VIETNAM NATIONAL UNIVERSITY

HCMC UNIVERSITY OF TECHNOLOGY

SCHOOL OF INDUSTRIAL MANAGEMENT

GROUP PROJECT REPORT

ANALYZE THE SUPPLY CHAIN LAUDRY
DETERGENT OF UNILEVER

Subject: Supply Chain Management (IM3021)

Lecturer: Nguyễn Thị Đức Nguyên
Class: CC01 - Group: 03

Ho Chi Minh City, November 19th, 2023

 Student’s full name Student’s ID

Nguyễn Ngọc Vân Anh 2153165

Đặng Quốc Bảo 2153198

Bùi Thái Cơ 2153237

Nguyễn Quang Đại 2152498

Phạm Hiếu Hạnh 2153333

Đỗ Văn Hoàng 1952697

Nguyễn Hồng Kim 1952804

Bành Khánh Linh 2153519

Huỳnh Tố Quân 2153734

Lê Ngọc Minh Thư 2152304

 TABLE OF CONTENTS

List of figures..........................................................................................i

List of tables............................................................................................i

1. Background information and the supply chain structure of

Unilever Vietnam............................................................................................1

1.1. Introduce about Unilever Vietnam...............................................1

1.2. General information about the Laundry detergent of Unilever VN 2

1.3. The components of Unilever supply chain and the objectives of

each party in its supply chain network............................................................4

2. Analyze detailed the supply chain management of Laundry

detergent in Unilever Vietnam.........................................................................7

2.1. Value Information and supply chain integration..........................7

2.1.1. The Push-Pull is applied in the supply chain.............................7

2.1.2. Conflict objectives and designing the supply chain for the conflict
goal 9

2.2. Location and distribution strategies are used in supply chain......10

2.2.1. Some factors affects on location selection...............................10

2.2.2. Centralized supply chain of Unilever......................................12

2.3. Strategic alliances of Unilever...................................................13

2.3.1. Third-party logistics relationship...........................................13

2.3.2. VMI relationship applies in the network..................................16

2.4. Procurement and outsourcing strategy used for the laundry

detergent 18
 2.4.1. Analyze procurement strategy of Unilever based on Kraljic
supply matrix and Fisher framework..........................................................18

2.4.2. Make and Buy framework of the laundry detergent product......19

2.5. The measurement of performance and its issues in the Unilever

laundry detergent supply chain....................................................................21

2.5.1. The model measures the Unilever performance........................21

2.5.2. The result of its performance.................................................32

3. The recommendations of solutions for improving the laundry

detergent supply chain..................................................................................37

3.1. Recommendations for improvement...........................................38

References...........................................................................................40
List of figures

Figure 1.1. Laundry Detergent of Unilever Vietnam..............................................................8

Figure 2.1. The Push-Pull is applied in the supply chain..................................................11

Figure 2.3. Transformation vision..............................................................................................28

Figure 2.4. Supply chain mission and strategy......................................................................28

Figure 2.5. Blanced Scorecard..................................................................................................... 28

Figure 2.6. “Tương lai xanh, Sạch nhà nhỏ - Xanh nhà chung” Program.................34

Figure 2.7. Literature Review....................................................................................................... 42

List of tables

Table 2.1. Conflicting objectives the supply chain for the conflict goal.................................

Table 2.2. Make/Buy decision for Unilever Vietnam producing laundry detergent...............

Table 2.3. Supply Chain Operations Reference (SCOR) Model.............................................

Table 2.4. Balanced Scorecard (BSC) Model.........................................................................

 1

1. Background information and the supply chain structure of Unilever

Vietnam

In the rapidly changing consumer goods industry, a company's supply chain's

effectiveness and stability are critical factors in preserving its market leadership.
The present study aims to investigate the complexities present in the laundry
detergent supply chain of Unilever Vietnam, which is an essential element of the
company's wide-ranging and significant product line.

1.1. Introduce about Unilever Vietnam

Founded in 1995, Unilever Vietnam is a prominent participant in the

Vietnamese consumer goods industry, providing an extensive assortment of
commodities such as food, personal hygiene, and household care. Due to its
dedication to sustainability and innovation, the company has a significant global
reach and is well-known in the fast-moving consumer goods (FMCG) sector.

With programs like "Clean Future," "For a Healthier Vietnam," and "Green-
Clean-Healthy School," Unilever Vietnam has established industry standards for
corporate responsibility. Unilever Vietnam boasts more than 300,000 shops, 150
distributors, and more than 400 brands. The company is well-known in the
Vietnamese FMCG industry and has directly and indirectly generated over 1,500
jobs. The organization's all-encompassing logistics management, which stands out
for its portability and adaptability, may be the reason for its success.

Unilever Vietnam strives to improve lives through innovative and sustainable

consumer goods, promoting vitality in Vietnamese families. They envision a better,
sustainable future for Vietnam, inspiring positive change and contributing to the
well-being of its people.

Besides, shopping addiction and a desire for value are characteristics of

Unilever's target market, which is mostly urban females between the ages of 18 and
35 (Mar, Brade, 2023)Error: Reference source not found. Many technologically
proficient consumers frequently choose electronic commerce platforms as their
 2

preferred method of making purchases. Unilever's marketing strategy is designed to

cater to the tastes of a certain target demographic by providing products and
campaigns that effectively address their concerns around sustainability and ethical
consumption.

In addition to its market dominance, Unilever Vietnam actively engages in

social and cultural activities, thereby contributing to the improvement of the quality
of life for a significant number of individuals in Vietnam. The beneficial influence
of this action not only builds trust but also strengthens Unilever's dedication to
maintaining its social responsibility as a business entity. Unilever's involvement in
social initiatives is in agreement with its corporate objective to actively contribute
to the betterment of the community and provide a favorable societal influence that
extends beyond the scope of its consumer product offerings.

1.2. General information about the Laundry detergent of Unilever VN

Unilever Vietnam's laundry detergent line, featuring renowned brands such

as OMO, is a cornerstone of the company's commitment to sustainability,
innovation, and meeting diverse customer needs. This expansive product range,
encompassing various formulations like liquid, powder, and eco-friendly options, is
meticulously crafted to cater precisely to the preferences and requirements of every
household.

Unilever and its most popular brand, OMO, hold an important position in the
highly competitive Vietnamese laundry detergent market. The market share of
OMO is significant, covering 60% of the home washing powder market. Tide, the
primary competitor of the mentioned brand, commands a market share of 30%,
while the remaining 10% is distributed among other detergent brands. Despite
facing competition from emerging brands such as Tide, Viso, Surf, and others,
OMO continues to demonstrate strong effectiveness in meeting consumer demands.

Moreover, the dynamics of market share highlight the fierce competition

between local and international products, with Unilever Vietnam developing as an
 3

important player in the consumer market. OMO, a product that holds an essential
place in the daily routines of Vietnamese consumers, is currently encountering
competition from emerging market players. This situation emphasizes the
importance of adopting strategic business techniques in order to sustain its position
as a market leader.

Unilever has implemented aggressive efforts to safeguard its brand and

financial gains in response to the recognized risks associated with imitation
products. The organization formed a committee dedicated to preventing
counterfeiting and safeguarding intellectual property rights. This committee actively
engages in Consumer Goods Fairs with the aim of educating and safeguarding
Vietnamese customers. Localized manufacturing, working with the government to
deal with the problem of fake goods, and running campaigns to make people aware
of the bad things that happen when they use fake goods are some of the strategies
that are considered.

