Today’s Pickup: Unilever provides a peek inside its supply chain

 The supply chain for palm oil is very long and very complex, but Unilever recently unveiled the entire process in a quest for greater transparency.

The supply chain for palm oil is very long and very complex, but Unilever recently unveiled the entire process in a quest for greater transparency.

Good day,

The supply chain is a bit like some mystical creature. It’s massive, it’s complicated, and yet no one really knows what is going on throughout it. Transparency has been often talked about, but rarely fully achieved. Some aspects of the supply chain have become visible – such as tracking technologies that allow shippers and customers to see where their load is at any given time – but the majority of the process is shrouded in secrecy.

Blockchain technology is something that can create that transparency, but until that becomes an industry standard, it will be left to companies such as Unilever to pull back a corner of their veil.

Unilever recently unveiled its entire palm oil supply chain – all 1,400 mills and 300 direct suppliers – to provide some transparency to the process.

“By sharing information about our suppliers and the mills that process the products we buy, we are making a real step change towards greater transparency in the industry. We strongly believe that being open and transparent is key to achieving a fully traceable supply chain – a goal we set ourselves back in 2013 when we first launched our Sustainable Palm Oil Sourcing Policy and which we have been pursuing ever since,” the company said in a release announcing the move.

“A lot of people think if you outsource your value chain you can outsource your responsibilities. I don’t think so,” said CEO Paul Polman at a panel at this year’s World Economic Forum in Davos. “We need to be at the forefront of change. This is why Unilever is committed to greater transparency and continue to work with our partners to drive positive change in the palm oil industry.”

The company believes that by making the supply chain more visible, it will enable issues to be identified quicker and also for others to identify change within the supply chain. “This in turn enables us to investigate and work to remedy the issues alongside suppliers, NGO partners, governments and other stakeholders,” the company said.

The palm oil supply chain is long and complex,  Unilever explains, with the palm oil changing hands many times before it reaches company factories. The fruit is grown on plantations where farmers sell their produce to middle men and agents. They in turn supply it to a mill where the fruit bunches are processed. Next it is transported via traders to refineries for further processing. Only after this point does it enter Unilever’s direct supply chain.

“We have been long committed to lead the drive towards transparency and the best way to demonstrate this is by opening up our own supply chain,” says Marc Engel, Unilever’s chief supply chain officer. “Due to traditional commercial sensitivities and the complexity of the palm oil supply chain, it has required perseverance to get to where we are now. We are very proud to be the first consumer goods company to take this step. Unilever believes that complete transparency is needed for radical transformation. We want this step to be the start of a new industry-wide movement.”

Did you know?

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Quotable:

‘This is a big step towards greater transparency, but we know there is more work to be done to achieve a truly sustainable palm oil industry and we will continue our efforts to make this a reality.’

- Marc Engel, Unilever’s chief supply chain officer, on the company’s plan to reveal details of its entire supply chain for palm oil

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Final Thoughts

Unilever has pulled back the curtain on its palm oil supply chain, identifying more than 1,400 mills and 300 direct suppliers in the process all with a goal of creating greater transparency. The company said that it took years to get all parties on board with this process. Blockchain holds the same promise of creating transparency within the supply chain, and can do that without the long, arduous task of securing permissions with each participant, many of whom don’t know each other and may not trust what others will do with that information.  

Hammer down everyone!

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