Here we’ve gathered some of his insights into the Unilever Partner with Purpose program and the value of deeper connections with your supplier ecosystem.
Supplier Collaboration at Unilever
Unilever launched their much-celebrated Partner to Win programme in 2011. Its aim: to build strategic relationships with key suppliers in support of mutual business growth through innovation.
Following the success of Partner to Win, Unilever launched Partner with Purpose in 2020, building a new and improved partner ecosystem focused on innovating responsibly and transparently. Through Partner with Purpose, Unilever generates solutions that not only drive mutual growth, but also strive to protect people and planet in accordance with their Sustainable Living Plan.
These programs exemplify what Unilever recognised early on: close relationships with key suppliers and partners allow organisations to work collaboratively, sharing valuable innovative ideas. These innovations in turn generate sustainable growth.
This truth underlies Marc Engel’s work at Unilever. During his fireside chat he made one thing clear repeatedly: Partner with Purpose just makes sound business sense.
Partner with Purpose: The Business Case
Engel was clear that the motivations behind Unilever’s Sustainable Living Plan targets are twofold: one, that companies have a duty to protect our world and its inhabitants; two, that doing so provides a tangible financial opportunity for Unilever.
Over the last decade the CPG space has struggled on the stock market, with profit growth nose-diving since the turn of the century, largely as a result of failures to increase unit growth.
Correspondingly, Marc signalled a solution to stagnant sales, suggesting that an increase to the financial security and buying power of people across the globe is not solely a moral good:
‘You cannot afford not to make a contribution in lifting people out of poverty and giving them a livelihood. Not just because it’s the right thing to do; it’s also a reality that if you’re earning 5 dollars a day and you can go to earning 10 dollars a day, then actually that 5 additional dollars will largely find its way back into consumption’.
By teaming up with other brands like L’Oreal to support a living wage through Partners with Purpose, Unilever hopes to stimulate their own sales.
Meet consumer need
Consumers are becoming increasingly demanding of both a product’s performance and its repercussions for people and planet. This holds true at Unilever, with Engel commenting:
‘Essentially our consumers want to see companies and brands step up and actively engage in addressing today’s most urgent and deep-seated social and environmental challenges and not just pay them lip service.’
With this trend, it’s imperative that Unilever takes meaningful action on the issues threatening the world. This requires pivoting towards a decidedly purpose-led business strategy and reducing the social and environmental impacts of its products and packaging in line with consumer demands.
Foster innovation through supplier diversity
To supply the market with the products that satisfy their consumer base, Unilever needs to drive innovation by increasing the volume of cutting-edge ideas they have at their disposal.
Given that externally-sourced innovations are typically 40% faster to market than home-grown ideas, most large companies source the majority of their innovation externally. Unilever is no exception. Whether it’s product deliverables, active ingredients, or pioneering packaging, 70% of its innovation already comes from suppliers and partners.
So how can Unilever increase the quality of this innovation? In Engel’s view the answer is clear: ‘The best way to get diverse ideas is to create more diversity in your suppliers.’
And he means it; Unilever have committed to an annual spend of €2bn with new diverse suppliers. For context, their total spend in 2020 amounted to €33.7bn across 59,800 incumbent suppliers.
This is a laudable pledge in a world of widespread inequality, yet Engel takes a humble view. While he agrees that there is an element of mitigating inequality by helping traditionally marginalised groups, he is adamant that ‘this is not charity’. Instead, he asserts:
‘It’s good business. Because you get different ideas, you get people looking at ideas differently, and coming up with better innovations and better business ideas. It just makes good business sense.’
Get better value from supplier R&D
Engel preempts protests about the cost of supplier innovation. He reminds us that regardless of your relationship to your suppliers, you will always pay for their research and development costs; it’s in their overheads.
Instead of asking how much it costs, he suggests a different focus:
‘The question that you need to ask is: are you getting the best of the R&D for what you’re paying? Because you’re going to pay anyway. So the question is not “is the price good enough?”, it’s “what R&D are you actually getting for what you have paid?” That’s the challenge that our procurement teams live and excel in day in and day out.’
The key to getting the best R&D for what you’re paying? You guessed it: forging close, mutually-beneficial relationships with suppliers and partners. Through these relationships comes privileged access to innovations, and increased influence over your partners’ project pipelines. You become what Engel terms ‘the partner of choice’.
Read more of Engel’s insights in Part 2: How to Become Customer of Choice.
To watch our full fireside chat with Marc Engel, head on over to Collaborate 2021 On Demand.