesstoday.in/current/corporate/coronavirus-lockdown-30-hul-expects-pa
ndemic-to-speed-up-technology-adoption-in-distribution/story/402664.htm
10. https://www.businesstoday.in/current/economy-politics/set-up-crisis-management-system
-to-minimise-covid-19-disruptions-hul-cmd/story/437894.html
SWOT Analysis
1. https://www.livemint.com/companies/news/hul-acquires-horlicks-as-company-completes-
merger-with-gsk-consumer-11585732372435.html
2. https://economictimes.indiatimes.com/markets/stocks/news/hul-completes-acquisition-of-
female-hygiene-brand-vwash-from-glenmark/articleshow/76638203.cms
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48
3. Hindustan Unilever Ltd (HINDUNILVR) - Financial and Strategic SWOT Analysis
Review (marketresearch.com)
4. https://www.projects4mba.com/swot-analysis-of-hindustan-unilever-limited/4699/
5. https://www.slideshare.net/omgogna/swot-analysis-of-hul-17252904
6. https://www.mbaskool.com/brandguide/fmcg/1515-hul-hindustan-unilever-limited.html
7. SWOT analysis of Hindustan Unilever - HUL SWOT analysis (marketing91.com)
8. Hindustan Unilever Ltd. SWOT Analysis | Strength (moneycontrol.com)
9. Mergers and Acquisitions | HUL
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Hindustan Unilever Limited Supply Chain

Birla Institute of Technology and Sciences, Pilani

Birla Institute of Technology and Science, Pilani

Course: Supply Chain Management

Course No. : MF F421

Project Name: Hindustan Unilever (HUL) Supply Chain

Group Members and Work Distribution:

Name BITS ID Work Done

Shruti Kumari 2017B2A11052P Supply chain and Product configuration

Raunaq Jiandani 2017A1PS0716P Strategic Fit

Utkarsh Dixit 2017B1A10403P Logistical & Cross Functional Drivers

Chandan Pandey 2017B1A21011P Logistical & Cross Functional Drivers

Meghna Gupta 2018A1PS0476P Introduction, Pricing (Cross Functional Drivers)

Gaurav Bellal Natesh 2018A1PS0027P Supply Chain Coordination and Obstacles

Ayush Kumar 2017B1A20382P SWOT Analysis

Aman Saurav 2017B1A20494P SWOT Analysis

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Personal Care Division

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

In the words of Paul Polman, the C.E.O. of Unilever in 2009(6):

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

1. Inventory Turnover Ratio

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

● Picking up Customer Signals

Birla Institute of Technology and Science, Pilani

● Best Total Value

Birla Institute of Technology and Science, Pilani

● Competition and Collaboration

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

What is Supply Chain Coordination?

Reimagine HUL Initiative

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

HUL’s IT system & processes: A boost towards Coordinated Supply Chain

Birla Institute of Technology and Science, Pilani

Obstacles to Supply Chain Coordination and how HUL tackles them:

Birla Institute of Technology and Science, Pilani

2. Information Processing Obstacles

Birla Institute of Technology and Science, Pilani

Birla Institute of Technology and Science, Pilani

1. Demand Uncertainty and Volatility

Birla Institute of Technology and Science, Pilani

2. Complete Disruption of the Supply Chain due to the Pandemic

Birla Institute of Technology and Science, Pilani