Why Accenture lists ‘digital twins’ as top-five technology trend in 2021
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A digital twin technology is one that creates a virtual replication of a real-world entity, like a plane, manufacturing plant, or supply chain.
Manufacturing companies have increasingly used digital twin technologies to accelerate digital transformation initiatives for product development, and the tech has grown in popularity over the past five years as legacy manufacturers look for ways to keep up with innovative startups like Tesla.
The idea has been around since 2002, when it was coined by Michael Grieves , then a professor at the University of Detroit, to describe a new way of thinking about coordinating product lifecycle management. The concept stumbled along for many years, owing to limits around integrating processes and data across engineering, manufacturing, and quality teams. But it has begun picking up steam, thanks to improvements in data integration, AI, and the internet of things, which extend the benefits of digital transformation efforts into the physical world.
In 2019, Gartner suggested that 75% of organizations would be implementing digital twins within the next year. This year, Accenture has positioned digital twins as one of the top five strategic technology trends to watch in 2021. The reason is that businesses are finally figuring out how to scale these projects across a fleet of projects, rather than a single one-off, Accenture Technology Labs managing director Michael Biltz said.
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Early digital twin leaders show the way
The promise of digital twins lies in improving collaboration and workflows across different types of groups — like product design, sales, and maintenance teams — and engineering disciplines. When it’s done well, it can deliver fantastic results. For example, the U.S. Airforce has made extensive use of digital twins to design and build a new aircraft prototype in a little over a year, a process that traditionally drags on for decades.
In other industries, the same principles can translate to accelerating vehicle electrification, lowering construction costs, and building smart cities. Chevron expects to save millions of dollars using digital twins to predict maintenance problems more quickly. Kaeser, which makes compressed air equipment, has been using digital twins to shift from a product model to a subscription model.
Accenture worked with Unilever to build a digital twin of one of its factories. The digital twin allowed different experts to analyze various trade-offs in fine-tuning the factory while minimizing the risk of new problems. They were able to reduce electricity costs and increase productivity. Despite these early gains, many of these successes have been within a limited domain constrained by the technology platforms or systems integrators.
Digital twins are not off-the-shelf technology
The core idea behind digital twins emerged in the product lifecycle management for streamlining product development. But then other industries realized some of the same ideas were applicable. Gartner has characterized different types of digital twins for areas like product development, manufacturing, supply chains, organizations, and people.
Although the digital models themselves are getting better, figuring out how to share models across applications is a bit trickier.
Different types of applications optimize the data collection process and the data models for specific use cases. PLM vendors like Siemens, PTC, and Dassault have been buying up and building out rich ecosystems of tools that facilitate the exchange of digital twin data across the product lifecycle.
These kinds of tools work well when enterprises buy tools from one vendor, but passing digital twin models between apps from different vendors leads to less integration.
Various standards groups have been working to help streamline this process. The International Standards Organization has been working on developing a variety of standards for digital twin manufacturing, reducing data loss during exchanges, and promoting business collaboration.
Michael Finocchiaro, senior technologist at digital transformation consultancy Percall Group, said, “I think that there is a big dependency on the PLM vendors to implement these standards so that they are brought into the DNA of how we develop digital twins.” As the big PLM systems — such as Dassault’s 3DEXPERIENCE, PTC’s Windchill, and Siemen’s Teamcenter — adopt these standards, they will become easier to deploy in the real world.
But the jury is still out on how committed vendors are to ensuring interoperability in practice. For example, Finocchiaro said that integrating bill-of-material data across platforms often requires extensive customization despite the existence of standards.
“This exposes the gap between the rhetoric of openness of these platforms as they seek to maintain and expand their customer base occasionally by vendor lock-in,” Finocchiaro said. This natural tendency puts a bit of drag into the adoption of standards. Scaling these efforts will require better integration and improved communications across stakeholders about how digital twins are supposed to work in practice.
A pragmatic approach to digital twin standards
Industry collaborations like the Object Management Group’s (OMG) Digital Twin Consortium could help. Digital Twin Consortium CTO Dan Isaacs said, “While there is a lot more work to be done to enable digital twin interoperability, integration and standards that can support composability, sharing, and common practices will provide a foundation.”
The OMG has previously spearheaded widely adopted standards like CORBA for business architectures and BPMN for diagramming business processes. The Digital Twin Consortium includes industry leaders such as Microsoft, Dell, GE Digital, Autodesk, and Lendlease, one of the world’s largest land developers.
The group is focusing on creating consistency in the vocabulary, architecture, security, and interoperability of digital twin technology. It does not develop standards directly, but instead helps the different participants flesh out the requirements that will inform standards by organizations like ISO, the IEC, and the OMG.
For example, the Digital Twin Consortium recently announced an alliance with FIWARE, an open source community that curates various digital twin reference components for smart cities, industry, agriculture, and energy. The hope is that this partnership could jumpstart digital twin deployments in the same way the internet grew on the back of TCP/IP reference implementations. This will make it easier to connect multiple digital twins to help model cities, large businesses, or even the world .
