We recently posted a podcast dealing with cold foods, which are a unique kind of supply chain. Now, a major firm, Unilever, has decided that such a supply chain is more expensive and complex than it wants to carry.
Unilever has one of the biggest ice cream portfolios in the business, with popular brands including Ben & Jerry’s and Magnum. But the company’s leadership has decided to emphasize shelf-stable operations, which spans from lotions to mayonnaise. From manufacturing to transit and point of sale, Unilever’s ice cream business differs from the company’s other operating arms. Differences include end-to-end temperature control, equipment, storage facilities and modes of transportation. All those costs add up.
“If you get rid of the ice cream business, you’ve got this portfolio that, basically, you can use any warehouse, you can ship it from any truck, you can use the same processes,” said a Syracuse U. supply chain professor. “It makes life a lot easier from a control standpoint. A cold-storage warehouse alone can be 3-4 times more expensive than a regular one because it has to be insulated and a special ammonia is needed for refrigeration.”
Further, Unilever can’t have its frozen products sit on the same truck or container as shelf-stable products, writes Supply Chain Dive (April 19, 2024). Frozen food requires freezer trucks or freezer rail cars. The result is many moving parts. It means having too many different vendors that it’s working with to maintain its overall goods Ice cream becoming a standalone business will help optimize Unilever’s manufacturing, logistics and distribution network. The standalone ice cream unit is still an attractive business and Unilever will likely end up selling it to the highest bidder.
Classroom discussion questions:
- How does the cold food supply chain differ from normal supply chains and why is it so complex?
- Review the podcast linked above. What is its main point?