Unilever's market leadership in the Vietnamese laundry detergent industry

extends beyond its most popular product, OMO, to include a varied portfolio of
products that cater to different client segments. Unilever offers a range of products
serving several customer categories, including Comfort in the high-end category,
Viso in the mid-range area, and Surf in the affordable segment. This strategic
approach allows Unilever to effectively address the diverse needs of its customer
base. The implementation of strategic product diversification by Unilever enhances
its market leadership by providing a wide range of offers that cater to various
consumer preferences and financial capabilities.

Unilever Vietnam's laundry detergent line can be characterized as a strategic

combination of diversified products, market leadership, and a steadfast dedication to
ensuring consumer happiness and fulfilling social responsibilities. Unilever's use of
a comprehensive strategy establishes its prominent position as the leader in the
Vietnamese consumer products sector, thereby making significant contributions to
the daily lives of customers and the wider community.
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1.3. The components of Unilever supply chain and the objectives of each party
in its supply chain network

Figure 1.1. The supply chain laundry detergent of Unilever Vietnam

Unilever’s supply chain of Omo and detergent compresses into 5

components: Suppliers, manufacturers, distributors, wholesalers and retailers, and
finally, the customer which is their end users.

Its laundry detergent supply chain has 07 main and only suppliers in total,
each supplier plays a crucial role in Unilever’s supply chain and develops its
production strategically, dividing into 2 main categories. There are 06 packaging
plastics suppliers: Tan Tien Plastic Packaging JSC provides shrink film, plastic bags
of all kinds; Bien Hoa Packaging JSC provides cartons of all kinds; Duy Tan
Plastics Manufacturing Corp. as one of the main supplier of plastic bottle as well as
collaborating with Unilever to collect plastic waste and then produce packaging for
Unilever; Dynaplast Packaging (Vietnam) Co.,Ltd. supplies all kinds of plastic
bottles; Fuji Seal Packaging (Thailand) Co., Ltd. provides PET shrink film; Mei
Sheng Textiles Vietnam Co., Ltd. supplies plastic caps.
 5

Besides plastic components suppliers, Unilever also has 01 chemical

substances suppliers, which is Vietnam National Chemical Group (Vinachem).
Since the memorandum agreement between Unilever and Vinachem which tightens
the relationship of raw material supply between the two companies, this has made
Vinachem a strategic supplier and part of Unilever's global supply chain, in addition
to the existing long-term manufacturing and processing cooperation relationship
between Unilever and Vinachem’s subsidiaries. According to the basic content of
the Memorandum of Understanding, Unilever will assist and cooperate with
Vinachem to develop production and supply of key raw materials right in Vietnam,
thereby reducing dependence on Vietnam's imports, increasing exports and at the
same time help improve production costs and enhance the competitiveness of all
parties. Specifically, the two sides will cooperate to build new basic chemical plants
in the common development of Vietnam's petrochemical industry.

After receiving the materials; its manufacturer, Unilever Vietnam Homecare

Liquid Plant at Tay Bac, Cu Chi will proceed to complete the product in large
quantities. The manufacturer’s mission is to ensure the successful production and
distribution of Unilever homecare liquid products. The plant is responsible for
manufacturing a wide range of products, including laundry detergents, fabric
conditioners, and household cleaners, adhering to strict quality standards and
sustainability practices. They prioritize safety and compliance with regulations
while continuously improving processes and implementing innovative solutions.
The distributors play a crucial role in delivering these products to retailers and
consumers, ensuring timely availability and working closely with retailers to
promote sales. Together, they form a cohesive supply chain that ensures Unilever
products are manufactured efficiently, sustainably, and distributed effectively to
meet consumer needs.

Its distributors are responsible for the timely delivery of products to retailers,
ensuring that they are well-stocked and readily available to consumers. They also
work closely with retailers to promote Unilever products and increase sales will
 6

receive finished products to distribute these products to wholesalers, retailers. These

distributors include Unilever Vietnam Distribution Center in Binh Duong, Linfox
Transport Pty Ltd. as a third party logistics company and Unilever’s online selling
platform such as U Shop, Shopee and Lazada. Its distribution center in Binh Duong
is also a local distributor, providing products for wholesalers, retailers and
customers who want to purchase its products directly from this distributor.

Wholesalers and retailers are responsible for receiving wholesale and retail
orders from customers, they are considered the convenient destination for customers
to reach and buy Unilever products, in this case laundry detergent. Because the
number of wholesalers and retailers is countless, they are listed in 3 main category:
General Trade (GT) such as grocery stores and small shop; Modern Trade (MT)
including supermarkets and convenience stores; Metro selling points consists of
Mega Market play not only as a wholesaler and retailer but also a distributor for
General Trade and Modern Trade destinations. Finally, the customers are the end
users of Unilever’s products. These customers can include:

- Household customers: These majority have the largest demand towards

Omo’s products. They are individual customers who purchase Omo
detergent for their personal use in washing clothes at home.
- Commercial customers: Businesses such as laundromats, hotels, and
hospitals, that purchase Omo detergent in bulk for use in their operations.
- Retail Customers: Customers who purchase Omo detergent from retailers,
such as supermarkets and convenience stores, for personal or commercial
use.
- Online Customers: These are customers who conduct purchases online
through e-commerce platforms or Unilever's website.
 7

2. Analyze detailed the supply chain management of Laundry detergent in

Unilever Vietnam

2.1. Value Information and supply chain integration

2.1.1. The Push-Pull is applied in the supply chain

Figure 2.2. The Push-Pull is applied in the supply chain

Unilever may adopt the following supply chain tactics for various types of
products based on the typical characteristics of items such as laundry detergents
(e.g., Omo):

In terms of Push Strategy for Regular Products, because these goods have
reasonably stable demand, Omo's regular laundry detergents may employ a push
strategy for their main product lines. In terms of Pull Strategy for Enhance Formula
Products, such as stain removers or laundry additives of Omo products, a pull
strategy may be employed. These goods may have greater variability in sales trends,
thus they may be produced in reaction to actual consumer needs.

a) Modes Supply chain in Unilever’s Laundry Detergent

 8

Unilever may potentially employ a push-pull technique in its Omo supply

chains. For the key product lines, the upstream stages of the supply chain, such as
manufacture and distribution to regional warehouses, may work on a push basis. To
respond to changes in demand or abrupt surges in sales, downstream stages such as
distribution to merchants and direct-to-customer sales may function on a pull basis.

Although Unilever might choose different strategies in different situations

(such as Market Dynamics, Seasonality, Inventory Management, and Technology
and Data Analytics, etc.), they might use a push-pull strategy to optimize supply
chain efficiency:

b) Push strategy: Suppliers - Manufacturers

In the production and distribution facilities upstream in its supply chain,

Unilever uses a push strategy. This works well for goods whose demand is
comparatively predictable and stable. Based on previous information and market
projections, Unilever creates and inventories these products in advance. To satisfy
baseline demand and prevent stockouts, it is important to keep a steady supply of
these products on hand.

c) Pull strategy: Retailers - Customers

With a pull strategy, Unilever's supply chain focuses on fluctuating consumer

demand. In order to do this, demand signals from client orders, point-of-sale (POS)
systems, and real-time sales data must be monitored. These real-time indications are
used to inform production and distribution decisions in order to cut back on excess
inventory and adapt to changing market conditions.

