Procurement and Inventory

Unilever´s Procurement Function & Inventory Requirements at a Glance


Term Paper, 2010
28 Pages, Grade: 1,0

Excerpt

Contents

List of Tables

List of Figures

List of Abbreviations

1. Introductionstrong

2. A Description and Critically Review of Unilever´s Procurement Function and Inventory Requirements
2.1 Unilever´s Procurement Function
2.2 Unilever´s Inventory Requirements
2.3 Conclusion

3. The Strategic Planning Process of Unilever´s Procurement Function and the Wider Effects of Purchasing and Inventory
3.1 The Strategic Planning Process of Unilever´s Procurement Function
3.2 The Wider Effects of Purchasing and Inventory
3.2.1 Supply Chain Management
3.2.2 Enterprise Integration
3.2.3 Logistics Management
3.2.4 Suppliers and Customers
3.3 Conclusion

4. The System and Resource Requirements of Implementing Just-In-Time
4.1 The System of Just-In-Time
4.1.1 The Effects of Implementing Just-In-Time
4.1.2 The Benefits of Implementing Just-In-Time
4.1.3 The Problems of Implementing Just-In-Time
4.2 Resource Requirements of Implementing Just-In-Time
4.3 Conclusion

5. The Implications of Unilever´s Global Purchasing and Inventory Functions on the External Environment
5.1 Global Purchasing and Inventory Functions and the External Environment
5.2 Implications on the Macro Environment
5.2.1 Political and Legal Implications
5.2.2 Economic Implications
5.2.3 Social Implications
5.2.4 Technological Implications
5.2.5 Environmental Implications
5.3 Conclusion

6. Conclusion

List of References

List of Tables

Table 1: Critical overview of the global sourcing policy of Unilever

Table 2: Strategic planning process of Unilever

List of Figures

Figure 1: Overview coursework assignment

Figure 2: The five rights: A classic definition

Figure 3: The price/cost iceberg

Figure 4: Total acquisition cost

Figure 5: Calculation stock-turn rate

Figure 6: ABC analysis

Figure 7: Product life cycle

Figure 8: Competitive strategies

Figure 9: Just-In-Time Concepts

Figure 10: The ‘milk round’ routing of collecting transport

Figure 11: PESTEL Analysis

Figure 12: Business drivers for social procurement

List of Abbreviations

illustration not visible in this excerpt

1. Introduction

It is a matter of fact that through increasing globalisation, multinational companies now face a wide range of issues related to their business, for instance, the processes of purchasing and manufacturing as well as the management of inventory. Furthermore, multinational companies have major implications on the external environment.

This report will focus on Unilever´s procurement function and their inventory requirements. Unilever is a multinational company with more than 400 brands spanning 14 categories of nutrition, home, personal and care products with presence in more than 100 countries worldwide to meet everyday needs (Unilever 2010).

In detail, the report will first discuss and critically review the procurement function and the inventory requirements of Unilever and secondly, illustrate the strategic planning process of Unilever, and analyse the wider effects on other company functions as well as Unilever´s suppliers and customers. In addition to that, it will discuss the just-in-time system and the resource requirements Unilever needs to implement a fitted just-in-time concept. Finally the report will analyse the implications of Unilever´s global purchasing and inventory functions on the external environment.

illustration not visible in this excerpt

Figure 1: Overview coursework assignment (own figure)

2. A Description and Critically Review of Unilever´s Procurement function and Inventory Requirements

This chapter deals with Unilever´s procurement function and inventory requirements and point out a critically review related to these issues.

2.1 Unilever´s Procurement Function

The scope of the procurement function is to supply the company with a continue flow of materials such as raw materials and indirect materials as well as services to meet company´s demand. The Procurement ensures a maintaining relationship with its suppliers and other departments and provides useful information to secure the effective operation of the company as a whole (Baily et al. 2008).

The objectives of procurement are obvious; the procurement function should select the best possible suppliers in the market and protect the company´s cost structure, for example, to buy in large quantities to generate ‘economics of scale’. But there is problem related to the inventory department. They seek to minimise their inventory to protect the cost structure of their department. The problem is when they get large quantities from the procurement function they could not protect their cost structure. Hence, it is a major issue and both the procurement function and the inventory department should communicate this and other related problems to ensure the performance of the company (Baily et al. 2008, Lowson, King and Hunter 1999, Stuart and Granville 2007).

More objectives of the procurement function:

- To monitor the supply markets and their trends (forecasting)
- To negotiate effectively with suppliers and internal departments
- To improve and/or maintain the quality of their products
- To secure the availability of materials

Moreover, Unilever´s procurement function manages different material requirements such as primary requirements, dependant requirements and tertiary requirements.

illustration not visible in this excerpt

Figure 2: The five rights: A classic definition (own figure)

Unilever operates a global sourcing policy, and therefore Unilever have the need and leverage to gain competitive advantage from a global sourcing approach (Baily et al. 2008). This means that Unilever purchases from the global market goods and services across geopolitical boundaries with the aim to achieve considerable cost savings and low trade tariffs (Baily et al. 2008, Unilever 2010). In order to accomplish the aim it is necessary to employ integrated IT systems. Companies with a global sourcing policy and a wide range of product groups usually operate a decentralised purchasing approach. In order to minimise disadvantages of a decentralised purchasing, companies try to combine both a centralised and a decentralised purchasing policy. Unilever operates a combination of both to obtain the benefit from the best features of each, while trying to minimise the disadvantages (Baily et al. 2008, Unilever 2010).

Critical overview of the global sourcing policy of Unilever:

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Table 1: Critical overview of the global sourcing policy of Unilever (A & E Consulting 2010, Bailey et al. 2008)

The comparison critically clarified the advantages and disadvantages of a global sourcing policy, and highlighted several methods to reduce the uncertainty and disadvantages by pursuing a global sourcing policy.

[...]

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Details

Title
Procurement and Inventory
Subtitle
Unilever´s Procurement Function & Inventory Requirements at a Glance
College
Coventry University
Grade
1,0
Author
Year
2010
Pages
28
Catalog Number
V160065
ISBN (eBook)
9783640731626
ISBN (Book)
9783640732043
File size
816 KB
Language
English
Tags
Procurement, Inventory, Unilever´s, Function, Requirements, Glance
Quote paper
B.Sc. Marcel Keller (Author), 2010, Procurement and Inventory, Munich, GRIN Verlag, https://www.grin.com/document/160065

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