Digital Supply Chain and Innovation at Unilever

• About global supply chain management at Unilever
• Supply chain and digital transformation
• Cognitive automation, Aera Technology, and supply chain resilience
• Supply chain innovation and digital transformation strategy
• SCM and machine learning
• How Unilever manages potential supply chain disruptions

This transcript was lightly edited.

About global supply chain management at Unilever

Michael Krigsman: Supply chain at an organization the size of Unilever is complex and drives innovation for the whole company. We're speaking with Wendy Herrick, the head of digital supply chain at Unilever. Wendy, tell us about supply chain at Unilever.

Wendy Herrick: Our integrated and connected supply chain is at the heart of our ability to make more than 77,000 SKUs and win in more than 190 countries across the globe. We capture the consumer demand and we turn brilliant brand and product innovation into delivering high-quality products to more than 2.5 billion consumers every day.

Michael Krigsman: Seventy-seven thousand SKUs, connect that huge number to supply chain.

Wendy Herrick: We have 220 (and, in fact, 221, I believe) owned factories and more than 3,300 discrete lines in which we run those products. But it's not just our own factories. We also have more than 900 partnerships with collaborative manufacturers as well, so it's a huge, huge job to deliver those products to our consumers.

Michael Krigsman: You're head of digital supply chain. It's an interesting title and role. Tell us what that means and what it encompasses.

Wendy Herrick: When you say the word "digital," people always jump to the conclusion that it's all about technology, but we've actually defined the role quite differently. Technology is just a piece of it.

My role is overarching to the supply chain transformation program. Our digital transformation is aimed at creating exponentially better customer and consumer experiences across our end-to-end value network.

My role specifically is all about the integration and connectedness of it: connectedness of processes, of innovation, not just product innovation but technology and partner innovation. It's really all underpinned. The most important thing is future-fit talent.

Supply chain and digital transformation

Michael Krigsman: Wendy, you mentioned the broader digital transformation at Unilever. Tell us about that to give us more context for understanding supply chain and the value network you were just talking about.

Wendy Herrick: We went from knowing it all to learning it all, and that's one of our mantras. We really needed to open our minds to what's possible and what's out there.

We talked to more than, I think, 100 different organizations, more than 30 or 40 different industries. We really did a lot of outside-in before we came to decide or define what our transformation was going to be about.

We defined it using what we call the three Ps.

• What we mean by that is platforms, so those things that we're going to continuously invest in—not only today but into the future—because we see it's where we can win.
• Another P is around people, so that future-fit talent that I talked to, making sure we're upskilling, and we have the right talent, right organization, and roles for the future.
• Also, the right partners. We can't do this on our own, so whatever innovation is out there, bringing those partners to the table and really making them an extension of our value network.

Cognitive automation, Aera Technology, and supply chain resilience

Michael Krigsman: I know you're working with Aera, and I'm grateful to Aera for making our conversation possible. Where does Aera fit into this?

Wendy Herrick: We have the same passion and vision. We want to build the self-driving – they call it enterprise; we call it consumer value network. In order to do that, you need cognitive technology. With their experience, with Fred, Shariq, and Kaushal (and the team there), they have a lot of experience, even in other technologies.

Michael Krigsman: When you talk about cognitive technology and the work you're doing with Aera, can you give us some concrete examples to help us understand (sort of get under the surface a little bit) of what that means and also why it's very important?

Wendy Herrick: When you start to look at your processes, Michael, you sit there and look at those things which are non-value added, right? I think of it in terms of, do I want to do that job every day? Where can we automate? You look across all your processes and you start to look at those areas where you can automate.

There's also predicting what's going to happen and prescribing what you can do. That human in the loop is about making it visible. This is descriptive. This is what's going to happen. Aera can do that.

Then it's about predicting. It's about saying, "I think you're going to struggle to provide that product to that customer, to customer A."

That's human on the loop. What do you do? You're predicting something is going to happen and then you expect the human in the loop to take action.

Then there's that human out of the loop. This is where Aera comes into play.

I would say they do along the whole spectrum, but this is where the intelligent right back. Once you're saying the human is out of the loop, you're saying, "Look. For those decisions, just go."

Imagine the speed on which you can act. Imagine the job satisfaction you're creating for humans that actually now don't have to do that tedious work. Also, the opportunities that you're taking advantage of because you're predicting and prescribing what you actually need to do.

Yeah, that pace of decision-making, it just really requires a new way of working in this era, in the era we're in, the digital era, and that's where Aera has helped us.

Michael Krigsman: Does it require a leap of faith or trust that you're placing your supply chain, which is one of the crown jewels of Unilver, in the hands of a machine?

Wendy Herrick: When we embarked on machine learning and AI before, there are a number of areas where it's a black box. Something comes out and they predict that this is going to happen, but you don't truly understand the black box, how it's thinking, and what's been put in that black box to take that information to give you a prediction.

With Aera, it's a clear box, so everything that's there, you can follow the logic, the algorithms are there, and you can actually then follow. If the human is still in the loop (human or machine), you can follow the audit trail of the decisions that have been taken, all the actions that have been taken.

