A private function

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Unilever is one of the world’s largest consumer products companies producing an extensive range of foods, home products and personal care items. Based in London in the UK and Rotterdam, the Netherlands, Unilever sells its products in around 150 countries across the globe, with 150 million people choosing its well known brands such as Knorr, Wall’s, Lipton, Surf laundry detergents, Sunsilk, Dove and Cif, to feed their families and to clean their homes everyday. Historically, this giant consumer goods manufacturer has grown through a series of acquisitions, which means that the company has inherited a large number of disparate business and technology systems all over the world. The problem it faced was knitting these systems together in order to facilitate communications along the company’s many supply chains.

Diverse locations
Operating in around a hundred countries across five continents using various Electronic Data Interchange (EDI) standards and Value-added Network’s (VANs), the company found that it was both complex and expensive to run so many different systems in diverse locations. As Chris Turner, vice president of applications architecture at Unilever says, ‘We recognised that we had about 200 operating companies, almost all of them connecting over VPNs (virtual private networks) to their customers. The problem was that they were all doing the same sort of things but with different EDI systems and with the high costs of running all the VPNs. It was very complicated.’

Back in 2000 Unilever came to realise that it had to become more effective at dealing with its trading partners. It appeared evident that installing an electronic exchange would make perfect sense for the company.

In order to increase revenue and maximise competitive advantage Unilever wanted to achieve much closer collaboration with all sections of its value chain, consisting of customers, suppliers and trading exchanges. This would require implementing a consistent platform on which to ‘plug in’ the various different systems currently being used. In turn this would enable Unilever to manage internal data transfer at a regional and global level across its entire product portfolio, and would also provide an external route or gateway to its customers across the world.

The essential mix
Unilever looked at a broad range of suppliers before deciding on a shortlist of two, and chose to work with IBM for this project. IBM had the essential mix of technology and consultancy expertise required to interpret Unilever’s business requirements in a full end-to-end offering, from initial consultancy and development of a proof of concept, through testing, to roll out of the private exchange.

An understanding of the technical and business processes was critical, but the flexibility to adapt quickly to changing market conditions was also vital. As Turner says, ‘we needed to find an option which would meet our needs well into the future in a costeffective way. We chose IBM because we felt they were a business who would be around long term.’

Web-based collaboration
Working closely together the two companies have developed and implemented a powerful cross-enterprise web-based collaboration platform – the ‘Unilever Private Exchange.’ The centralised platform addresses two major areas: firstly, it provides a common data infrastructure for Unilever’s global operations to communicate internally, and secondly, it enhances the company’s relationships with all trading partners that make up the Value Chain.

The Unilever Private Exchange enables the company to improve efficiency, reach new markets and enhance the traditional EDI approach.

The Exchange acts as a platform upon which the company can plug its business applications providing a common infrastructure for the exchange of information both inwardly and externally. The new technology gives Unilever much more visibility across the enterprise and enables far higher collaboration with suppliers.

Central to the collaboration platform is IBM’s Websphere Integration suite and in particular the trading gateway. Websphere uses e-business enterprise collaboration technology to help Unilever integrate with suppliers and customers and speed products to market. The global hub, or switch, is based in North America, with five regional hubs across the world.

The Websphere broker tool is used to pull together information from all of Unilever’s regional companies and communicate to the outside world through the central exchange. A key component here is Websphere’s ability to enable the exchange to deal with different communication protocols from the disparate systems run by the various Unilever companies.

‘Implementing a successful private exchange is a complex process,’ says Alain Benichou, vice president, IBM Distribution Sector, EMEA. ‘It involves multiple links with trading partners, including Webenabled back-end systems and integrated business processes across a host of disparate applications and technologies. By creating a specific offering in partnership with Unilever, we are rolling out a one-to-many Web-based trading network that gives the company a flexible and efficient gateway for B2B collaboration.’

The proof of concept for the private exchange was first run back in March 2002. Operating for six months, this proved highly successful and led to the first regional hub being tested with the former Bestfoods brands in the Netherlands. In November 2002 Unilever acquired IBM’s offering in a multi-million dollar deal.

The Unilever Private Exchange not only facilitates the company’s internal applications such as SAP, but is also expected to help in transforming and simplifying Unilever’s business by enabling the company to get products to market faster and react quickly to changing market conditions.

Through implementing this flexible and secure collaborative network, Unilever expects to make significant operational savings, grow revenue and raise productivity levels. By the private exchange, Unilever and its trading partners are able not only to manage business relationships across networks and geographies more efficiently and collaborate securely in a digital way, but in addition will be able to reduce transaction costs and launch products into new markets much more effectively.

Integrating customers
The Unilever Private Exchange is live in several parts of Unilever’s business, mainly in North America, and the company is now in the process of integrating its key customers and suppliers. Turner is confident that all of Unilever’s largest partners, which include those responsible for generating 80 percent of the company’s annual €48bn revenues, will transact business through the hub as it is rolled out. North America and Europe will be linked up to the Exchange first, with other regions following.

Turner says, ‘Unilever prides itself on providing the very best service for our suppliers and customers and we are confident that our customers will see the value of the Unilever Private Exchange for their own businesses.’

Research has shown that 15 per cent of all Fortune 2000 companies have set up private exchanges, with a further 28 per cent expected to follow suit by the end of 2003. During the next three years, private exchanges are expected to garner up to 90 per cent of new investment in marketplace infrastructure.

As an early adopter of a private exchange, Unilever is taking the lead on a best practice example for collaboration with both partners and customers.

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