Purchasing and Supply Management Journey into Unilever’s Circular Economy Strategy

The Circular Economy (CE) has emerged as an alternative to the linear systems. According to CE principles, the system designs out waste by intention. Biological materials are non-toxic and can easily return to soil by composting or anaerobic digestion. Everything is to be reused, repaired, and remade, maximizing the retention of value. To operate in this new environment, Purchasing and Supply Management (PSM) organizations will have a crucial role in the redesign of Supply Chains to speed up the change from linear to circular industrial systems, in a completely different way of doing business with existing suppliers and also innovative start-ups to break down the current linear system. A leading organization in this new way of doing business is Unilever. The launch of Unilever Sustainable Living Plan in 2010 started a journey to bring a net positive impact to the environment. In the last 20 years, PSM has moved in Unilever from a local-led transactional role in materials and services management towards a more strategic role, aligned to this long-term business requirements. Two key paths that are making PSM contribution unique in Unilever’s Circular Economy are: the new plastics agenda and the sustainable sourcing strategy. The second path is the sustainable sourcing. Sustainable oils are at the heart of Unilever sustainable sourcing program. Oils derived from soy and rapeseed are crucial ingredients in many Unilever brands. These crops are usually grown by family-owned farms, who sell them to the processors and suppliers who in turn sell them to Unilever. PSM has led an agenda involving a set of new stakeholders: farmers, NGOs, suppliers, other agri-businesses and governments. In Brazil, more than 40 farmers have gained Round Table for Responsible Soy certification, boosting sustainable soy cultivation. The sustainable soy oil is shipped to Unilever’s Pouso Alegre factory and used as raw material to produce Hellmann’s mayonnaise. Oil waste is turned into compost and the garden’s harvest is consumed in the factory’s cafeteria and part is given to a local community institution. Both initiatives will allow a rich discussion on the additional strategic elements required to manage a new ecosystem of suppliers. And how value generation can be achieved for a new set of stakeholders.