Monthly Archives: June 2013

Unilever’s Green Thumb

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June 5, 2013

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Unilever CEO Polman and his products

Unilever CEO Polman and his products

“Our purpose is to have a sustainable business model that is put at the service of the greater good,” says the CEO of consumer products giant Unilever in Fortune (June 10, 2013).This sounds like the boilerplate that fills corporate-responsibility reports, but Unilever has gone beyond companies like GE, IBM, and Wal-Mart by putting sustainability at the core of its business. In a 2010 manifesto, Unilever promised to double its sales even as it cuts its environmental footprint in half and sources all its agricultural products in ways that don’t degrade the earth. The company also promised to improve the well-being of 1 billion people by, for example, persuading them to wash their hands or brush their teeth, or by selling them foods with less salt or fat.

Whether Unilever’s do-good agenda has driven its financial success is hard to know.  The firm’s global hand-washing campaign, for instance, lifts sales of Lifebuoy soap, while a “brush day and night” campaign helps Pepsodent. Socially responsible marketing around self-esteem for women helped Dove become Unilever’s bestselling brand in the U.S.

The model drives innovation too. Unilever researchers are working to develop a laundry detergent that can clean clothes in a few minutes at any water temperature. The company wants to reduce the sugar in its ready-to-drink teas and remove calories from ice cream. It’s telling the farmers who supply it with palm oil, soybeans, tea, cocoa, and tomatoes to get their crops certified as sustainable. The chickens that lay the eggs that go into Hellmann’s mayonnaise or Ben & Jerry’s ice cream must be cage free. No other company has a sustainability program as wide and deep. Unilever’s plan includes 60 targets, with timetables, such as sourcing “75% of the paper and board for our packaging from certified sustainably managed forests or recycled material.”

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Apple Decides That Two Suppliers Are Better Than One

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JUNE 1, 2013

Pegatron began making iPad minis (left) recently, while Foxconn still assembles the larger iPads (right)

Pegatron began making iPad minis (left) recently, while Foxconn still assembles the larger iPads (right)

For years, nearly all of the world’s iPhones and iPads rolled off the assembly lines of a single company: Foxconn. It was a famous partnership between two outsize personalities— Steve Jobs, Apple’s intense and mercurial co-founder, and Terry Gou, the Taiwanese manufacturer’s equally demanding chairman. But under current CEO Tim Cook, reports The Wall Street Journal(May 30, 2013), Apple is dividing its weight more equally with a relatively unknown supplier, giving the technology giant a greater supply-chain balance. Pegatron will be the primary assembler of a low-cost iPhone expected to be offered later this year. Foxconn’s smaller rival across town became a minor producer of iPhones in 2011 and began making iPad Mini tablet computers last year.

Pegatron’s rise means an end to the monopoly that Foxconn, the world’s largest electronics contract manufacturer—has held over the production of Apple’s mobile products. There are strategic reasons for the shift: risk diversification after Foxconn’s manufacturing glitches last year with the iPhone 5 that resulted in scratches on the metal casings, and Apple’s decision to expand its product lines amid growing competition from Samsung and others. Pegatron also has been willing to accept thinner profits as it courts Apple’s business.

Ironically, Foxconn’s cost advantages from scale have waned as it works to improve factory conditions after a spate of high-profile worker suicides and accidents in recent years. Foxconn, in its growing heft as the world’s largest electronics contract company, was also getting more difficult for Apple to control, with incidents such as changing component sourcing without notifying Apple.

Pegatron, which has about 100,000 employees in Taiwan and China, expects to increase its China workforce in the second half of the year by around 40%. The staffing increase is largely due to expected production of low-cost iPhones.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.