Building on the success of GIS
“Digital transformation at full scale is still in early adoption,” Isaacs said. “Digital twins continue to gain momentum, but realizing their full potential will require seamless integration, alignment, and best practices for both software and hardware infrastructures.” This will require coordination across a wide range of technologies, such as AI/ML, modeling and simulation, IoT frameworks, and industry-specific data and communications protocols.
In practice, this might look like extending the success of geographical information system interoperability into other domains. These efforts are already extending the use of satellite imagery and point cloud scanning coupled with AI and ML to identify structures and anomalies that can then be tagged and associated to other assets or attributes. This helps enterprise teams improve pattern identification to unlock critical insights needed to gain a competitive edge.
Isaac expects to see the greatest adoption of digital twin technology in energy and utilities to accelerate the transition to renewables and achieve net-zero emissions. Other areas, like medical and health care, are also gaining momentum but face challenges harmonizing digital twins across a mishmash of different systems.
Visionary leaders who work out the kinks to scaling digital twins may see a significant competitive advantage. Accenture’s Technology Vision 2021 report predicted, “The businesses that start today, building intelligent twins of their assets and piecing together their first mirrored environments, will be the ones that push industries, and the world, toward a more agile and intelligent future.”
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Unilever Global Change location
The future of skills: using tech to put people first
Published: 30 April 2021
Reskilling or upskilling for an entirely new role is often seen as a big leap, but data-driven tools could begin to make it less of a jump than previously imagined.
Artificial intelligence (AI) is regularly cast as the villain of the workplace. The truth is more nuanced. Yes, smart tech solutions like AI are on the rise. Yet, on the flip side, today’s digital workplace is also driving opportunities for new skills and career options.
A quick ‘what if’... consider smart tech: what if AI was also seen as a positive facilitator of new career opportunities?
The World Economic Forum’s Retail, Consumer Goods and Lifestyle group recently put precisely that question to one of its business-led taskforces – co-led by Unilever and US retailer Walmart.
“Reskilling and upskilling are often seen as a time-consuming and costly exercise by businesses, so we were interested to find out if data and AI could help in some way and, if so, what future redeployment journeys might look like,” says Patrick Hull, Unilever Vice President, Future of Work.
Job skills pilot project
In search of answers, we recently embarked on a three-month research project with our taskforce partner Walmart.
To assist with the research process, we brought on consultancy firm Accenture and Canadian start-up SkyHive, an expert in workplace analytics.
Two propositions framed our approach. First, that jobs might be better viewed as a combination of multiple skills, rather than singular roles. Second, that data could potentially augment human perceptions about the skills required for specific roles.
The second idea came from SkyHive. When the AI specialist used its data-driven technology to analyse job-specific skills, it identified an average of 34 skills per person in a role. However, employees often downplay the number of skills they have, typically putting the figure at 11.
There’s another intrinsic benefit of a more data-driven approach to reskilling and redeployment: the elimination of preconceptions, reports Nicholas Whittall, Accenture’s Managing Director of Talent & Organisation/Human Potential.
As he notes: “AI eliminates human bias that recruiters or managers often hold in terms of who’s truly capable of doing which job.”
By way of a baseline, the HR teams at Unilever and Walmart selected ten different roles from across their respective businesses.
Each team then drew up a list of the main skills they associated with each role and the potential training pathways for reskilling people for different roles.
Accenture and SkyHive then reviewed the lists and subjected them to a variety of data analytics tools. Their objectives: to see what skills might be missing, to spot where skills overlapped, and to determine the most efficient way to upskill our existing talent.
By breaking roles down into their component parts and analysing them in granular detail, the skills gaps between different functions emerged as far less wide than initially thought.
Take two jobs that, on the face of it, may have little in common: an inventory replenishment manager and an eCommerce manager. The data shows that there’s actually a 63% crossover in skillsets.
“What the pilot has taught us is that AI and data analytics give us solid grounds for having an optimistic view about the future of work and the opportunities for reskilling,” Patrick observes.
Becoming future fit
Our hope is that other companies from the consumer goods sector will add their own case studies to the research (the key learnings of which are below).
In the long run, our ambition is that the findings will move from the hypothetical to the practical, informing how HR professionals address the pressing skills challenges faced by businesses.
“Focusing on expanding opportunities for growth for our own people is front and centre of our Future-Fit strategy. We know that if they grow, then our business also grows,” Patrick notes.
“Giving our people the training to fill internal skills gaps is good for them and for our business. If data and AI can help us do that better, as this initial pilot indicates it can, then great, let’s use it.”
As the research pilot goes forward, Patrick is confident that the role of tech will increasingly be seen as a friend, not a foe, of today’s fast-moving world of work and skills.
Key Learnings: Future Skills Pilot Report
- Skilling is just smart business: preparing existing employees for new roles is often the quickest and most cost-effective solution to filling skills gaps.
- HR must empower individual talent mobility: emerging data and AI-driven technology can support HR’s efforts to equip people to build and shape their careers.
- AI is essential for eliminating bias: machine-learning offers an objective, equitable means of creating new or potentially overlooked job pathways.
- A culture change is required: upskilling needs to be seen as a competitive advantage or as a business imperative.