In conclusion, the demarcation point where the application of the Push-Pull

strategy is most effective resides at the distributor level. This strategic approach,
incorporating both Push and Pull tactics, converges and finds its optimum
utilization among distributors. By utilizing a Push strategy to encourage product
availability and a Pull strategy to stimulate consumer demand, distributors serve as
the pivotal focal point where these strategies harmonize and yield their most
 9

impactful results. This convergence at the distributor level facilitates a more

streamlined and effective channel for the movement of goods, creating a synergy
between supply and demand to meet market needs efficiently.

2.1.2. Conflict objectives and designing the supply chain for the conflict
goal

Supplier Manufacturer Distributor Retailer/ customer

Stable volume Long runs production Warehouse: Less Availability

inventory; Smooth
Large quantity High buffer inventory Flexibility
flow; Less SKUs
Large lead time High quality Responsiveness
Transportation:
(order cycle time)
High productivity Full truck load
Low production cost

Table 2.1. Conflicting objectives the supply chain for the conflict goal

Supplier and manufacturer have conflict objectives at large quantities and

low production cost, respectively. We could deal with it by pursuing Lean
manufacturing to optimize production processes and reduce costs. Besides, strategic
sourcing should be selected. It could provide large quantities of materials at
competitive prices. Cost-Effective Transportation is a great idea to optimize
transportation logistics to reduce freight costs. They consider bulk shipping and
efficient route planning to minimize transportation expenses.

Manufacturer and distributor have conflict objectives at high buffer

inventory, quality, productivity and less inventory and SKUs. The design could be
built by product segmentation which means dividing product portfolio into two
categories: high-demand, high-margin, and stable products, and low-demand, low-
margin, and volatile products. We could do continuous improvement by using key
performance indicators (KPIs) to monitor the trade-offs between inventory levels,
quality, and productivity. Both of them continuously optimize the supply chain to
 10

balance both objectives. Besides, they coud use SKU Rationalization for regularly
reviewing the product portfolio to identify and eliminate underperforming or
redundant SKUs.

Distributors and retailers have conflicting objectives in having less SKU and
flexible products, respectively. To design for the supply chain, they need to make a
flexible product assortment by working closely with retailers to understand their
specific needs and demand patterns. Implement a Vendor-Managed Inventory
(VMI) system for these products, where the retailer holds minimal inventory, and
the distributor monitors and restocks as needed to ensure flexibility. Besides, data
analysis and technology should be applied by implementing advanced data analytics
and technology solutions for demand forecasting, inventory optimization, and SKU
management. These tools can help balance the conflicting objectives effectively.
Core product inventory management should be applied in the supply chain. For
core products with standard specifications, maintain lower inventory levels at
distribution centers. Use efficient inventory management practices such as Just-in-
Time (JIT) to meet distributor's SKU reduction goals. These core products are more
predictable and can benefit from lower inventory.

2.2. Location and distribution strategies are used in supply chain

2.2.1. Some factors affects on location selection

Selecting the right location for a facility and its location are key factors in
supply chain management. They have an impact on the price, quality, and timeliness
of the goods and services that clients receive. These choices are even more difficult
and complex in global supply chains since they entail numerous variables and trade-
offs across several nations and regions. In the case of Unilever, the company
assesses crucial factors to choose a facility location for its supply chain and then
formulates plans for the expansion of global supply chains in general and Unilever
Vietnam's supply chain in particular.
 11

The first factor that Unilever takes into consideration is proximity to major
markets. Unilever VietNam's production plants are located in VSIP Binh Duong, Da
Nang City, Bac Ninh province, which are three of the largest and most
economically important provinces in Vietnam.This distribution center has three
main functions: shipping goods to agents in the West, Central and South;
transshipping goods from Ho Chi Minh City to Unilever's 2 distribution centers in
Da Nang and Bac Ninh; exporting goods to 18 countries around the world such as
Hong Kong, Thailand, Malaysia, Taiwan, New Zealand…Therefore, Unilever can
easily access to a large number of consumers and also makes it easier to distribute
its products to other parts of the country. With three factories, the VSIP Binh Duong
factory facility is the largest distribution center in Vietnam with a total warehouse
area of up to 10 hectares. Thanks to its prime location, it is easy for transportation.
Unilever Vietnam's current distribution center in Binh Duong not only has the
largest area but also has the best equipment. The most modern equipment, layout,
and operating arrangements in Vietnam and in developed countries in the region to
meet the growing storage and distribution needs of Unilever Vietnam, helping the
company's products reach consumers quickly.

Access to transportation infrastructure for resource availability is another

factor that Unilever pays attention to. Unilever's production plants and distribution
centers are also located near major transportation routes, such as highways and
airports. This makes it easy to transport raw materials to the plants and finished
products to customers.

Geography, accessibility, and the availability of land or existing structures

are traditionally important considerations when choosing a new facility location.
However, labor availability is also becoming a crucial component. There is a labor
shortage and growing labor prices in nearly every logistical hub in Europe as well
as other areas of the world. As such, a thorough evaluation of the labor market in a
universal corporation like Unilever has become imperative, encompassing not just
the current state of affairs but also projections of future labor potential. Regarding
 12

markets rich in human resources such as VietNam, Unilever would evaluate the
availability of skilled labor in different regions. Locating facilities in areas with a
skilled workforce or access to training and education resources can help meet
production and operational requirements.

When running a supply chain in a new nation, Unilever must adhere to local
rules and regulations while utilizing global supply chain tactics. Learn about the
zoning laws, environmental restrictions, construction rules, and safety standards that
can affect the operations of the whole local supply chain. Therefore, Unilever looks
for locations where the government has policies to support foreign investment and
provides incentives to businesses.

Furthermore, Unilever at last bases its approach for choosing locations on

market dynamics and development prospects. Unilever would assess market factors
such as market size, growth potential, competition, and consumer demographics in
different regions of Vietnam. Locating facilities in regions with high market
potential or strategic access to target consumer segments can support market
responsiveness and growth.

2.2.2. Centralized supply chain of Unilever

Unilever sells nearly the same products everywhere, aims to create global
brands, coordinates its operations globally, and uses roughly the same competitive
strategy approach in all foreign marketplaces where the firm is present. For that
reason, Unilever may more easily combine its operations and concentrate on
building a consistent brand image and reputation across national borders by using a
centralized approach

Centralization gives Unilever excellent control and uniformity over the

procedures and guidelines governing its supply chain. Though it may encounter
bureaucracy, opposition to change, and rigidity, the corporation may nevertheless
gain economies of scale, consistency, and efficiency. The business reduces expenses
by utilizing worldwide production and distribution. Unilever boasts an extensive
 13

distribution network that encompasses both direct and retail channels but there's a
chance it may also cause them to lose out on local knowledge, be less creative, and
have to wait longer for products.

In the Vietnam market, Unilever implements its right-share policy by

focusing on centralized distribution strategy. Because the product is an essential
consumer product, meeting the consumer's daily living needs, this strategy helps the
company bring goods into the Vietnam market in large quantities, making
maximum use of intermediaries to distribute products to customers. The vendor-
managed inventory program (VMI) is an example of a centralized supply chain in
which the supplier makes inventory control choices for both itself and the buyer.

