Pier Luigi Sigismondi joined Unilever Plc as chief supply chain officer in September 2009, less than a year after Paul Polman had assumed charge of the world’s second-largest consumer packaged goods company. At that time, Unilever was losing market share and saw its volume growth take a beating in global and emerging markets like India.
The situation has changed since. Unilever crossed the €50 billion annual revenue mark (€51.6 billion) as on 31 December.
He has worked with Polman earlier too during his stint as vice-president of supply chain with Nestle SA where the latter was executive vice-president and zone director for the Americas.
Sigismondi is in India for a week with his entire supply chain team to provide technical advice and also to learn from the best local practices.
In an interview on Tuesday, he shared the strategies that Unilever has implemented to reduce time to market products and the road map ahead. Edited excerpts:
What persuaded you to join Unilever?
We saw a company that had fantastic brands, a fantastic history, a great culture but had lost its compass and its mission in the context of shareholders. We decided at that time to dedicate the best of our energy, best of our people, efforts and brands on growth in a sustainable and profitable manner. We are still at the beginning of our journey. But so far, so good.
You joined the company at a time when it was seeing volume slowdown and stiff competition from low-cost regional companies in markets like India. What had gone wrong?
Hindustan Unilever Ltd was very much focused on the bottomline at that time. It was a company that was concerned and very much dedicated to improving the margins of the business. We didn’t necessarily pay the right attention to growth. In 2009, we changed this to focus on growth and our ambition to double the growth and reduce our environmental footprint came in place. It is about leadership, about focus on growth and about sustainable development for the long term.
Can you tell us what has changed?
In the past, many of my colleagues in the industry would think that the best supply chain is the one with the right product, at the right place, at the right cost, and at the right time. But for us, competitive advantage is much more than that. It means leveraging our global skills while being very responsive in the marketplace using speed as a source of competitive advantage. It is in this respect that we are here in India today to learn how we do it and also to bring some of our best practices from around the world here.
What changes have you made over the years?
Globally, as well as locally, we have been cutting lead time to market. It takes 25-50% less time now to launch a product. We innovate or renovate a third of our portfolio every year. In order to win shares and draw the business, we have to constantly innovate or renovate our portfolio. It takes us less than a year now to build a brand new factory, in the past it used to take us 3-4 years. We took out 50% of non-core activities out of the system. This is a process of continuous work. With the digital world and e-commerce, there is more pressure to get products faster to the market than before.
What are you are looking at learning from India?
The low-cost business model is something that we started in India and we are now exporting to the rest of the world. We have started with homecare and adopted it in 65% of our markets internationally. This is just one example.
What global practice are you bringing into India now?
Ice cream is a capital-intensive business. But we have learned to produce high quality products at very low costs from China. We are introducing this low-cost business model in ice creams in India as well. This means you will see more high quality ice creams at a much lower cost.
Over the past few years, multinationals Procter & Gamble Co. and Kraft Foods Group Inc. have increased their interest in markets like India. Who is a bigger threat—MNCs or regional companies?
The degree of challenge is to be able to compete with local players who operate with very low costs and are nimble. But at the same time, multinationals are waking up to the fantastic growth opportunity here and we are prepared for that battle. I will welcome any competitor as long as it is done in an healthy manner.