- Cross-industry collaboration is an accelerator: preparing people for the future of work has to be a collective effort; no individual company can do it alone.
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If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” – Lee Kuan Yew, Former Prime Minister of SingaporeIn 1930, Unilever was established from the merger of two organisations, Lever Brothers, which was a British manufacturing company, and Dutch Margarine, a Dutch company. From…
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Nie wieder prokastinieren mit unseren Lernerinnerungen.
If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
– Lee Kuan Yew, Former Prime Minister of Singapore
In 1930, Unilever was established from the merger of two organisations, Lever Brothers, which was a British manufacturing company, and Dutch Margarine, a Dutch company. From that time onwards, Unilever has expanded into 100 countries globally. It produces a wide range of consumer goods. Unilever has become one of the most adaptable consumer products industries, with P&G as its sole rival. Among many other organisations, Unilever has also outsourced to different regions globally. Let's look at Unilver's outsourcing strategy!
Unilever outsourcing success story
Unilever’s products are sold all over the world. 2.5 billion people buy its products every day. An organisation that launched a single soap brand has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food. Here are some statistics that show Unilever's global dominance:
A turnover of €51 billion in 2020
It has around 400 brands under its umbrella
Networking with 25 million retailers
There are 90,000 factories globally
Global reach in 190 countries
150,000 employees in its workforce worldwide
There are multiple reasons for its success, including innovative strategies and excellent management , to efficient marketing and sustainability. Let's take a look.
Unilever's outsourcing strategy
Outsourcing is the practice of hiring another party outside of the organisation to perform services or produce products that were originally performed within the organisation.
The different types of outsourcing include:
Professional outsourcing: contracts are offered to individual specialists to manage multiple small tasks without having to outsource the whole function.
IT outsourcing means employing outside service providers to efficiently provide IT-related business processes and infrastructure solutions for organisation outcomes.
Manufacturing outsourcing is when the production process is undertaken by another organisation that specialises in manufacturing that product.
Process-specific outsourcing is when an organisation contracts a provider for a specialist service that may be niche.
Operational outsourcing is when an organisation hires other contractors to handle specialised work operations. This can be for their HR, accounting, data analysis, and administrative functions.
Unilever applies operational outsourcing with Accenture to manage its HR function. Organisations employ outsourcing to lower labour costs which include salaries, equipment and machinery, overheads, and technology. Organisations also use it so that they can concentrate on the core aspects of the organisation and outsource less crucial operations to external parties.
One of the major reasons for outsourcing is cost reduction. Money can be saved by outsourcing because producers who supply the same service to several customers can take advantage of 'economies of scale'. In addition, outsourcing can boost an organisation’s access to a range of experts. Many organisations have insufficient resources when it comes to rapidly changing technologies and systems.
Unilever implements a four-step method to outsourcing:
Prioritise: this is to determine which functions need outsourcing, nonetheless making sure that the areas of strength and major competencies stay within the organisation.
Select: d efine criteria for selecting a provider and take into account the correspondence between the values and philosophies of the two parties.
Trust: b uilding trust via clear communication between parties.
Monitor: m ake sure that assessment measures are in place for monitoring the success of the function that is outsourced.
Here is an example of Unilever’s human resource development outsourcing .
Prioritise: Unilever determined that its human resource (HR) function can be partially outsourced, as this would benefit the company.
Select: Unilever outsourced its human resource function to an external provider, Accenture. It may be reasoned that an organisation of the magnitude of Unilever should develop its own economies of scale with an in-house human resource development function. However, the strategy behind this could be to outsource a non-value-adding activity (ie. administration) to an external provider so that the organisation can focus on the core competencies to market and sell its brand.
Trust: Unilever acknowledges that close interaction between the in-house and external HR functions is needed in order to make the collaboration work. Joint employee meetings take place regularly. The measures taken are to develop trust, which is the foundation of a successful outsourcing arrangement.
Monitor: Regarding the assessment measures, there is a detailed structure to oversee the services provided by Accenture at the domestic as well as international levels.
Unilever and Accenture
Organisations today deal with globalisation, quick changes in technology and increasing complications of products/services. Because of this, it is hard for organisations to have in-house expertise . Unilever faced a similar issue as it is tough to enhance competitiveness, deliver distinctive functional excellence, and develop an efficient cost structure. Therefore, it did not have adequate expertise and time to concentrate on administrative activities, which makes it hard to stay competitive.
Organisations usually want to emphasise their core competencies . For this reason, Unilever has outsourced its global HR operations to Accenture.
There are benefits to be gained from outsourcing . It permits the organisation to share not only the fixed cost but also the risks linked to the development of a product or technology, the organisation can concentrate on its main competencies while getting access to corresponding competencies from the company they are outsourcing to. Consequently, the organisation can lower costs and boost revenues from outsourced operations.
Accenture is a worldwide management , consulting, technology services, and outsourcing organisation.
Unilever believed it was best to put all of its efforts into its core competencies , such as product development and acquiring new companies.
Without outsourced HR, it would have to solve the issues internally, which would split its focus. In addition, they would have to use more time to train staff and keep up with technological change.