2.3. Strategic alliances of Unilever

2.3.1. Third-party logistics relationship

Third-party logistics (3PL) refers to the outsourcing of logistics and supply

chain management functions to a specialized third-party provider. 3PL allows
businesses to streamline their supply chain, improve operational efficiency, reduce
costs, and enhance customer satisfaction.

a) Linfox logistics (vietnam) co., ltd

Linfox Logistics (Vietnam) Co., Ltd. is a worldwide logistics firm that

provides transportation, warehousing, distribution, freight forwarding, and value-
added logistics. The firm has developed operations in Vietnam to meet the logistics
demands of the local market. Linfox Logistics provides a full range of services such
as domestic and international transportation, warehousing, distribution, customs
clearing, freight forwarding, inventory management, and supply chain solutions.
The firm is industry-specific, employs technology and innovation to improve
operational efficiency, and is dedicated to sustainability and environmental
stewardship. The organization prioritizes client pleasure and long-term
collaborations.
 14

Linfox is a big Australian logistics business that Unilever has chosen to

handle the new distribution facility in Vietnam - Singapore Industrial Park Binh
Duong. Unilever plans to invest USD 12 million on a 10-hectare plot of land to
transform this distribution facility into a station delivering the company's goods
throughout Vietnam's Central region, Central Highlands, Southeast, and extreme
South. the Warehouse Management System control system, such that most
warehouse activities are controlled and managed by computers, and the loading and
unloading capacity of products may exceed 2,000 tons per year.

After being manufactured at the facility, commodities will be collected and

delivered to Unilever agents in the Central area (from Nha Trang onwards) and the
Southern region, which also serves as a transit hub for goods, from Ho Chi Minh
City to Unilever's two distribution hubs in Da Nang and Hanoi. Furthermore, the
facility serves as an export hub for 18 nations worldwide…

Linfox provides services such as warehouse, distribution, transportation, and

inventory management. They also offer tailored solutions for Unilever's unique
requirements, such as temperature-controlled storage for perishable items.

Unilever can benefit from partnering with Linfox as a 3PL provider due to
their extensive experience in the logistics industry, their ability to handle large
volumes of products, and their advanced Warehouse Management System control
system. This system allows for the automation and computerization of warehouse
activities, streamlining processes and improving overall efficiency. It enhances
accuracy, reduces errors, and enables real-time monitoring of operations.

Linfox's reputation for reliable and efficient logistics services has earned
them the trust of numerous clients across various industries. Unilever can benefit
from this reliability, ensuring their products reach customers promptly and in
optimal condition.

While there are several advantages to partnering with Linfox, it is important

to consider potential disadvantages as well. These may include the cost associated
 15

with their services, as a large and established logistics provider may have higher
pricing compared to smaller or local providers. Additionally, integrating Unilever's
existing systems with Linfox's Warehouse Management System control system may
pose some challenges and require coordination and collaboration between both
parties.

Some challenges that may occur when integrating Unilever's existing

systems with Linfox's Warehouse Management System control system include:

- Incompatibility between different systems and technologies

- Data transfer and synchronization issues
- Differences in business processes and workflows
- Security and access control concerns
- Technical difficulties during implementation and testing
- Communication and coordination between Unilever and Linfox teams.

b) In Do Trans Logistics Corporation

In Do Trans Logistics Corporation is a logistics firm that provides

transportation, warehousing, distribution, freight forwarding, customs clearing, and
supply chain management services. They have a truck fleet and facilities
strategically placed for efficient storage and distribution. Freight forwarding is an
important business that handles shipments, paperwork, and customs clearance. They
are also knowledgeable about customs legislation and clearance processes. Supply
chain management services improve the whole process, including demand forecasts,
procurement, inventory management, and supplier and customer collaboration.

ITL Corporation, a prominent logistics and transportation firm, has joined up

with Unilever Vietnam to distribute FMCG and transport export products and raw
materials. The collaboration highlights ITL's expertise in the distribution of
commodities since it can produce infinite truck capacity and fulfill a variety of
transport demands. ITL provides effective services to consumers in HCMC 24
hours a day, seven days a week. The firm also provides comprehensive information
 16

on operations and pricing, with eTMS support enabling real-time shipment tracking.
ITL prioritizes customer service by listening, sharing, and being adaptable in order
to discover solutions to fulfill client requests. The collaboration between ITL
Corporation and Unilever Vietnam is crucial for both firms, as it validates ITL's
expertise in product distribution while also providing Unilever Vietnam with
efficient and dependable logistics and transportation services. ITL's customer-
focused strategy and operational excellence have built consumer trust and improved
service quality.

Due to its expertise in managing logistics and transportation operations,

Unilever can benefit from working with ITL as a third-party logistics provider
(3PL). ITL's industry knowledge and ability to develop Infiniti truck capacity may
give Unilever scalability and flexibility in its distribution operations. Furthermore,
working with ITL can result in cost savings by streamlining logistics operations,
network architecture, and transportation routes.

Unilever, on the other hand, must weigh the possible drawbacks of working
with ITL. Dependence on a third party might result in supply chain problems and
consumer unhappiness. Furthermore, because the 3PL bears ultimate responsibility,
Unilever may lose control over some logistical processes. Effective communication
and alignment between Unilever and ITL are critical for the collaboration's success.
Miscommunication or a lack of coordination in the logistics process can result in
inefficiencies, delays, or mistakes. Unilever should maintain strong cooperation and
clear communication channels to mitigate these risks.

2.3.2. VMI relationship applies in the network

Unilever uses the VMI system in manufacturing and VMI is one form of
retailers - suppliers relationship. Therefore, it can be said that Unilever uses the RSP
strategy.

Vendor-managed inventory (VMI) is a partnership between upstream

suppliers or vendors and downstream consuming organizations. The vendor makes
 17

the majority of replenishment decisions for the buyer in a VMI agreement. This
means that the seller is in charge of monitoring the purchasers' inventory levels and
deciding on the quantity, timing, and delivery of resupply.

Regarding the distribution of goods to wholesalers, Unilever has

computerized all of its delivery and receipt activities. With the successful
application of the VMI model for key accounts, it helps reduce partners' inventory
significantly, helping to solve the inventory problem of today's wholesalers.

After using VMI, Unilever has reduced the risk of high seasonal or peak
demand fluctuations. Unilever operates according to actual demand, so they
produce what is actually selling, not what is forecast to sell. This results in major
cost savings throughout the supply chain.

At the same time, inventory can be monitored more closely and replenished
on an as-needed basis. Limit stockouts and reduce inventory costs. With improved
demand accuracy and replenishment capabilities, delivery times are significantly
reduced, and distribution is more efficient. VMI enables Unilever to improve
production and logistics management.

Unilever can better understand client needs via VMI, including resource
efficiency, minimal inventory of raw materials and finished products.Improve
quality and communicate more directly with customers. VMI may also assist
Unilever with more in-depth market analysis, which can subsequently be used to
improve revenue by precisely forecasting the market.Provide management
categories as well as additional value-added services.

Unilever can reduce supply time (stock-out) and inventory expenses (reduced
inventory) by using real-time information between suppliers and retailers. Increase
revenue by reducing inventory and reducing redundancy. Furthermore, VMI assists
Unilever in developing and maintaining strong supply chain connections.Service
level is increased and reduces the level of waiting for goods and out of stock.
 18

Even though the VMI program provides advantages, there are also
drawbacks that businesses must consider. Sharing information amongst companies
in the same supply chain is useful, but many are hesitant to adopt such approaches
due to how one-sided the benefits are for vendors rather than merchants. A lack of
trust between the vendor and the buyer may result in the distribution of obsolete or
incorrect data. Sufficient investment in software systems is required for VMI
deployment; thus, technical disparities between vendor and buyer produce
erroneous data interchange.