Again, it's like treating this machine as part of your organization. They're part of your org chart. It's really about being incredibly smart in where you do that and when you trust it for those more complex decisions.

Supply chain innovation and digital transformation strategy

Michael Krigsman: Wendy, you've been describing the digital transformation strategy. Now, what's the connection between that and what you're doing with supply chain?

Wendy Herrick: It's actually underpinned by three strategic focus areas. One is about agility. Everyone is talking about agility today, especially during COVID. Agility for the changing market.

Our consumers continuously, continuously change. They say the rate of change will never be as slow as it is today, so agility for a changing marketplace is one of those strategic areas.

The other one is reshaping our costs and asset base. How do we get quicker on innovation? How do we make the most use of our assets that currently are in the business?

Then the third one is about caring for the people and planet. That caring for people and planet is front and center.

Michael Krigsman: Wendy, how much of this transformation involves technology and processes versus the culture change aspects?

Wendy Herrick: Seventy-five percent of transformations fail because of culture, so we took that very, very, very seriously.

Culture doesn't happen overnight, but if you look at some of the technology today, you can do that within three months. If you look at culture, it takes a much longer time and a lot of effort and leadership in which to do that.

I would say that culture has been really, really critical. But also, the processes in technology are all part of that journey as well.

Michael Krigsman: What are the kinds of technologies that come into play?

Wendy Herrick: It's everything from digital twins to AR and VR, 3D printing, AI and machine learning, and the list kind of goes on and on. That's just to name a few. There's blockchain. There's just a lot out there.

You really need to be, I would say, very choiceful in how you do that. Of course, you have the technology for your ERP system and your basic transactions, but there's an incredible amount of technology that's out there.

SCM and machine learning

Michael Krigsman: You mentioned AI and machine learning. Where does that come into play with supply chain?

Wendy Herrick: Absolutely critical, so even if you look at the jobs of the future and what people want to be doing, they don't want to be working on spreadsheets and doing the same job day in and day out every day. We want to create the jobs of the future. We want to have the process of the future.

When you start to segment your processes and your decisions, there are some decisions that a machine can take an awful lot quicker than a human and take in a lot more information. But then there are those decisions that are more complex and really need that human in the loop there.

Human out of the loop, the machine can do just as good of a job. Then when it's in the loop, it's really in between the two of them and how you basically segment your decisions in that sort of way.

How Unilever manages potential supply chain disruptions

Michael Krigsman: Wendy, the global pandemic has kind of wreaked havoc with supply chains. What has been the impact on Unilever and how have you dealt with it?

Wendy Herrick: Alan Jope, our CEO, and the board really, really stepped up very, very fast and focused us as an organization (supply chain or whatever function that you're in) on five key areas.

First and foremost was our people, keeping our people safe.

The second thing to focus on was about supply. We make products that are critical to cleanliness, feeding people. The consumer needs our products, so making sure that we could supply those products and get them to the marketplaces where they buy them was absolutely critical. That was number two.

The third thing was about staying close to the demand. If you looked at where demand shifted to, everyone talks about e-comm. Of course, it shifted to e-comm. It was exploding. No matter where you went, it was e-comm.

We also saw other consumer shifts. There was more, you know, "Could you buy toilet paper or paper towels during the pandemic?" [Laughter] People were kind of big basket shopping and going once every two weeks versus going three times a week – that sort of thing.

We were looking at shopping habits, but we also looked at cocooning. People started to cook at home, but then you saw a real uptick in other parts of our food business and in our beauty and personal care: Dove, the soap, and everything we did there. Actually, in six weeks, we started making hand sanitizer like you would not believe to really, really help across that demand.

Keeping our ear to the ground there, we went to cycles that were unbelievably fast. When you sit there and say, "Well, we have a four-week S&OP cycle," we went to days and, in some instances, in hours. We went to S&OP lite where we could really do it at speed. We went from really what I call batch sort of planning to concurrent planning.

Then it was all about giving back in the communities in which we live and work: donations, working with our partners to make ventilators at break net speed to help frontline workers. I could go on and on in that space, but really, really supporting the communities in which we live and work was very, very important to us.

Michael Krigsman: Wendy, as we finish up, I'd like to ask you to share advice for business leaders who are listening. How can business leaders overcome the challenges and the complexity of undertaking this kind of supply chain transformation that you've been describing?

Wendy Herrick: I think it's really important to focus on the problems you're trying to solve. I think it's really important to put the consumer at the center of your processes and what you're trying to do and to deliver.

Everyone talks about transformation and, of course, we've been on that journey as well, but we're never going to go back to not transforming. Really, we're starting to think about this isn't about a one and done. It's not about a start and an end, and we've transformed now. It's about what we like to call serial innovation, and innovation not just in the product sense—which we've always had and we've referred to it in the past—but it's about serial innovation to make sure that you continue to win in the marketplace and, I would say, make sustainable living commonplace.

Michael Krigsman: Okay. Wendy Herrick, head of digital supply chain at Unilever, thank you for taking time to speak with us today.

Wendy Herrick: Michael, it was a pleasure. I really, really enjoyed talking to you today. Thank you very much.