Besides the advantages, there are also threats associated with an outsourcing relationship like this one. One drawback is that influential customers may exploit suppliers, and at times influence them to reveal classified information. Moreover, the success of the outsourced operation is only possible when cooperation with the supplier is efficient. Other drawbacks include security risks, reduced quality control, loss of control, and communication issues.
Unilever has expanded from developed markets to developing markets. It is using an outsourcing approach to lower the cost of production. It produces brands that fulfil the expectation of its customers through design, taste, nutrition value and hygiene, providing exactly what the customer needs.
Unilever Outsourcing - Key takeaways
Unilever was established when two organisations merged, Lever brothers which was a British manufacturing company and Dutch Margarine from Holland.
Unilever has grown into 190 countries globally with over 400 brands under its umbrella.
Unilever has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food.
Outsourcing is the practice of hiring an external party to perform services or produce products that were originally performed within the organisation.
Organisations employ outsourcing to lower labour costs, which include salaries, equipment and machinery, overhead, and technology.
Unilever implements a four-step method to outsourcing: prioritise, select, trust, and monitor.
Reasons for outsourcing include globalisation, rapid changes in technologies, and lack of expertise within an organisation.
Unilever has outsourced its global HR operations to Accenture.
The benefits of outsourcing are that it permits the organisation to share not only the fixed cost and risks linked with the development of the product and technology. The organisation can concentrate more on its main competencies, and get access to corresponding competencies.
The drawbacks of outsourcing are that influential customers exploit suppliers and at times influence them to reveal classified information. Lack of coordination can have detrimental effects.
Frequently Asked Questions about Unilever Outsourcing
--> does unilever use outsourcing.
Yes, Unilever uses outsourcing. Unilever uses operational outsourcing in partnership with Accenture to manage its HR function. Unilever implements a four-step method for outsourcing: prioritise, select, trust, and monitor.
--> What is Unilever's growth strategy?
Unilever's growth strategy includes the use of outsourcing to expand into a variety of markets. Through outsourcing, the organisation can lower its costs and the risks linked with entering new markets, as they benefit from access to local knowledge via their partners. The organisation can concentrate on its main competencies while getting access to corresponding competencies from the company they are outsourcing to.
--> What is Unilever's competitive advantage?
Part of Unilever's competitive advantage includes its outsourcing strategy. By using an outsourcing approach, the company manages to lower production costs. Through outsourcing, Unilever can also focus on its core competencies, like product development and the acquisition of new companies.
--> What are the different forms of strategic outsourcing?
The different forms of strategic outsourcing include professional outsourcing, IT outsourcing, manufacturing outsourcing, process-specific outsourcing, and operational outsourcing.
Final Unilever Outsourcing Quiz
Unilever outsourcing quiz - teste dein wissen.
Was Unilever a merger?
Unilever was established due to a merger of two organisations Lever brothers which was a British manufacturing company and Dutch Margarine from Holland.
Which year did Unilever have a merger?
How did Unilever start?
Unilever was launched with one soap brand initially has emerged as one of the biggest global consumer brands, offering products in beauty & personal care, home care, and food.
Outsourcing is the practice to hire another party out of the organisation to perform services or produce products that were originally performed within the organisation.
Why do organisations outsource?
Organisations employ outsourcing to lower labor costs which include salaries, equipment and machinery, overhead, and technology. Organisations can also focus more on their core competencies instead of administrative functions.
What are the main elements of outsourcing?
Usually cost, capacity and competencies are the key components that provide the drive.
What benefit did Unilever have from outsourcing?
One of the benefits was that outsourcing boosted Unilever’s access to a variety of experts. Many organisations are deficient in internal resources to be ahead of rapidly changing technologies and legal systems. Hence, Unilever outsourced its administrative operations.
Who is Unilever’s outsourcing partner?
Its global human resource function is managed by Accenture.
What does Accenture do?
Accenture is a worldwide management, consulting, technology services, and outsourcing organisation.
Which Unilever’s operations does Accenture deal with?
Human resource function
What is Unilever’s method to outsource?
It has a four-step method: prioritize, select, trust, and monitor.
How many brands does Unilever have?
It has around 400 brands under its umbrella.
What are the benefits of outsourcing?
The benefits of outsourcing are that it permits the organisation to share not only the fixed cost and risks linked with the development of the product and technology. The organization can concentrate more on its main competencies, and get access to corresponding competencies.
What are the drawbacks of outsourcing?
The drawbacks of outsourcing are that influential customers exploit suppliers and at times influence them to reveal classified information regarding their costs. Lack of coordination can have detrimental effects. Other drawbacks include security risks, reduced quality control, loss of control, communication issues, etc.
In how many countries does Unilever operate?
It has a global reach in 190 countries.
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UnileverA Case Study
This article considers key issues relating to the organization and performance of large multinational firms in the post-Second World War period. Although foreign direct investment is defined by ownership and control, in practice the nature of that "control" is far from straightforward. The issue of control is examined, as is the related question of the "stickiness" of knowledge within large international firms. The discussion draws on a case study of the Anglo-Dutch consumer goods manufacturer Unilever, which has been one of the largest direct investors in the United States in the twentieth century. After 1945 Unilever's once successful business in the United States began to decline, yet the parent company maintained an arms-length relationship with its U.S. affiliates, refusing to intervene in their management. Although Unilever "owned" large U.S. businesses, the question of whether it "controlled" them was more debatable.