2.4. Procurement and outsourcing strategy used for the laundry detergent

2.4.1. Analyze procurement strategy of Unilever based on Kraljic supply

matrix and Fisher framework

a) Kraijic's supply matrix

Omo laundry detergent consists of two main components: chemical

substances and packaging. In terms of chemical substances, the recipe is
confidential and it has the highest impact on customer experience and their price is
a large portion of the system cost (Alexandre Afonso Luís, 2021)Error: Reference
source not found. For example, if the detergent is not able to eliminate dirt and
stains according to what the brand has advertised, maybe due to low-quality
chemical ingredients, then the customers’ expectations are not met. That's why they
need to form a partnership to ensure consistent and reliable supply of the most
crucial materials. Vinachem, which is a Vietnamese state-owned chemical company
that produces a number of different chemicals, including surfactants, which are used
in laundry detergent, is a strategic partner which supplies chemical substances to
Unilever.

The packaging, on the other hand, is identified as a bottleneck item, which

states that it does not contribute significantly to the product cost, but their supply is
risky. Unilever chooses to outsource all of their packaging to various manufacturers,
therefore they do not have full control of the quality. Moreover, since Unilever
 19

belongs to a highly competitive market, confidential issues should be prioritized.

Outsourcing packaging can increase the risk of image, latest product leakage. Thus,
one solution is to ensure continuous supply through long-term contract or carrying
stock (Chopra, 2015)Error: Reference source not found.Unilever has formed various
contracts with firms such as Duy Tan Plastic, Vietnam Packaging Joint Stock
Company (Vinapack) and Saigon Plastic Corporation (SPC).

b) Fisher’s Functional vs Innovative

OMO laundry detergent belongs to functional products. The laundry product

is a necessity and has high response to customer expectation; moreover, it requires
fewer customization or changes in functions so it has slow product clockspeed.
Being a necessity product plus reputation in brand name and high responsiveness
means that there are fewer errors in forecasting customers’ demand. In terms of the
profit margin, the price is affordable for any segmentations so it has a low profit
margin but utilizes the economies of scale.

In conclusion, both the components of OMO laundry detergent have a high

risk in supply yet stable demand from customers, it is best to implement a make-to-
stock strategy to ensure the material supply. Speaking of the components, we
evaluate whether to outsource by their profit margin Chemical substances have
higher profit margin so it is the main focus of Unilever, whereas packaging has low
profit margin so they will choose to outsource to reduce the overall procurement
cost.

2.4.2. Make and Buy framework of the laundry detergent product

Omo laundry detergent ingredients are defined as an integral product because

it is made up of a number of different chemicals that work together to clean clothes.
These ingredients include surfactants, builders, enzymes, and fragrances. Each of
these ingredients plays a different role in the cleaning process, and they all need to
be present in order for the detergent to work effectively. If you remove any of the
ingredients from Omo laundry detergent, it will not be as effective at cleaning
 20

clothes. For example, if you remove the builders, the detergent will not be able to
soften hard water and make it more effective at cleaning.

Unilever Vietnam has a team of experienced scientists and engineers who

develop and optimize the formulas for Omo laundry detergent.The product is
manufactured in the Cu Chi production plant. Unilever Vietnam may also source
some ingredients from third-party suppliers, but the overall production process is
controlled by Unilever, especially Vietnam Chemical company. Some of the
reasons why Unilever Vietnam chooses to produce laundry detergent in-house. The
company can control the quality of its laundry detergent by producing it in-house.
This is important because laundry detergent is a product that comes into direct
contact with people's skin. Moreover, it is more flexible in its production process
by producing laundry detergent in-house. This allows the company to quickly
respond to changes in demand or to introduce new products. Additionally, Unilever
Vietnam may be able to produce laundry detergent more cost-effectively in-house
because the company does not have to pay third-party suppliers for production
costs. Overall, it is likely that Unilever Vietnam owns the knowledge to produce
laundry detergent and that it produces the product in-house. However, the company
also sources some ingredients from third-party suppliers, including Vinachem.

In the case of customer experience of the product, there are some following
components of Omo laundry detergent that are important to customers. Customers
want a laundry detergent that can effectively clean their clothes, even tough stains
so the company must focus on developing the cleaning power. Customers also
expect their clothes to smell fresh and clean after washing and are gentle on their
clothes and skin after washing. The most important characteristic is the affordable
price to most household users in Vietnam. Overall, the components of Omo laundry
detergent are important to customers because they impact the cleaning power,
freshness, gentleness, and affordability of the product. These components can all
affect customer choice, along with other factors such as brand reputation,
availability, and marketing.
 21

On the other hand of packaging of the product, this material can be a

modular product which is made up of separate components, each of which performs
a specific function. The components of modular packaging can be easily assembled
and disassembled, which makes modular packaging adaptable to different products
and packaging needs. Packaging is important to customer choice and experience. In
fact, a study by Nielsen found that 67% of consumers say that packaging influences
their purchase decision including providing detailed information, protection,
branding and convenience. Even Though the packaging plays an important role in a
product, Unilever doesn't have any advantage in manufacturing plastic packaging
for laundry products. Its strategy is designing the layout of packaging and sending it
to plastic companies to produce the laundry packaging.

Criteria Ingredients Packaging

Customer High High

importance

Clock Speed Slow Slow

Competitive Independence of knowledge No

position and capacity

Capable supplier A strategic supplier - Many plastic suppliers

Vinachem

Architecture Integral Modular

product

Decision making In-house manufacturing Outsourcing

Table 2.2. Make/Buy decision for Unilever Vietnam producing laundry

detergent
 22

2.5. The measurement of performance and its issues in the Unilever laundry
detergent supply chain

2.5.1. The model measures the Unilever performance

Unilever Vietnam (UVN) uses a variety of tools and technologies to measure

its supply chain performance. These tools and technologies include:

- Warehouse management systems (WMS): WMS systems track the

movement of goods through warehouses and help to ensure that orders are
picked and packed correctly and on time.
- Transportation management systems (TMS): TMS systems track the
movement of goods from suppliers to warehouses and from warehouses to
customers.
- Data analytics software: Data analytics software is used to analyze supply
chain data and identify areas where performance can be improved through
ERP systems - SAP H4NA, E2E data led by Cloud, IoT, Analytics and
Control Tower. This metric measures how well Unilever Vietnam is able to
use data and technology to improve the efficiency and effectiveness of its
supply chain operations.

Unilever Vietnam also uses a number of other metrics to measure its supply
chain performance, but the above five metrics are the most important.

- On-time delivery is important because it ensures that customers receive their

orders when they need them. Unilever Vietnam aims to achieve an on-time
delivery rate of 99%.
- Order fill rate is important because it ensures that customers receive all of the
items that they ordered. Unilever Vietnam aims to achieve an order fill rate
of 98%.
- Inventory turnover is important because it helps Unilever Vietnam to reduce
inventory costs. Unilever Vietnam aims to achieve an inventory turnover
ratio of 5.0.
 23

- Warehouse efficiency is important because it helps Unilever Vietnam to

reduce the cost of picking and packing orders. Unilever Vietnam aims to
achieve a warehouse efficiency rate of 95%.
- Transportation costs are an important component of the overall cost of
supply chain management. Unilever Vietnam aims to reduce its
transportation costs by 1% each year.

