Unilever Creating New Distribution Network

Partners with ProLogis to consolidate DC operations, reduce costs

Denver  July 19, 2002  Consumer products giant Unilever is working with ProLogis, a provider of distribution facilities and services, to develop a new national distribution network designed to consolidate the logistics operations of Unilever Home & Personal Care  NA (Unilever HPC).

Unilever HPC is undertaking this initiative even as the consumer products goods (CPG) industry as a whole is moving to optimize logistics networks to meet more stringent distribution demands.

From concept to delivery, this network is expected to be fully developed in less than three years and will ultimately consist of five major, super-regional, distribution facilities located in Georgia, Pennsylvania, Texas, Illinois and California, totaling 4.9 million square feet. ProLogis' investment in these facilities is expected to be over $200 million.

Unilever HPC was formed in 1997 through the mergers of Lever Brothers Co., Cheesebrough-Ponds and Helene Curtis. The integration of these companies triggered a major challenge to create a unified supply chain system from three distinct networks.

In 2000, Unilever HPC and ProLogis began working to provide the CPG company with the capability to integrate and consolidate its North American supply chain while reducing logistics costs and increasing speed to market. This newly created network of distribution facilities will enable Unilever HPC to ship all of its products to customers throughout North America within one day, a 15 percent improvement in efficiency compared to the original network created by the merger of the three companies.

While improving logistics efficiencies, the enhanced network will also enable Unilever to consolidate its distribution network from 15 smaller facilities to five major, super-regional, distribution centers, a move that is expected to produce 7 percent total savings in transportation, administrative and facility costs.

John Seiple, president and chief operating officer of North America for ProLogis, said his company offers distribution solutions that include complete network optimization tools, with network modeling, facility design, site selection, state incentive negotiations, and material handling equipment procurement and leasing.

"As one of the world's largest consumer products companies, Unilever is continually looking for 'best-in-class' practices to improve efficiencies in its distribution network as customer demands change and market conditions fluctuate," said Joe Ehnat, director of warehousing for Unilever HPC. "ProLogis' experience in every major distribution market was one of the key reasons we chose them to assist us in developing our national network."

According to veteran industry analyst and ProLogis consultant, Bob Delaney, the trend for corporations to redesign their distribution networks is set to accelerate. "Two major developments are causing this," Delaney explained. "First is the consolidations required from merger and acquisition activity, and second is that a new and well-designed distribution system can cut costs for a corporation and, at the same time, improve service to customers. The latter is obviously a powerful incentive for corporations to begin the process immediately."