Some of the central issues related to the organization and performance of multinationals after the Second World War can be illustrated by studying the case of Unilever in the United States. Since Unilever's creation in 1929 by a merger of British and Dutch soap and margarine companies, 1 it has ranked as one of Europe's, and the world's, largest consumer-goods companies. Its sales of $45,679 million in 2000 ranked it fifty-fourth by revenues in the Fortune 500 list of largest companies for that year.
A Complex Organization
Unilever was an organizational curiosity in that, since 1929, it has been headed by two separate British and Dutch companies—Unilever Ltd. (PLC after 1981), and Unilever N.V.—with different sets of shareholders but identical boards of directors. An "Equalization Agreement" provided that the two companies should at all times pay dividends of equivalent value in sterling and guilders. There were two head offices—in London and Rotterdam—and two chairmen. Until 1996 the "chief executive" role was performed by a three-person Special Committee consisting of the two chairmen and one other director.
Beneath the two parent companies a large number of operating companies were active in individual countries. They had many names, often reflecting predecessor firms or companies that had been acquired. Among them were Lever; Van den Bergh & Jurgens; Gibbs; Batchelors; Langnese; and Sunlicht. The name "Unilever" was not used in operating companies or in brand names. Lever Brothers and T. J. Lipton were the two postwar U.S. affiliates. These national operating companies were allocated to either Ltd./PLC or N.V. for historical or other reasons. Lever Brothers was transferred to N.V. in 1937, and until 1987 (when PLC was given a 25 percent shareholding) Unilever's business in the United States was wholly owned by N.V. Unilever's business, and, as a result, counted as part of Dutch foreign direct investment (FDI) in the country. Unilever and its Anglo-Dutch twin Royal Dutch Shell formed major elements in the historically large Dutch FDI in the United States. 2 However, the fact that all dividends were remitted to N.V. in the Netherlands did not mean that the head office in Rotterdam exclusively managed the U.S. affiliates. The Special Committee had both Dutch and British members, and directors and functional departments were based in both countries and had managerial responsibilities without regard for the formality of N.V. or Ltd./PLC ownership. Thus, while ownership lay in the Netherlands, managerial control was Anglo-Dutch.
The organizational complexity was compounded by Unilever's wide portfolio of products and by the changes in these products over time. Edible fats, such as margarine, and soap and detergents were the historical origins of Unilever's business, but decades of diversification resulted in other activities. By the 1950s, Unilever manufactured convenience foods, such as frozen foods and soup, ice cream, meat products, and tea and other drinks. It manufactured personal care products, including toothpaste, shampoo, hairsprays, and deodorants. The oils and fats business also led Unilever into specialty chemicals and animal feeds. In Europe, its food business spanned all stages of the industry, from fishing fleets to retail shops. Among its range of ancillary services were shipping, paper, packaging, plastics, and advertising and market research. Unilever also owned a trading company, called the United Africa Company, which began by importing and exporting into West Africa but, beginning in the 1950s, turned to investing heavily in local manufacturing, especially brewing and textiles. The United Africa Company employed around 70,000 people in the 1970s and was the largest modern business enterprise in West Africa. 3 Unilever's total employment was over 350,000 in the mid-1970s, or around seven times larger than that of Procter & Gamble (hereafter P&G), its main rival in the U.S. detergent and toothpaste markets.
A World-wide Investor
An early multinational investor, by the postwar decades Unilever possessed extensive manufacturing and trading businesses throughout Europe, North and South America, Africa, Asia, and Australia. Unilever was one of the oldest and largest foreign multinationals in the United States. William Lever, founder of the British predecessor of Unilever, first visited the United States in 1888 and by the turn of the century had three manufacturing plants in Cambridge, Massachusetts, Philadelphia, and Vicksburg, Mississippi. 4 The subsequent growth of the business, which was by no means linear, will be reviewed below, but it was always one of the largest foreign investors in the United States. In 1981, a ranking by sales revenues in Forbes put it in twelfth place. 5
Unilever's longevity as an inward investor provides an opportunity to explore in depth a puzzle about inward FDI in the United States. For a number of reasons, including its size, resources, free-market economy, and proclivity toward trade protectionism, the United States has always been a major host economy for foreign firms. It has certainly been the world's largest host since the 1970s, and probably was before 1914 also. 6 Given that most theories of the multinational enterprise suggest that foreign firms possess an "advantage" when they invest in a foreign market, it might be expected that they would earn higher returns than their domestic competitors. 7 This seems to be the general case, but perhaps not for the United States. Considerable anecdotal evidence exists that many foreign firms have experienced significant and sustained problems in the United States, though it is also possible to counter such reports with case studies of sustained success. 8
During the 1990s a series of aggregate studies using tax and other data pointed toward foreign firms earning lower financial returns than their domestic equivalents in the United States. 9 One explanation for this phenomenon might be transfer pricing, but this has proved hard to verify empirically. The industry mix is another possibility, but recent studies have suggested this is not a major factor. More significant influences appear to be market share position—in general, as a foreign owned firm's market share rose, the gap between its return on assets and those for United States—owned companies decreased—and age of the affiliate, with the return on assets of foreign firms rising with their degree of newness. 10 Related to the age effect, there is also the strong, but difficult to quantify, possibility that foreign firms experienced management problems because of idiosyncratic features of the U.S. economy, including not only its size but also the regulatory system and "business culture." The case of Unilever is instructive in investigating these matters, including the issue of whether managing in the United States was particularly hard, even for a company with experience in managing large-scale businesses in some of the world's more challenging political, economic, and financial locations, like Brazil, India, Nigeria, and Turkey.
