Unilever’s circular economy: how to build a sustainable supply chain in the consumer goods industry

Unilever, one of the world’s largest consumer goods companies, has long been a leader in sustainability. 

Faced with growing environmental concerns and increasing consumer demand for eco-friendly products, Unilever adopted a circular economy strategy designed to minimize waste, maximize resource efficiency, and reduce its overall carbon footprint. 

For businesses across the globe—whether large enterprises or small and medium-sized enterprises (SMBs)—Unilever’s approach offers a blueprint for building sustainable supply chains.

Unilever’s commitment to a circular economy

Unilever’s commitment to sustainability is not new. Their sustainable living plan, introduced in 2010, laid the foundation for the company’s ambitious circular economy goals. 

The essence of a circular economy is simple: rather than following the traditional linear model of “take, make, dispose,” companies focus on keeping products and materials in use for as long as possible.

It involves everything from designing products for reuse or recycling, to reducing waste in production, to ensuring that end-of-life products are reintegrated into the supply chain.

Unilever’s circular economy approach spans several key areas:

• Redesigning products for sustainability: By rethinking how products are made and packaged, Unilever aims to reduce waste at the source. The company has committed to ensuring that 100% of its plastic packaging is reusable, recyclable, or compostable by 2025.
• Waste-free production: As of 2020, Unilever has achieved zero non-hazardous waste to landfill across its global manufacturing operations. This was no small feat, requiring significant changes to how waste is managed in their factories.
• Recycling and reuse programs: In collaboration with retailers and waste management partners, Unilever has implemented take-back and recycling programs, encouraging consumers to return packaging for reuse or recycling.

Since the launch of its Sustainable Living Plan, Unilever has reduced its total waste footprint per consumer use by 32%. [1]

These initiatives have not only helped Unilever reduce its environmental impact, but they have also resonated with consumers, who are increasingly demanding more sustainable products.

The challenges of transitioning to a circular supply chain

While Unilever has made significant strides, the transition to a circular economy hasn’t been without its challenges. 

The complexity of building a circular supply chain can be daunting, especially for large multinational corporations like Unilever. 

However, these challenges are not unique to Unilever—they are faced by any company trying to adopt more sustainable practices.

Here are some of the key challenges Unilever has encountered, which are also relevant for businesses of all sizes:

• Managing reverse logistics: One of the biggest hurdles in a circular economy is managing the return flow of products and materials. For Unilever, this includes collecting used packaging from consumers and ensuring it is properly recycled or reused. This requires a robust reverse logistics network, which can be costly and difficult to manage on a scale.
• Coordinating a global supply chain: With operations in over 190 countries, Unilever’s supply chain is vast and complex. Coordinating sustainability efforts across different regions—each with its own regulatory frameworks and infrastructure—is a major challenge.
• Sourcing recycled materials: While there is a growing demand for recycled materials, the supply of high-quality recycled inputs can be inconsistent. This is particularly true in regions where recycling infrastructure is underdeveloped.

These challenges are not impossible, but they do require significant investment in logistics, technology and partnerships. 

 For SMBs, the barriers to implementing a circular economy can seem even higher, given their limited resources. However, with the right tools and a phased approach, SMBs can overcome these challenges and build their own sustainable supply chains.

According to a recent article, McKinsey highlights the complexities of adopting circular value chains, emphasizing the need for strong reverse logistics networks and infrastructure to support circular models. [2]

How Infios can support circular supply chain models

Although Unilever’s scale allows them to invest heavily in sustainability, smaller businesses can still adopt circular economy practices by leveraging technology. 

Infios offers a range of solutions that help businesses - regardless of size - build circular supply chains by optimizing their resource use and improving logistics.

Here’s how Infios’s solutions can support businesses in their journey toward a circular economy:

• Warehouse Management System (WMS): Infios’s WMS enables businesses to manage inventory and optimize warehouse operations, ensuring efficient resource utilization. By streamlining processes such as product sorting, storage and retrieval, businesses can minimize waste and reduce energy consumption within the warehouse.
  