Figure 2.3. Transformation vision

Figure 2.4. Supply chain mission and strategy

 24

Figure 2.5. Blanced Scorecard

Unilever's approach to measuring supply chain performance has been

multifaceted, often incorporating elements from different models:

a) Supply Chain Operations Reference (SCOR) Model:

Unilever uses this model to benchmark performance across various aspects

of supply chain management, including reliability, responsiveness, agility, costs,
and asset management efficiency.

ASPECTS DESCRIPTION

Reliability, Unilever's operational agility has been reflected in its

Responsiveness, robust market performance and financial results. The
Agility (Unilever, company's adaptive strategies have led to a significant market
2021)Error: share gain in over 60% of its business areas in the last quarter.
Reference source not This is particularly impressive considering it is based on
found measurable markets, indicating a targeted and effective
approach to growth.

Financially, Unilever's agility translates into substantial

economic outcomes. The business reported an underlying
operating profit of €9.4 billion, showcasing the effectiveness
 25

of its cost management and operational efficiencies.

Moreover, Unilever's ability to generate substantial free cash
flow—which saw an increase of €1.5 billion—demonstrates
its capacity to maintain liquidity and invest in strategic areas
that underpin further growth and innovation.

These achievements underscore Unilever's commitment

to maintaining a flexible and responsive business model that
can swiftly adapt to changing market dynamics while
delivering strong financial performance.

Costs and Unilever's cost and asset management strategies in

Asset management Vietnam play a pivotal role in the company's impressive
efficiency (Unilever, growth within the region. As the 12th largest market in
2023)Error: Unilever's global operations, Vietnam showcases the
Reference source not company's ability to optimize its operations in a dynamic
found economic landscape.

Cost management at Unilever Vietnam is underpinned

by a focus on operational efficiency, strategic sourcing, and
investment in local production capabilities. This approach not
only reduces overheads but also minimizes the dependency on
imports, which can be subject to currency fluctuations and
other external economic pressures.

Asset management efficiency is another cornerstone of

Unilever's strategy. The company leverages its strong brand
portfolio, where 80% of its brands hold the number one
position in sales and consumer preference, to ensure high
turnover and excellent returns on investment. By managing
these assets effectively, Unilever can reinvest in market-
 26

leading innovations, sustain brand equity, and maintain its

competitive edge.

This effective management of costs and assets is a

testament to Unilever's robust presence in Vietnam, where the
company not only benefits from but also contributes to the
country's economic vitality. Through these efforts, Unilever
reaffirms its status as a market leader, adept at navigating the
complexities of a vibrant and growing economy.

Table 2.3. Supply Chain Operations Reference (SCOR) Model

b) Balanced Scorecard (BSC) Model:

The BSC model provides a more holistic view, aligning supply chain
performance with broader business strategies. Unilever likely uses this to balance
financial metrics with non-financial aspects like customer satisfaction, internal
processes, and learning and growth.

ASPECTS DESCRIPTION

Financial This perspective focuses on financial metrics and

Perspective goals that are important for measuring the financial
performance of the organization. It may include metrics
such as revenue growth, profitability, return on investment
(ROI), or market share. For Unilever Vietnam, financial
metrics could reflect the company's sales revenue, profit
margins, cost management, and market expansion.

Retail sales accounted for the biggest portion of

VND1,187 trillion ($50.58 billion), up 11.4%.

Vietnam's retail sales and service revenue, an

indicator of domestic demand, reached VND1,505 trillion
 27

($64.14 billion) in the first quarter of this year, up 13.9%

year-on-year, according to the General Statistics Office.

% business winning:

Improve operating profit margin by 1.3% in 2022

compared to 2021. (Delivering sustainable business
performance, 2022)Error: Reference source not found

Customer Pepsodent has a long-term commitment to promoting

Perspective toothbrushing. This expanded in 2022 with the launch of its
teledentistry initiative in Indonesia and Vietnam, offering
access to free dental advice and dentist consultations via
mobile.

In 2023, Unilever Vietnam aims to push recyclable

packaging to 75% and reduce the use of virgin plastic by
87% to enhance the sustainable development that follows
the instruction from the Vietnam Government. The factory
is set to raise its capacity to 100,000 tons a year in the third
phase from 2024. (Duc & Tri, 2023)Error: Reference source
not found

Internal Board members spent time in Singapore, Indonesia

Perspective and Vietnam, reviewing the businesses there with the heads
of the five regional Business Units. The increased speed of
decision-making – and the energy this is releasing within the
business – was very apparent.

Learning and Unilever Vietnam places great emphasis on building

growth perspective data-led operations within the business. Building and
designing a platform system, along with equipping data
 28

management skills is a challenge but also an opportunity for

more than 10,000 people in Unilever Vietnam's value chain
to prepare themselves with knowledge. and prepare for the
future, as well as make data-driven decisions.

Table 2.4. Balanced Scorecard (BSC) Model

c) Sustainability Metrics:

Given Unilever's strong focus on sustainability, they likely incorporate

sustainability metrics into their supply chain performance assessment. This includes
measuring the environmental impact, ethical sourcing, and waste reduction in the
supply chain. A key focus for Unilever is the incorporation of sustainability metrics
into its supply chain performance measurement. This involves tracking and
reducing the carbon footprint, minimizing water usage, and effectively managing
waste across all supply chain activities. As per Unilever's 2021 Annual Report, the
company has been committed to ambitious sustainability goals, and by 2023, these
efforts are expected to be more deeply embedded in every aspect of supply chain
management. (Xây dựng chuỗi giá trị không phát thải CO2, 2022)Error: Reference
source not found

Unilever has unveiled its Sustainable Living Plan, positioning it at the core
of the group's compass, to double the size of the company while simultaneously
halving its environmental impact and enhancing its positive social influence over
the next decade (Phát triển bền vững: Chiến lược kinh doanh của Unilever)Error:
Reference source not found. Announcement of sustainable goals that Unilever's
Sustainable Living Plan is anchored by three principal global objectives to be
achieved by 2020. These are to:

- Double the size of the company, while cutting the environmental footprint in
half;
- Source 100% of agricultural raw materials sustainably;
 29

- And aid over one billion people worldwide in improving their health,
hygiene, and living conditions.

To be more specific, in 2023, UNV is taking concrete steps to realize its

sustainability pledges through ambitious targets and innovative programs that
reflect the company's commitment to sustainable development. A top priority is
addressing plastic waste pollution by promoting the use of recyclable bottle
packaging, reducing virgin plastic by significant percentages through direct
reduction and increased use of post-consumer recycled (PCR) plastics, and
committing to recover and process more plastic than used in their product
packaging.

Furthermore, UVN's largest ambition is the 'Green Future' program by the

Home Care division, which focuses on developing environmentally friendly
products, both in formulation and packaging, utilizing multiple technologies to
reduce greenhouse gas emissions (T.D.V, 2022)Error: Reference source not found.
For instance, Unilever Vietnam has implemented product compression and
concentration technology to help reduce greenhouse gases from their Home Care
products. Initially, this initiative improved the efficiency of liquid detergents and
fabric softeners, extending the product life within a single bottle and reducing the
plastic used in packaging. This technology also allows for the creation of dilutable
products, meaning they can be packaged in smaller bottles, and consumers can
reuse old bottles to dilute the product. Moreover, the initiative has been crucial for
developing lighter-weight product formulas for all detergents and powders,
supporting more efficient transportation and contributing to a reduction in
greenhouse gas emissions.