The story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. — Geoffrey Jones
Finally, the story of Unilever in the United States provides rich new empirical evidence on critical issues relating to the functioning of multinationals and their impact. It raises the issue of what is meant by "control" within multinationals. Management and control are at the heart of definitions of multinationals and foreign direct investment (as opposed to portfolio investment), yet these are by no means straightforward concepts. A great deal of the theory of multinationals relates to the benefits—or otherwise—of controlling transactions within a firm rather than using market arrangements. In turn, transaction-cost theory postulates that intangibles like knowledge and information can often be transferred more efficiently and effectively within a firm than between independent firms. There are several reasons for this, including the fact that much knowledge is tacit. Indeed, it is well established that sharing technology and communicating knowledge within a firm are neither easy nor costless, though there have not been many empirical studies of such intrafirm transfers. 11 Orjan Sövell and Udo Zander have recently gone so far as to claim that multinationals are "not particularly well equipped to continuously transfer technological knowledge across national borders" and that their "contribution to the international diffusion of knowledge transfers has been overestimated. 12 This study of Unilever in the United States provides compelling new evidence on this issue.
Lever Brothers In The United States: Building And Losing Competitive Advantage
Lever Brothers, Unilever's first and major affiliate, was remarkably successful in interwar America. After a slow start, especially because of "the obstinate refusal of the American housewife to appreciate Sunlight Soap," Lever's main soap brand in the United Kingdom, the Lever Brothers business in the United States began to grow rapidly under a new president, Francis A. Countway, an American appointed in 1912. 13 Sales rose from $843,466 in 1913, to $12.5 million in 1920, to $18.9 million in 1925. Lever was the first to alert American consumers to the menace of "BO," "Undie Odor," and "Dishpan Hands," and to market the cures in the form of Lifebuoy and Lux Flakes. By the end of the 1930s sales exceeded $90 million, and in 1946 they reached $150 million.
By the interwar years soap had a firmly oligopolistic market structure in the United States. It formed part of the consumer chemicals industry, which sold branded and packaged goods supported by heavy advertising expenditure. In soap, there were also substantial throughput economies, which encouraged concentration. P&G was, to apply Alfred D. Chandler's terminology, "the first mover"; among the main followers were Colgate and Palmolive-Peet, which merged in 1928. Neither P&G nor Colgate Palmolive diversified greatly beyond soap, though P&G's research took it into cooking oils before 1914 and into shampoos in the 1930s. Lever made up the third member of the oligopoly. The three firms together controlled about 80 percent of the U.S. soap market in the 1930s. 14 By the interwar years, this oligopolistic rivalry was extended overseas. Colgate was an active foreign investor, while in 1930 P&G—previously confined to the United States and Canada—acquired a British soap business, which it proceeded to expand, seriously eroding Unilever's market share. 15
The soap and related markets in the United States had a number of characteristics. Although P&G had established a preponderant market share, shares were strongly contested. Entry, other than by acquisition, was already not really an option by the interwar years, so competition took the form of fierce rivalry between incumbent firms with a long experience of one another. During the 1920s and the first half of the 1930s, Lever made substantial progress against P&G. Lever's sales in the United States as a percentage of P&G's sales rose from 14.8 percent between 1924 and 1926 to reach almost 50 percent in 1933. In 1930 P&G suggested purchasing Lever in the United States as part of a world division of markets, but the offer was declined. 16 Lever's success peaked in the early 1930s. Using published figures, Lever estimated its profit as a percentage of capital employed at 26 percent between 1930 and 1932, compared with P&G's 12 percent.
