nilendu sarkar hindustan unilever ltd - · pdf filevp personal care supply chain – south...

MANUFACTURING CENTRIC BUSINESS MODELS FOR COST EFFECTIVENESS

Nilendu Sarkar VP Personal Care Supply Chain – South Asia Hindustan Unilever Ltd

AGENDA

HUL Overview

HUL Approach for Cost Efficiency

Case Studies

- High Speed Technology

- Productivity Improvement

- Continuous Improvement

- Futuristic Sources of Energy

Summary

•75+ year history in India

q Sunlight soap first imported in 1888

q Lever Brothers incorporated in 1933

q Hindustan Lever Ltd formed thru merger in 1956

•Unilever equity diluted in 1977 and 1980 to 51%

•1993 : TOMCO merged with HLL

•1996 : Brooke Bond Lipton & HLL merge

•1998 : Ponds merges with HLL, Lakme acquired

•1999 : Modern Foods acquired

•2006 : Move to one Unilever structure

•2007 : Name change to Hindustan Unilever Ltd

•2010 : Shift to new, integrated Head Office

Deep-rooted history

UNILEVER IN INDIA

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Touches 2 out of every

3 Indians everday*

Reach 80%

Households*

Shelf Availability

84% outlets in India

(6.3 mln)

Direct Coverage

2 mln Outlets

15000 employees

2000+ suppliers & associates

35+ own manufacturing sites

45+ Contract manufacturing

2500+ stockists, 43 Depots

*Based on Hansa Research, Guide to Indian Markets, 2006

** Based on AC Nielsen Market Research

75 YEAR HISTORY & STRONG LEADERSHIP

A Turnover of Rs.20000 crores in 2011

OUR PRODUCTS AND BRANDS:

Home Care Skin Cleansing

OUR PRODUCTS AND BRANDS:

Personal Products Foods & Beverages

~1000 Suppliers ~ 2000 Materials

~ 35 own Factories ~ 10000 Employee ~ Third Parties

~ 43 Distribution Centers ~ 2500 Active Lanes

~ 2500 Customers ~ 150 MT Customers ~ MT, GT, CSD & Rural

Suppliers Factories Distribution Centers

Customers Outlets

• 2.7 mln Tons / Year, 4400 SKU’s ~ 8000 Trucks on Road Everyday • 36 billion Units/ Year ~ 1200 Packs every Second • Distance travelled / Year ~ 100 Trips from ‘Earth to Moon’

HUL SUPPLY CHAIN:

HUL SUPPLY CHAIN:

AGENDA

HUL Overview

HUL Approach for Cost Efficiency

Case Studies

- High Speed Technology

- Productivity Improvement

- Continuous Improvement

- Futuristic Sources of Energy

Summary

HUL APPROACH TOWARDS MANUFACTURING COST EFFICIENCY:

•Use of High Speed, integrated technologies for future expansion

1. High speed Technology

•De-bottlenecking for packing lines

•Re-design of Process for manufacturing

•End-of-Line for speed improvement

•Right Location of the factory to minimize TDC

2. Productivity Improvement & Factory Consolidation

•OEE improvement & loss reduction

•Focus on Changeover

•Focus on RM/PM waste

3. Continuous improvement through AWG

•Energy Generation: Biomass Fuel/ Wind Energy

•Consumption Efficiency: Screw compressor, VAM chillers

4. Use of Futuristic Sources of Energy







2. Productivity improvement & Consolidation








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tic Soururururururururururcecececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececececes s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s rgy

A. HIGH SPEED TECHNOLOGY -PARADIGM SHIFT:

High Speed Technology to Leverage

- Productivity & Cost

- Flexibility & speed to market

- Consumer delight quality

Our Approach:

Don’t add machine ‘Foot-Print’

Replace ‘Low Speed Machines’ with ‘High Speed Machines’

Progressively invest on new technology

High Speed machines – 300-600 UPM Tube Lines, Bottle Lines & Soap Bars

B. DISRUPTIVE TECHNOLOGY AS COST LEVERAGE- BLACK SEA:

Our Approach:

Look at different Approach for material cost through technology leverage

•Duopoly controlling global tube

technology. Alternate identified in STS of

Bulgaria

•Continuous engagement

•Softer prices and exclusivity

•Long term technology collaboration new

technology

Black Sea Technology

DISRUPTIVE TECHNOLOGY APPROACH:

Laminate

Caps

Shoulder

Printing

Tube Integrated

Tube Maker Break It Up

Laminate Pricing

Dedicated Printing

Injection Moulding

Rec

onfi

gure

Assembling

Disruption How ?

