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    Unilever Un-Chained Case Study

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    ferrarifanatic
    Unilever was seeking to launch a new detergent targeting specific customer needs with a gross margin greater than 40%. The document outlines Unilever's approach to modifying the formulation, packaging, and distribution of their existing detergent Surf Excel to develop a new product called White Magic. It details the current and modified cost structures, finding that adjusting the raw material formulation, packaging options, and distribution network allows the gross margin to be increased from 35% to over 40% while keeping the selling price fixed.

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    © All Rights Reserved
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    Unilever Un-Chained Case Study

    Uploaded by

    ferrarifanatic
    20 views12 pages
    Unilever was seeking to launch a new detergent targeting specific customer needs with a gross margin greater than 40%. The document outlines Unilever's approach to modifying the formulation, packaging, and distribution of their existing detergent Surf Excel to develop a new product called White Magic. It details the current and modified cost structures, finding that adjusting the raw material formulation, packaging options, and distribution network allows the gross margin to be increased from 35% to over 40% while keeping the selling price fixed.

    Original Description:

    HUL Case Study

    Original Title

    Hul Bright Riders

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    Unilever was seeking to launch a new detergent targeting specific customer needs with a gross margin greater than 40%. The document outlines Unilever's approach to modifying the formulation, packaging, and distribution of their existing detergent Surf Excel to develop a new product called White Magic. It details the current and modified cost structures, finding that adjusting the raw material formulation, packaging options, and distribution network allows the gross margin to be increased from 35% to over 40% while keeping the selling price fixed.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    20 views12 pages

    Unilever Un-Chained Case Study

    Uploaded by

    ferrarifanatic
    Unilever was seeking to launch a new detergent targeting specific customer needs with a gross margin greater than 40%. The document outlines Unilever's approach to modifying the formulation, packaging, and distribution of their existing detergent Surf Excel to develop a new product called White Magic. It details the current and modified cost structures, finding that adjusting the raw material formulation, packaging options, and distribution network allows the gross margin to be increased from 35% to over 40% while keeping the selling price fixed.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    UNILEVER UN-CHAINED

    CASE STUDY
    Problem in Hand
    Launch of a new detergent targeting specific customer needs and having gross
    margin greater than 40%.

    Whiteness
    White Magic Brightness
    Proponents
    Low Cost

    Scope Constraints
    Surf
    Change the gross margin by cutting • Fixed selling price
    excel
    • Formulation cost • Fixed volume
    • Packaging cost White Magic
    • Fixed turnover
    • Conversion cost • Fixed manufacturing cost &
    • Distribution cost Other overhead
    Current cost structure
    Components In INR/ ton

    Turnover per ton 98,000.00

    RM cost per ton 35,870.00

    PM cost per ton 12,000.00


    Target Areas
    Manufacturing cost and overheads 10,000.00

    Distribution cost 5,100.00


    Depreciation impact ( 10% of
    investment) 500

    Total cost 63,470.00

    Gross Margin per ton 34,530.00

    GM% 35%
    Approach
    Packaging

    Raw
    Distribution
    Material

    Gross
    Margin>40%
    Distribution Cost
    Region % Split Volumes per year
    Demand North 10% 100
    West 20% 200
    South 70% 700
    North
    North
    West
    2000 West
    West West

    South 2500 South


    South

    Distribution cost Distribution cost


    per ton - 5100 per ton - 2650
    Packaging Options
    Acc. To Current Distribution System Acc. To Modified Distribution System

    Model Cost of Depreciation of Enzyme Handling Depreciation of Enzyme Handling


    packing Packaging Unit Unit Depreciation Packaging Unit Unit Depreciation
    (INR/tonne) (INR) (INR) (INR) (INR)`
    Bottle Same 17000 0 0 0 500
    Shape as Surf
    Excel Liquid

    Bottles – 12000 500 0 1000 500


    Different shape
    for White Magic
    Pouches 9000 3000 0 6000 500

    Pouches with 11000 4000 0 8000 500


    spout at side

    Brick pouch by 9500 7000 0 14000 500


    Volpack
    Cost
    (Distribution + Depreciation +Packaging)
    Distribution Cost Packaging Cost Total Depreciation Cost Cost (distribution +
    (INR/tonne) (INR/tonne) (Enzyme unit + packaging +
    packaging unit) depreciation )
    (INR/tonne) (INR/tonne)
    Current* Modified Current* Modified Current* Modified Current* Modified
    Bottle Same Shape as 5100 2650 17000 17000 0 500 22100 20150
    Surf Excel Liquid
    Bottles – Different 5100 2650 12000 12000 500 1500 17600 16150
    shape for White Magic
    Pouches 5100 2650 9000 9000 3000 6500 17100 18150
    Pouches with spout at 5100 2650 11000 11000 4000 8500 20100 22150
    side
    Brick pouch by Volpack 5100 2650 9500 9500 7000 14500 21600 26650

    *The table comprises of the operating cost of various packaging units


    It also includes enzyme handling unit cost and depreciation cost
    Comparison of Cost
    (Distribution + Depreciation +Packaging)
    30000
    Cost (distribution + packaging +

    25000

    20000
    depreciation )

    Current Cost
    15000
    Modified Cost

    10000

    5000

    0
    Modifying the formulation
    White Magic White Magic
    Surf Excel Liquids - White Magic Liquids
    powders - Liquids -
    Material Function Cost / kg Existing -Proposed
    Existing Modified
    Formulation Formulation
    Formulation Formulation
    Acts as an active detergent for washing, gives
    Surfactant 1 140 2.5 16 2.027 2.027
    foam
    Acts as an active detergent for washing, less
    Surfactant 2 120 10 8.108 8.108
    foam, takes out grease
    Surfactant 3 Acts as an active detergent 80 12.5 10.135 10.135
    Glycol Viscosity Reduction and enzyme stabilization 36 3 3 3
    Tinopal Fluorescence 900 2 1 2 2
    Enzyme For stain removal 600 0.5 0.5 0.3
    Shading Dye for whiteness 3000 0 0.075 0.075 0.075
    Color/ Dye For color of liquid detergent 2400 1 0.75 0.75 0.5
    Perfume Smell 500 1.5 1.25 1.2 1.2
    BIT Preservative 1 1 1
    Water Filler 5 66 71.2 71.65
    Solids Filler 10 80.9
    Total 100 100 100 100
    Sum total of total formulation/ ton
    41190 33003 35870 32285
    Modified Cost Structure
    Components Current Modified
    Cost (INR) Cost (INR)
    Turnover per ton 98000 98000
    RM cost per ton 35870 32285
    PM cost per ton 12000 12000
    Manufacturing cost and overheads 10000 10000
    Lowered cost on
    Distribution cost 5100 2650
    Depreciation impact ( 10% of 500 1500
    investment)
    Total cost 63470 58432
    Gross Margin per ton 34530 39565
    GM% 35 % 40.36 %
    Cumulative Cost Comparison
    70000

    60000

    50000

    40000

    30000 Current Cost (INR)


    Modified Cost (INR)
    20000

    10000

    0
    RM Cost PM Cost Distribution Depriciation Total Cost Gross
    Cost Cost (*10) Margin per
    tonne
    Thank You!

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