Countway's greatest contribution was in marketing. During the war, Countway put Lever's resources behind Lux soapflakes, promoted as a fine soap that would not damage delicate fabrics just at a time when women's wear was shifting from cotton and lisle to silk and fine fabrics. The campaign featured a variety of tactics, including washing demonstrations at department stores. In 1919 Countway launched Rinso soap powder, coinciding with the advent of the washing machine. In the same year, Lever's agreement with a New York agent to sell its soap everywhere beyond New England was abandoned and a new sales organization was established. Finally, in the mid-1920s, Countway launched, against the advice of the British parent company, a white soap, called "Lux Toilet Soap." J. Walter Thompson was hired to develop a marketing and advertising campaign stressing the glamour of the new product, with very successful results. 17 Lever's share of the U.S. soap market rose from around 2 percent in the early 1920s to 8.5 percent in 1932. 18 Brands were built up by spending heavily on advertising. As a percentage of sales, advertising averaged 25 percent between 1921 and 1933, thereby funding a series of noteworthy campaigns conceived by J. Walter Thompson. This rate of spending was made possible by the low price of oils and fats in the decade and by plowing back profits rather than remitting great dividends. By 1929 Unilever had received $12.2 million from its U.S. business since the time of its start, but thereafter the company reaped benefits, for between 1930 and 1950 cumulative dividends were $50 million. 19
Many foreign firms have experienced significant and sustained problems in the United States. — Geoffrey Jones
After 1933 Lever encountered tougher competition in soap from P&G, though Lever's share of the total U.S. soap market grew to 11 percent in 1938. P&G launched a line of synthetic detergents, including Dreft, in 1933, and came out with Drene, a liquid shampoo, in 1934 both were more effective than solid soap in areas of hard water. However, such products had "teething problems," and their impact on the U.S. market was limited until the war. Countway challenged P&G in another area by entering branded shortening in 1936 with Spry. This also was launched with a massive marketing campaign to attack P&G's Crisco shortening, which had been on sale since 1912. 20 The attack began with a nationwide giveaway of one-pound cans, and the result was "impressive." 21 By 1939 Spry's sales had reached 75 percent of Crisco's, but the resulting price war meant that Lever made no profit on the product until 1941. Lever's sales in general reached as high as 43 percent of P&G's during the early 1940s, and the company further diversified with the purchase of the toothpaste company Pepsodent in 1944. Expansion into margarine followed with the purchase of a Chicago firm in 1948.
The postwar years proved very disappointing for Lever Brothers, for a number of partly related reasons. Countway, on his retirement in 1946, was replaced by the president of Pepsodent, the thirty-four-year-old Charles Luckman, who was credited with the "discovery" of Bob Hope in 1937 when the comedian was used for an advertisement. Countway was a classic "one man band," whose skills in marketing were not matched by much interest in organization building. He never gave much thought to succession, but he liked Luckman. 22 This proved a misjudgment. With his appointment by President Truman to head a food program in Europe at the same time, Luckman became preoccupied with matters outside Lever for a significant portion of his term, though perhaps not to a sufficient degree. Convinced that Lever's management was too old and inbred, he dismissed about 15 percent of the work force soon after taking office, and he completed the transformation by moving the head office from Boston to New York, taking only around one-tenth of the existing executives with him. 23 The head office, constructed in Cambridge by Lever in 1938, was subsequently acquired by MIT and became the Sloan Building.
Luckman's move, which was supported by a firm of management consultants, the Fry Organization of Business Management Experts, was justified on the grounds that the building in Cambridge was not large enough, that it would be easier to find the right personnel in New York, and that Lever would benefit by being closer to the large advertising agencies in the city. 24 There were also rumors that Luckman, who was Jewish, was uncomfortable with what he perceived as widespread anti-Semitism in Boston at that time. The cost of building the New York Park Avenue headquarters, which became established as a "classic" of the new postwar skyscraper, rose steadily from $3.5 million to $6 million. Luckman had trained as an architect at the University of Illinois, and he was very involved in the design of the pioneering New York office.
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Unilever Case Study
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Unilever's corporate strategy is defined as a global corporation operating in nearly 190 countries and a historical establishment of strategic transformation in the FMCG - Fast Moving Consumer Goods sector. Its strategic development has evolved successfully over 130 years, and its future revolves around the strengths of its competitive advantage positioning in the FMCG industry. However, due to the transactional cost of industry convergence (IC), around 2.5 billion people use its product varieties and the investments in technologies, brand names and distribution channels. Unilever's learning curve has demonstrated logical and consistent organisation actions that can be evaluated with the suitability, acceptability and feasibility criteria of its strategic context.
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Now it’s personal: Unilever’s digital journey leads to real results for consumers and employees
What does “digital transformation” mean for an established global manufacturing enterprise like Unilever, maker of iconic brands such as Dove, Vaseline and Ben & Jerry’s?
For Unilever CIO Jane Moran, it means empowering employees to carry out the company’s mission of meeting consumers’ rising expectations.
Unilever CIO Jane Moran. (Photo courtesy of Unilever)
“What’s transformative is the way we’re connecting people, making data accessible to a broader employee base and giving them the skills to analyze the data to make better informed decisions,” Moran says. “That can have obvious benefits, like increasing efficiency, but also an impact on topics that are central to our business, such as sustainability.”
From project to platform
One of Unilever’s major goals in its digital journey is to become driven by data insights to predict the future — no mean feat for a global giant worth $55 billion, operating in 190 countries.
To realize this change, Unilever shifted from a project-based approach to a platform strategy, supported by Microsoft technology and hands-on support. Azure, Microsoft’s cloud computing service, provides the architectural backbone for the company’s digital transformation.
“That has allowed us to be much more agile and much more scalable,” says Moran. “We can’t deliver unless we have a platform-based approach and it’s very powerful. We’re really exploiting that now at Unilever.”
Digitally rewiring the supply chain
For Unilever, the capabilities of digital technology offer an opportunity to transform its supply chain to meet the needs of customers who “expect customization, on-demand products and brands with purpose,” Moran says.
