How Pier Luigi Sigismondi Transformed Unilever’s Supply Chain

Background on Sigismondi & Unilever (His Appointment, Scope)

Unilever is one of the largest consumer goods firms in the world. It is a British-Dutch company that was established over a 100 years ago. They own over 400 brands and their products are sold in 190 countries. Everyday, about 3.4 billion people use their products. Its supply chain strategy is one of the reasons behind its success. Their supply chain strategy is based on 3 foundational pillars; supply chain optimization, digitalization and automation.

In May 2009, Paul Polman, who at the time had been serving as Unilever’s CEO for less than a year announced the appointment of Pier Luigi Sigismondi as Chief Supply Chain Officer (CSCO) a crucial part of the company’s efforts to transform the supply chain into a customer centric one. He had a lot of experience heading operations from Nestle and also served as a consultant for AT Kearney. He also had experience in logistics, strategic procurement and manufacturing across industries including the consumer industry.

As Unilever’s Supply Chain Officer, he was the head of 270 factories globally, delivering 23 billion Euros in cost of goods sold. He was also in charge of Unilever’s end-to-end value chain and was given the task of creating the best supply chain in the fast-moving consumer industry. Sigismondi believed the supply chain was a key driver in becoming a customer-centric organization. He saw the supply chain as a key bolster in meeting their growth plans. For him, driving an ambitious plan meant finding the right balance between end-to-end costs, customer service and improved quality of service.

This study focuses on 3 of Sigismondi’s approaches to Unilever’s supply chain transformation.

His Role in Unilever’s Sustainability Efforts

Under his leadership as Chief Supply Chain officer, Unilever implemented the sustainable living plan. This plan was launched in 2010, the year following Sigismondi's appointment. It outlined Unilever’s plan to achieve growth independent of environmental harm while increasing its positive social impact. Some commentators described it as the most ambitious plan ever created by an international corporation.

The plan set out to achieve hundreds of targets which can be subsumed into 3 main ones: To help more than a billion people improve their health and wellbeing, to halve the environmental impact of the making and use of their products and to enhance the livelihoods of thousands of people within their supply chain.

In 2012, they also reached 224 million people through their programmes to mitigate diarrheal disease by handwashing with soap, providing them with safe drinking water and promoting oral health. In 2013 they were winners of the prestigious catalyst award for their initiatives that expanded opportunities for women and business.In their efforts to inspire environmental and social change they launched the Sustainable Living Young Entrepreneur Awards that was meant to inspire young people to tackle climate, social and health issues. For Sigismondi, knowing where Unilever’s palm oil came from was a crucial step towards a more transparent palm oil industry. He acknowledged the complexity of the task but at the same time their readiness to see it through.

As at 2014, Unilever could trace about 58% of its palm oil use to known mills. For him, sourcing in a sustainable way was a method to both meet customer needs and to future proof their supply chain. To achieve this, the company publishes a list of their palm oil suppliers, including mills and their tier 1 suppliers along with details of their refineries and facilities.

By 2015, they had achieved zero non hazardous waste to landfill across their factories. In 2017, they had committed to 100% electric vehicles by 2030 and they used 100% renewable energy across 5 continents in 2019. Unilever noted that their sustainable brands grow twice as fast as their other brands.

Global Lead, Local Agility and Segmentation

Under his leadership, Unilever transformed into a globally led interdependent organization in which executives had stronger buying authority. Initiatives such as the U2K2 project harmonized their systems and processes across various regions on a single platform improving information flow and faster decision making. They also centralized key functions such as; engineering in India and commodity risk management whilst consolidating their supplier management and procurement processes by centralizing sourcing. The establishment of regional hubs further strengthened this model.

Despite this global integration, Unilever maintained local agility, ensuring that its systems and processes were globally aligned but had enough flexibility to respond to regional or local issues. For example, even though sourcing was centralized local teams retained control over call-offs. Unilever organized its supply chain into segments (by product, channel, and region) and gave regional teams flexibility to choose the most effective ways to distribute products in their markets.

The Shift from Cost-Cutting to Value and Growth

Unilever had a strategic ambition to expand in size whilst minimizing its carbon footprint; a very challenging task, which necessitated a shift from mere cost-cutting to value creation. In 2009, the year Sigismondi was appointed, Unilever began reorienting its supply chain towards serving its customers better, and embracing sustainability, collaboration and innovation across its operations. Under his leadership, the company aimed to make its end-to-end supply chain a key driver of growth rather than just a tool for efficiency. The following year, Unilever recorded its highest revenues in 3 decades denoting the success of this strategic shift.

The Partner to Win Program

In 2011, under the leadership of Sigismondi as Chief Supply Chain Officer, Unilever launched its ‘Partner to Win’ program to build long-term, collaborative relationships with suppliers. These collaborative relationships were built to foster good supplier relations and innovation. Sigismondi noted that nearly half of their innovation pipeline came from suppliers - highlighting the strength of these supplier relationships and how they benefitted from it.

This initiative was designed to create mutual strategic growth opportunities by emphasizing on collaboration and innovation rather than short-term cost advantages. This initiative changed their procurement’s focus from purely transactional relationships with suppliers, where they moved from one supplier to another mainly focused on cost, to building strategic relationships focused on collaborative innovation.

Over time, Partner to Win eventually evolved into Partner with Purpose in response to changing market conditions in 2020.

The Legacy of Pier Luigi Sigismondi

Pier Luigi Sigismondi’s time at Unilever left a lasting impact on how the company viewed and managed its supply chain. With a bold vision of operating in a sustainable and profitable way to building long-lasting strategic and mutually beneficial relationships with partners and suppliers, his leadership marked a transition from cost-cutting to customer-centric value creation built on innovation, collaboration and sustainability.

By driving global integration with local responsiveness, he set new standards for supply chain excellence in the fast-moving consumer goods industry. During his time at Unilever, he demonstrated a strong sense of purpose and operational excellence.

Sigismondi’s legacy lives on as the company continues to pursue long-term value creation and environmental stewardship.