Another technology under the 'Green Future' program aims to cut CO2
emissions by replacing fossil-fuel-derived carbon in Home Care product formulas
with renewable or recycled carbon. Specifically, Home Care brands are employing
bio-science and industrial biotechnology to produce cleaning ingredients from
 30

sustainable biomass, such as Rhamnolipids surfactants used in Sunlight

dishwashing liquid or high-performance bio-enzymes.

Figure 2.6. “Tương lai xanh, Sạch nhà nhỏ - Xanh nhà chung” Program

In terms of sourcing, Unilever Vietnam has committed to using 100%

sustainably sourced agricultural raw materials. This is exemplified by the
implementation of renewable packaging technology, with several Unilever Vietnam
brands now using PCR plastic for their packaging. Notably, products from Sunlight,
Lux, and Love Beauty & Planet have achieved 100% PCR bottles, with other brands
like Dove, Lifebuoy, Sunsilk, Comfort, and OMO also incorporating PCR plastic in
their packaging (Áp dụng công nghệ phát triển bao bì tái sinh, 2023)Error:
Reference source not found.

By 2030, eliminating 100% of environmentally unfriendly fossil-fuel-derived

ingredients from Home Care products. Ensuring that the formula components of
Home Care products are 100% biodegradable. Reducing virgin plastic use and
increasing recycled plastic in packaging; specifically, by 2025, ensuring that 100%
 31

of Home Care product packaging is reusable, recyclable, or compostable, with over

25% of the packaging made from recycled plastic.

UVN is actualizing these commitments through partnerships with state

agencies, non-governmental organizations, as well as its partners and customers.
Notably, Unilever Vietnam pioneers in implementing public-private collaboration
programs and long-term strategic partnerships with Vietnamese ministries. These
foundations enable Unilever Vietnam to meet the goals and commitments of the
Sustainable Living Plan within the country, propelling robust growth and
contributing to the pledge of enhancing the lives of Vietnamese people.

Unilever has been at the forefront of establishing public-private partnerships

and strategic alliances with key industry players and government bodies. One such
strategic partnership is with Vinachem, Vietnam National Chemical Group, which
is pivotal for Unilever Vietnam in securing a stable and sustainable supply of
chemical ingredients essential for their diverse product range. This collaboration is
likely focused on ensuring the ethical sourcing of raw materials while also driving
innovations in product development that align with environmental standards.
Another key logistic partnership is with ITL Corporation, one of the leading 3PL
(Third-Party Logistics) providers in the region. ITL's extensive logistics and supply
chain services enable Unilever Vietnam to optimize its distribution networks,
ensuring efficient and sustainable product delivery to the market. This collaboration
not only supports Unilever's operational efficiency but also bolsters its commitment
to reducing carbon emissions and enhancing the sustainability of its supply chain
operations.

As its commitment to sustainability, Unilever Vietnam took a significant step

forward by signing a "Partnership on plastic collection and recycling" with Duy Tân
Recycling on March 14, marking a notable advance towards establishing a circular
economy in Ho Chi Minh City. This partnership is poised to enhance the recycling
infrastructure, allowing for a more efficient plastic waste management system that
aligns with Unilever's global goal of reducing plastic waste and promoting the reuse
 32

of recycled materials in its product packaging. With Duy Tân Recycling's expertise
in waste management and recycling technologies, Unilever Vietnam is set to make
considerable progress in minimizing its environmental footprint (Hợp tác với Duy
Tân Recycling thúc đẩy tái chế, 2023)Error: Reference source not found.

In 2023, UVN is making significant strides in actualizing its sustainability

commitments by setting ambitious goals and launching bold initiatives that align
with the company's vision for a sustainable future.A critical priority is addressing
plastic waste pollution by advocating for 75% of bottle packaging to be recyclable,
reducing the use of virgin plastic by 87% through direct reduction and the
incorporation of post-consumer recycled (PCR) plastics, and committing to collect
and process more plastic than is used in the packaging of their products sold in the
market.

These sustainability efforts are part of a broader strategy to not only

minimize the environmental footprint but also to lead the industry in adopting
practices that contribute to a circular economy. Unilever Vietnam's dedication to
these goals demonstrates a proactive approach to corporate responsibility, with an
understanding that sustainable business practices are integral to long-term success
and environmental stewardship.

Following its sustainability pursuits, Unilever Vietnam’s greatest ambition is

to establish a carbon-neutral value chain by 2039. Therefore, in 2023, the company
plans to support its partners in building capacities and conducting activities aimed at
achieving 'net-zero' carbon emissions, contributing to the collective goal of creating
a carbon-neutral value chain. A noteworthy initiative led by Unilever Vietnam's
OMO brand is a tree-planting program designed to absorb CO2 from the
atmosphere. Annually, OMO commits to planting 200,000 trees with a vision to
reach one million trees by 2025.

Moreover, Unilever, in close collaboration with government partners, the

private sector, international organizations, and NGOs, is dedicated to addressing
 33

health and hygiene issues and empowering women to promote gender equality
within society. Through initiatives such as “Handwashing with soap for a healthier
Vietnam,” “Green - Clean - Healthy Schools,” “Protecting Vietnam’s Smiles,” and
“Clean Latrine Journey,” conducted by brands like Lifebuoy, Vim, and P/S,
Unilever Vietnam pledges to significantly improve the health and sanitary
conditions for at least one million Vietnamese citizens.

Additionally, the Sunlight brand’s “Confident Vietnamese Women in

Business” program continues to provide entrepreneurial training opportunities to at
least 100,000 women, fostering economic empowerment and contributing to the
broader agenda of social equality and well-being.

2.5.2. The result of its performance

a) Sustainability and Environmental Impact:

Sustainability and Environmental Impact: With growing concerns about

environmental sustainability, companies like Unilever face pressure to minimize
their carbon footprint, reduce waste, and adopt sustainable practices throughout
their supply chain. This includes responsible sourcing, eco-friendly packaging, and
efficient logistics to minimize energy consumption and emissions.

Despite Unilever's ambitious sustainability goals, the challenges it faces are

substantial, particularly in the areas of regenerative agriculture, carbon reduction,
waste collection, and notably, plastic management. "I think one of the biggest
challenges we face is plastic, where we need to build a more circular economy.
That's not an easy challenge," a spokesperson commented on the situation in
Vietnam. This statement reflects the broader difficulties faced by Unilever in its
transition towards more sustainable practices. The complexity of establishing a truly
regenerative approach to agriculture, which not only preserves but enhances natural
resources, is a considerable task that requires innovation, commitment, and often,
systemic change.
 34

Similarly, reducing carbon footprint and improving waste collection are

goals that necessitate a transformation in both internal processes and consumer
behavior. However, the challenge of plastic is particularly daunting due to its
ubiquitous presence in packaging and the complexities involved in recycling and
reducing its use. In Vietnam, as in many parts of the world, building an effective
circular economy for plastics involves creating and sustaining a system where
plastic never becomes waste. Instead, it is reused, recycled, or composted, thus
keeping it within the economy and out of the environment. This approach requires
collaboration across the entire value chain, from suppliers to consumers, and the
development of new technologies and infrastructure. Unilever's acknowledgment of
these challenges is a candid recognition of the obstacles on the path to
sustainability. It underscores the need for concerted efforts, innovative solutions,
and persistent action to overcome these barriers and achieve their environmental
objectives (CEO Unilever toàn cầu thăm Việt Nam, 2023)Error: Reference source
not found.