• Reverse logistics solutions: Infios’s WMS and Transportation Management System (TMS) are designed to handle reverse logistics efficiently. This is crucial in a circular economy, where products need to be returned, recycled or refurbished. Efficient reverse logistics can reduce costs and ensure that materials are reintegrated into the supply chain effectively.
• Transportation Management System (TMS): Infios’s TMS helps businesses optimize route planning, reduce fuel consumption and ensure timely deliveries. By optimizing transportation routes, companies can lower their carbon footprint and contribute to overall supply chain sustainability.
• Voice Solutions: Infios’s voice solutions empower businesses to enhance workflow efficiency and visibility. By enabling optimized, real-time inventory management, businesses can seamlessly track and process returns with speed and accuracy. These efficiencies lay the groundwork for sustainable practices, such as recycling initiatives and packaging take-back programs.

• BES: By implementing Infios integrated Voice Solutions, BES digitized its picking processes, significantly improving workflow efficiency and visibility. With optimized, real-time inventory management, BES can seamlessly track and handle returns, ensuring products are processed quickly and accurately.
  These efficiencies not only enhance customer satisfaction but also create a foundation for sustainable practices like recycling and packaging take-back programs. Infios’s solutions enabled BES to streamline operations while remaining agile in its sustainability goals.

Watch the BES case study below:

Lessons from Unilever's circular economy journey for SMBs

Unilever’s circular economy strategy offers several valuable lessons for other businesses, especially SMBs that may be looking to adopt more sustainable practices. 

While Unilever’s scale and resources give them certain advantages, the core principles of their approach can be applied to businesses of any size.

Here are a few key takeaways from Unilever’s journey:

• Start small and scale: Unilever didn’t achieve its sustainability goals overnight. They started with small initiatives—such as redesigning packaging for recyclability—and gradually expanded their efforts as consumer demand and infrastructure evolved. SMBs can take a similar approach by starting with a single area of their operations (such as packaging or waste reduction) and scaling up over time.
  
• Leverage partnerships: One of the reasons Unilever has been so successful in its sustainability efforts is its ability to form strategic partnerships. By collaborating with retailers, waste management companies and technology providers, Unilever has been able to implement circular economy practices on a global scale. SMBs can also benefit from partnerships, especially with technology providers like Infios, who can provide the tools and expertise needed to implement sustainable supply chain solutions.
  
• Invest in technology: Technology plays a critical role in enabling a circular economy. From managing reverse logistics to optimizing resource use, technology can help businesses reduce waste and improve efficiency. Infios’s solutions are designed to support businesses in their sustainability efforts, providing them with the tools they need to build circular supply chains without the need for large upfront investments.

The future of circular supply chains in consumer goods

The consumer goods industry is experiencing a significant transformation, with Environmental, Social and Governance (ESG) standards emerging as a top priority for both businesses and consumers.

As the circular economy gains traction, businesses will need to adapt to meet new regulatory requirements, changing consumer preferences and the growing demand for sustainable products.

Emerging technologies, such as artificial intelligence (AI) and blockchain, will play an increasingly important role in circular supply chains. 

These technologies can help businesses improve traceability, optimize resource use and ensure that products and materials are reused or recycled efficiently. For example, AI-powered systems can analyze supply chain data to identify areas where waste can be reduced, while blockchain technology can provide transparency and accountability in the recycling process.

Conclusion

Unilever’s journey toward a circular economy serves as a powerful example of what’s possible when businesses prioritize ESG standards. 

Their success in reducing waste, improving resource efficiency and building a more sustainable supply chain offers valuable lessons for other businesses - whether large enterprises or SMBs. 

By adopting circular economy practices, businesses can not only reduce their environmental impact but also improve their operational efficiency and strengthen their brand.

Resources:
[1] Unilever: Unilever Annual Report and Accounts 2021
[2] McKinsey: Improving circularity and sustainability with reverse logistics | McKinsey
[3]: Accenture: Future-Ready Supply Chain Operations | Accenture

Image copyrights:
Image 1:  Unilever is cutting 7,500 jobs and spinning off its ice cream business | The Independent