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Unilever South Africa: Winning in the marketplace through customer service

Recession, skyrocketing prices and economic downturn were the buzzwords of 2008. All we heard around us were stories of doom and gloom. Following a period of change and reorganisation in 2007, Unilever South Africa (ULSA) entered this phase of unpredictability and pessimism, faced with challenges in their customer service delivery.

The three previously separate Foods, Home & Personal Care and Ice Cream businesses were merged into One Unilever. The business was char- acterised by system integration challenges, high levels of employee turnover, skill and process erosion and loss of morale. The resultant approach to customer service became fire fighting – addressing symptoms of the customer service issues and not root causes. The problem boiled down to availability of products on shelf. If the products were not available on shelf when the shopper went to the store, no amount of marketing could make up for it.

Customer service KPI

Customer service in Unilever is measured using Customer Case Fill On Time (CCFOT): This measurement includes all service and efficiency losses from the point of original order that the customer places to the final receipt of the product by the customer. It is more rigorous than traditional Case Fill in that it includes measurement of efficiency loss and external losses (outside of Unilever’s control). In 2008, ULSA’s customer service as measured in CCFOT averaged 61% (with lowest point at 48%). This meant that out of 100 cases of product ordered, the customer would receive only 61 cases at the right time when the customer needed it.

Taking ownership

In order to improve their customer service, ULSA started with a deep understanding of the root cause behind poor service delivery. Customer service losses were analysed by a cross-functional team. The output indicated improvements required across people, systems and organisation. This sup- ported the South African Board’s drive for a more holistic and business wide approach to customer service. The resultant improvement programme there- fore not only addressed the traditional areas like sourcing unit capacities, but also included system and business process improvements, people skills and capability, leadership and behavioural elements. The Board took ownership of the improvement programme, championing it through the business and driving strong KPI alignment behind CCFOT. CCFOT improvements were also written into the performance bonus targets across the business.

Behavioural enablers

The behavioural enablers that were fundamental to the improvement programme were customer service mindset and new ways of working. It was evident that everybody within the company needed to own customer service, not only the supply chain function. To make service culture second nature both with internal and external customers, the service mindset training was driven across all functions throughout the business.

The team also encouraged the building of a culture of root causes analysis, as opposed to fire fighting, and continuous improvement throughout the organisation, not just in the manufacturing environment.

In the development and delivery of the improvement programme, the South African team drew heavily on the expertise, best practice and support of the regional Customer Service Excellence team.

Positive results

Keeping in mind the service profit chain model, every 3% of service improvement would equal 1% of growth for business. The overall aim of the customer service improvement programme was to lift customer service from the 2008 level of 61% to above 90% whilst reducing inventory as measured in days on hand to<60.

The successes of this major customer service improvement programme were already apparent: at the end of 2009 – about 1 year into the project – with an increased service level to about 85% in CCFOT and a 33% decrease in inventory, exiting below 60 days and releasing R650m cash for growth. This was delivered in parallel with a massive SC transformation project of combining and optimising the previously separate Foods and Home & Per- sonal Care ambient distribution networks into one.

Outlook

Whilst the results so far have been impressive, much more needs to be done to ensure that ULSA’s improved customer service will be maintained. The team is now focusing on embedding the gained improvements into the organisation.

Unilever South Africa aims to

l Ensure that improvements of 2009 are maintained in the face of market volatility and business complexities.

l The new ways of working and customer mindset to becomes a way to life in everyday work.

l _{Remain aligned to their customers, both internally and externally.} Through these three steps, the team is determined to continue its journey of winning in the marketplace through customer service.

Customer Service Team Unilever South Africa

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Suggestions for Further Reading

Blanchard, K. H., Ballard, J., Finch, F. (2004).Customer mania: It’s never too late to build a customer-focused company. New York: Free Press.

Blanchard, K. H., & Bowles, S. M. (1993).Raving fans: A revolutionary approach to customer service. New York: William Morrow & Company.

Gattorna, J. L., & Friends (2009). Dynamic supply chain alignment. Farnham: Gower Publishing Ltd.

Johnston, R., & Clark, G. (2005). Service operations management: Improving service delivery. Upper Saddle River, NJ: Pearson Prentice Hall.

References

Christopher, M. (2005).Logistics and supply chain management: creating value-added networks.

Financial Times Prentice Hall: Harlow.

Edwards, S. (2006).Best practice guide for customer service professionals. London: Customer 1st

International.

Emmet, S. (2007).The customer service toolkit. Cirencester: Management Books 2000 Ltd.

Frei, F. X. (2006). Breaking the trade-off between efficiency and service.Harvard Business

Review, 84(11), 92.

Heskett, J. L., & Sasser, W. E. (2010). The service profit chain: From satisfaction to ownership. In

P. Maglio, C. Kieliszewski, & J. Spohrer (Eds.),Handbook of service sciences (pp. 19–29).

New York: Springer Science+ Business Media.

Hicks, C. (2006).National complaints culture survey. Redditch: TMI.

Kaplan, R. S., & Norton, D. P. (1996).The balanced scorecard: Translating strategy into action.

Cambridge, MA: Harvard Business School Press.

Kotler, P., Armstrong, G., & Cunningham, P. H. (2008).Principles of marketing. Pearson Prentice

Hall: Upper Saddle River, NJ.

Reichheld, F. F. (2003). The one number you need to grow.Harvard Business Review, 81(12),

Chapter 11

Guide to Outsourcing in Supply Chain

Management

Abstract This chapter guides you through the topic of outsourcing in supply chain management. This chapter is structured as follows; first it considers the breadth, growth drivers and common reasons and concerns for outsourcing. Second, it will then define the tendering activities; where a nine-step process is highlighted. Third, it explains how service can be improved through better third party logistics management and the evolving future of outsourcing in the business world. This chapter will conclude with an overview on outsourcing trends.

Having read this chapter you will be able to:

l _{Demonstrate good practice of distribution outsourcing and the associated} tendering process

l Assess operations in your company and decide whether outsourcing presents a viable option

l Recognise how improved service can be reached in your existing outsourcing relationships through better third party logistics management