Figure 2.6. Global Unilever CEO visits Vietnam

b) Supply Chain Transparency and Risk Management:

 35

Unilever Vietnam (UVN) faces intricate challenges in maintaining supply

chain transparency and managing risks, despite the concerted efforts of its local
partners. These partners often grapple with the demands of meeting UVN’s
corporate requirements and international quality standards. This struggle stems from
a lack of experience and the difficulty in securing the human and financial resources
necessary for sustained collaboration with UVN. As the intensity of global
competition rises, UVN escalates its expectations from suppliers, especially small
and medium-sized enterprises (SMEs) (Pham Lan Huong, Pham Thien Hoang,
Tran Binh Minh, Nguyen Thi Hong Lam, Nguyen Cong Manh, Nguyen Hoa Mai,
Nguyen Thi To Anh, Le Duc Vuong, Nguyen Dinh Vinh, 2009)Error: Reference
source not found.These SME partners are now obliged to adhere to rigorous
international standards regarding product quality, cost-effectiveness, and delivery
schedules. This requirement represents a significant threshold for local partners
striving to align with UVN's high benchmarks.

Transparency in the supply chain, particularly concerning ethical labor

practices and responsible sourcing, is another pressing issue for UVN. This
transparency is paramount as corporate responsibility continues to gain public and
regulatory attention worldwide. UVN's commitment to ethical operations
necessitates a clear understanding of its supply network's practices, reinforcing its
integrity and consumer trust. Risk management also presents a complex landscape
for UVN. Navigating geopolitical tensions, fluctuating trade policies, and the
inherent volatility of markets requires a robust strategy. The ability to anticipate and
mitigate these risks is critical for sustaining UVN's supply chain resilience and
ensuring consistent product availability to meet consumer demand.

c) Technological Integration and Digital Transformation:

In the wake of the COVID-19 pandemic, Unilever Vietnam faced

unprecedented disruptions in its supply chain, which compelled the company to
accelerate its technological integration and digital transformation. The pandemic
 36

highlighted the vulnerability of global supply networks, and for Unilever Vietnam,
it brought the need for a resilient and adaptable supply chain to the forefront.

UVN, optimizing logistical operations presents both a challenge and an

opportunity. Maximizing the load capacity of delivery trucks is crucial for reducing
the environmental impact and operational costs associated with logistics. By
ensuring trucks are fully loaded, Unilever can significantly decrease the number of
trips required, leading to a reduction in fuel consumption. Statistics suggest that
distributors can save around 15% on operational costs through such efficiencies.
However, this optimization requires a sophisticated system capable of determining
the most efficient routes and delivery points. The implementation of smart systems
equipped with tablets for route planning and delivery confirmation is essential. This
level of automation and system integration, while beneficial, also introduces
complexities in terms of data management, software maintenance, and staff training.

Furthermore, the end-of-day reporting on delivery performance must be

seamlessly integrated into the company's broader data analytics framework. This
integration enables real-time monitoring and swift decision-making but also poses
challenges in ensuring data accuracy and handling the vast amounts of information
generated daily. For UVN, these issues highlight the need for continuous investment
in intelligent systems and the development of robust IT infrastructure to support the
company's sustainability and efficiency goals. The company must also focus on
training employees to adapt to and manage these sophisticated systems effectively

The immediate impact of COVID-19 led to a series of supply chain

interruptions. Lockdowns and restricted movements resulted in delayed shipments,
logistics bottlenecks, and a sudden shift in consumer behavior that Unilever
Vietnam had to swiftly address to maintain supply continuity for its wide range of
consumer products.

To combat these challenges, Unilever Vietnam embarked on an aggressive

digital transformation strategy. This involved integrating advanced supply chain
 37

management software, adopting cloud-based platforms for better data visibility, and
utilizing AI and machine learning for predictive analytics. These technologies
enabled the company to anticipate potential disruptions, optimize inventory levels,
and maintain efficient production schedules.

Digital transformation also extended to customer interactions and demand

forecasting. E-commerce became more significant than ever, and Unilever Vietnam
leveraged digital channels to stay connected with consumers and respond to
changing purchasing patterns. Additionally, real-time data analytics became crucial
for understanding market shifts and adjusting strategies accordingly.
 38

Figure 2.7. Literature Review

3. The recommendations of solutions for improving the laundry detergent

supply chain

This report has analyzed and evaluated the operation of Unilever supply
chain management in Vietnam through some aspects such as integration,
distribution strategies, strategic alliances, outsourcing, etc. We clarified some
advantages and drawbacks of its supply chain.

Unilever has a strong local presence in Vietnam, with manufacturing

facilities, distribution centers, and a large sales force. This allows the company to be
agile and responsive to local market conditions. Unilever is strongly committed to
sustainability, and this is reflected in its supply chain operations in Vietnam. The
company is working to reduce its environmental impact and improve the social
well-being of its suppliers and workers. Additionally, the company has built strong
relationships with its suppliers in Vietnam. This helps to ensure that the company
has a reliable supply of high-quality products.

One of the main obstacles Unilever must overcome to meet its environmental
targets is the handling of plastics. In addition, the organization has complex issues
in risk management and supply chain transparency, even with the combined efforts
of its local partners. The COVID-19 pandemic has brought attention to the
susceptibility of global supply chains, necessitating an acceleration of Unilever
Vietnam's digital transformation and technology integration. Streamlining logistics
operations offers a chance as well as a difficulty. Unilever Vietnam launched an
aggressive digital transformation plan to counter supply chain disruptions. This
made it possible for the business to plan ahead for probable setbacks, maximize
inventory levels, and keep productive production schedules.

3.1. Recommendations for improvement

Unilever continues to promote projects related to packaging recycling, using

environmentally friendly packaging materials. The manufacturer can design
 39

packaging that is easy to recycle, and educate consumers about how to recycle
properly. In addition, consult and research initiatives to produce packaging that can
be dissolved in water or decomposed. Unilever can source sustainable materials by
working with suppliers who use sustainable practices.

In terms of transparency management, Unilever can publish a sustainability

report that details its environmental and social performance. This report should be
made available to the public and stakeholders. It should track and report on its
progress towards its sustainability goals. This data should be made available to the
public and stakeholders. The engagement of stakeholders, such as NGOs, investors,
and community groups, could consult on its sustainability performance. The
company can increase customers’ reliability in knowing where the products they
buy come from and how they are made and enhance the brand reputation. Training
to employees on sustainability issues should cover topics such as environmental
compliance, social responsibility, and ethical sourcing.

Improving automation could operate the supply chain more efficiently and
effectively. This could include using robots to automate tasks in warehouses and
factories, using sensors to track inventory levels, and using self-driving vehicles to
transport goods. Moreover, data analytics optimize operations which includes using
data to identify bottlenecks, optimize transportation routes, and predict demand.
Blockchain is another latest solution to improve transparency in its supply chain
that tracks the origin of goods, the movement of goods, and ensures that products
are not counterfeit. Using digital twins to simulate supply chain operations
including testing new processes, identify potential problems, and optimize
operations.
 40

References

(n.d.).

Alexandre Afonso Luís, D. (2021). The Influence of Packaging on Consumer

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