Unichema Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

Unichema founded in 1992, is a subsidiary of Unilever Company. Unilever is one of the world largest food and personal care companies. Unilever’s specialty chemicals include companies such as Unichema International, National Starch, Quest International, and Crosfield Chemical. The primary objective of Unilever is to deliver best quality products and services in the area of foods, drinks, detergents, and personal products. The biggest competitor of Unilever is Procter and Gamble it is an American multinational consumer goods company. The total turnover sales of the Unilever in 1992 were 39.6 billion.

Unichema International produced half a million tons of Oleochemical yearly for customers worldwide. Oleochemical is a chemical compound derived industrially from animal or vegetables oils or fats. The formation of Oleochemical substances includes fatty acids, fatty acid methyl ester (FAME), fatty amines, fatty alcohols, and glycerol. Oleochemical products, which are produced by Unichema have a large application area in polymers, cosmetics, rubber, textile, leather, paper and lubricants. Unichema Chemie BV in Gouda is the largest production site, which comprises of 430 employees and 120 host employers.

Responding to the customers need effectively is the top priority of the company. However, Oleochemical industry is affected by globalization and a competition within the industry itself. Many challenges arise in the Oleochemical industry due to high competition, and tightening legislations with regard to product liability, environmental issues, cost-effective strategy, and high operating fixed-cost levels resulted in declining overall industry profitability. Moreover, balancing these issues with the achievement of high volume and good margins may affect the way in which the company is functioned. In order to achieve success in the future, the company should develop a strategy to build flexibility and a strong technological base to optimize opportunities in the company; this will also lead to encourage employees to work effectively and efficiently.

PROBLEM STATEMENT

The company’s objective is to deliver quality products and services in less time and money. However, the company requires a major overhaul in order to implement “just-in-time” strategy, to deliver its key customers. Nonetheless, problem statement identified in the case is that implementing through the JIT process is difficult and expensive to introduce on a large scale. The JIT manufacturing also opens businesses to a number of risks associated with the supply chain (Inman 2005).

BUSINESS CONDITION

Unichema International is a company, which produces high value-added Oleochemical derived from natural oils and fats that is used for cosmetics products. Oleochemical industry’s participants have become more competitive and more responsive to customers’ requirements, requires an effective JIT process. JIT is a product and inventory control system in which materials are purchased and units are produced in order to meet the actual customers’ demand, and deliver product in less time as possible. Mr. Jan Lowik recognized the need for higher return on assets and reduction in inventory as the key means to this end.

In just in time, the manufacturing system inventories are reduced to the minimum and in some cases they are zero. Moreover, JIT works in three inventories such as raw material, work in process, and finished goods. The benefits of the JIT are that time is reduced, quick response to customers, defect rates are reduced, reduction in labor costs, reduction in quality costs, reduction in space required, resulting in greater potential output and greater customer satisfaction. The company should provide better response to customers with lower prices, and high quality, while maintaining and improving their business.Unichema Case Solution

Customers’ service effectiveness

The company’s objective is to satisfy customers, both upstream and downstream with high effectiveness and efficiency than the competitors. However, to fulfill the customer’s perception is a big challenge for any company. Moreover, when the company receives a customer’s order, it will always seek the most cost effective approach. The company must consider customer’s feedback and demand to provide quick response to satisfy them.

The company has to deal with two criteria such as customer-facing and internal-facing. The customers facing measures relate to how well the supply chain delivers products to customers. On the other hand, the internal facing measures are concerned with the efficiency with which a supply chain operates. Unichema realized that it is necessary to have a greater understating of the customers’ business needs, their product needs and their information needs, in order to achieve high return on assets.............

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