HIGH SPEED TECHNOLOGY RESULTS:

• 150- 300% more output per machine

• Speed to Market and Flexibility to change across portfolio

• 50% reduction in RM / PM waste (technical efficiencies)

• Cost Saving of between 2-3% of total Supply chain cost

High Speed Technology

Results:2010-2012







•Factory location strategy

2. Productivity Improvement & Consolidation








A. PRODUCTIVITY IMPROVEMENT:

1. Multi-track FFS Machines: Speed Improvement by 33%:

- Re-design of Jaws

- Increase number of tracks -25%

- Strengthening frame & foundation

2. Manufacturing Process optimization for batch cycle time reduction by 40%

- Cold process / Crunch Process

- Re-design of process sequence

- Stabilization and establishing results

Cold Process / Crunch Technology

Multi-track FFS Machines

PRODUCTIVITY IMPROVEMENT:

1. End -of-Line Solutions: To increase upstream speed by 10%

- Auto-packing design

- Customize collator design

- Case packer and Case erector solution

Multi-track FFS Machines

B. FACTORY LOCATION STRATEGY:

Raw

Mate

rial

Co

ncen

trati

on

1)

Market Concentration2)

High

Low

Low High

Slide Rule

Concept

Optimal

size Factory

Factory

Rationalisation

Non Critical ?

RM supplier

Market

Note: 1) RM Supplier based on location of salt, dolomite and soda ash suppliers; 2) Market of at least 30KT in a radius of 200kms

Slide rule: Factory should be between ‘RM Source’ to ‘Market concentration’ in Straight Line for business which are volume driven to minimize total delivered cost

PRODUCTIVITY IMPROVEMENT RESULTS:



• 20% Higher Output without any addition of Manpower

• Conversion cost reduction by 5-8%

• Fixed cost volume leverage

• Environment impact is reduced with same machine delivering 20% more

Productivity Improvement & Consolidation

Results (2010 – 2012)




3. Continuous improvement through AWG •Energy Generation: Biomass Fuel/ Wind Energy



BENEFIT OF FACTORY LOCATION STRATEGY:

2011 2012 • 80,00 km less travelled

• 1.4 million liters of fuel less burned

4000 tons of

less CO2

emitted

% Regionalization has gone up from 73% to 80%















CONTINUOUS IMPROVEMENT THROUGH TPM:

TPM Turbo- Charging

Model

Demonstrated Leadership

Commitment.

Strengthen

Core

Basics

Effective Assessment

s

Communicate & Connect Effectively

Lead Initiatives & Replication

KPI Measurement & Process linkage to

results

Strengthening Core Basics: Autonomous Maintenance

Circle Engagement

Loss Analysis

To deliver 25% of capacity increase by 2015 - Achieve Global best OEE (85 % -90%) - Zero Capital Cost and incremental conversion cost

These Losses contribute to 80% of the

Overall Losses

OEE loss tree created for each

sub-family

Operators’ log book data

KK: STRUCTURED OEE APPROACH:

LOSS ANALYSIS: LINES CONTRIBUTING TO TOP LOSSES

The Top Losses are then mapped to lines causing those losses

Example Taken: Measurement and Adjustment Loss in DL 2

Focus Only on lines contributing significantly to OEE loss

CONTINUOUS IMPROVEMENT RESULTS:



• 4% OEE Improvement over 2010- 2012

• Factory conversion cost reduction by 2-5% over 2010- 2012

Continuous improvement through

AWG

Results 2010- 2012




3. Continuous improvement through AWG •Energy Generation: Biomass Fuel/ Wind Energy

















ENERGY EFFICIENCY: SAVE MONEY WHILE PLANET SMILES:

1. Generation Efficiency:

Energy sourcing to clean & renewable sources

- Agriwaste based steam

- Cogeneration (CHP) from agriwaste

- Solar Thermal/PV/ Windrowers

2. Consumption Efficiency:

- Energy Efficient Motors

- Lighting –CFL, LED lighting

- Variable Frequency Drives (VFD)

- Power factor improvement

- Energy efficiency chillers, compressors

Back Pressure Turbine & Co-generation

Plant (470 kw)

Biomass Boiler

Backck P P Prereressssssurure e TuTurbrbinine e & & CoCo--gegegegenenenenerararatitionPlPlanant t (4(4(47070 k kw)w)w)w)

VAM Chiller Screw Compressor

ENERGY EFFICIENCY: RENEWABLE ENERGY

90%

10%

80%

20%

2008 2012

Renewable Energy contribution increased from 10% to 20% Co2 Reduction: 2008- 2012 - Generation - 293 k tons reduced - Consumption - 33 k tons reduced

Savings – 2010 – 2012 : 9 m €

SUSTAINABILITY RESULTS:

2008 2012

Water (m3/Ton)

2008 2012

C02 (Kg/Ton) 15% redn

22% redn

53% redn

Sustainable Sourcing

60% of Tomato’s sourced through Sustainable sourcing

16 % of Tea sourced from India through Sustainable Sourcing 2008 2012

Waste (kg/Ton)

22% redn

IN SUMMARY:


2. Productivity Improvement & Factory Consolidation



2010 2012

Product Cost as % of TO

+60bps

THANK YOU

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