“We are digitally rewiring our supply chain, focusing on generating real-time, democratized information, artificial intelligence planning, capitalizing on robotics and building digitally connected factories. All this will allow us to readily predict and respond to whatever the future throws at us,” adds Dave Penrith, Unilever chief engineer.
Unilever chief engineer Dave Penrith. (Photo courtesy of Unilever)
Unilever is using IoT (Internet of Things) and intelligent edge services in the Azure IoT platform to enable its digital twin, which is a next-generation digital model of a physical environment — in this case, a Unilever factory. The machines and equipment in the factory are connected so that they can send a mass of data — everything from temperatures to production cycle times — into the model.
This creates a representation of every machine and process, offering visibility across all levels of the plant. The collected data is mined for insights and patterns using advanced analytics and machine learning algorithms, which can predict outcomes based on historical data.
“The more data it gets, the more it learns. The more it learns, the faster it learns, and it starts to learn at an increasingly exponential rate,” Penrith says.
The algorithm can reach a level of accuracy where it can be allowed to directly control part of a machine or process. This allows operators to make better-informed decisions and frees them up from repetitive manual tasks for more value-added functions.
The digital twin has already had an impact on operations. Once Unilever switched control of moisture levels in a soap-making machine to the digital twin algorithm, operators did not want it switched off because it gave them so much control over consistency.
In another instance, the digital twin has used data on how long it takes to produce one batch of liquid, such as shampoo or detergent, to predict the correct order of processes in order to get the most efficient batch time. The less time each batch takes, the higher the production capacity of the plant, fully utilizing the asset and avoiding having to invest in capability elsewhere.
The digital twin solution was custom-built by Unilever’s engineering team in partnership with The Marsden Group, a Microsoft partner, and is hosted on Microsoft’s Azure platform.
Right now, Unilever is operating eight digital twins across North America, South America, Europe and Asia. The company is streaming data from 15 of its 300 global plants, with plans to connect 70 factories by the end of the year and another 100 or so in 2020 – “everything from soap to soup,” Penrith says.
Digital tools allow employees to easily visualize and interpret data.
Diving into data
In its mission to become data-insights driven, Unilever is using Power BI, a business analytics tool, to help employees access the data they need. Employees can use Power BI to visualize data in whatever way works for them to solve the problem they’re facing, and it also allows them to create their own reports, rather than relying on a technology team.
Being able to uncover data and visualize it in Power BI has allowed Unilever to increase productivity by eliminating false or unimportant alerts on production lines. Previously, operators were responding to 3,000 alerts every day in this complex site, each of which took a few minutes to assess, acknowledge and clear. This put operators into constant reactive mode and slowed down production lines. Unilever has been able to reduce the number of alerts requiring action by 90% per day, ensuring far fewer interruptions and more timely interventions.
Power BI is just one tool in an interconnected system that cultivates the “democratization of data,” says Penrith. “With Power BI connected to all our historical data, live data, analytics and models, our people get real-time intelligence, all sitting in Microsoft Teams, with conversation happening all the time so our employees and factories can support and collaborate with each other.”
Empowering with PowerApps
A big part of that interconnected system is finding ways to help people fix their own issues. One tool the company is using to achieve this is Microsoft PowerApps, which allows employees to build custom apps themselves, without a developer.
For example, one Unilever factory quality assurance employee saw a demo for PowerApps — and then created a quality assurance PowerApp herself.
The app is now available in all of Unilever’s factories, a vast upgrade from the manual process that was previous used for quality checks. The app enables real-time adjustment to the manufacturing process and saves time, freeing up employees for more valuable tasks. It also saves paper, contributing to Unilever’s sustainability mission.
A Unilever factory in Valinhos, Brazil.
Connecting a global team
Unilever also wanted to offer its people — nearly 155,000 employees worldwide — the tools to further connect with one another and share lessons and ideas. Unilever uses Microsoft 365, a bundle of services that includes Windows 10, as well as productivity apps such as SharePoint, Outlook, Word, PowerPoint and Excel, and collaboration and communication tools such as Teams and Yammer.
This suite of tools has made a big impact on productivity and collaboration, according to Moran.
“Using digital tools like Teams and Yammer have really helped our organization to collaborate and share, and you can’t appreciate how great that is,” she says. “It’s taken off at the top of our company, and now everyone is using this to share wonderful stories about what they’re doing every day. It has allowed everyone to have a voice.”
For Penrith, Microsoft Teams has had a major impact on communication. The company created a global Teams environment for all Unilever engineers that allows them to connect and share knowledge.
“That’s been a real game changer,” he says. “Overnight, we connected 2,000 engineers, most of whom may never really have spoken to each other before … it takes away any false boundaries that people may have, and it links colleagues from around the whole world.”
Penrith has a blog area within Teams where everyone can reply to everyone else, and they can also contact him directly on the platform. Penrith now spends more time on Teams than on email and has seen a 60% to 70% drop in the number of emails arriving to his inbox.
Unilever’s digital transformation empowers employees to carry out the company’s mission of meeting consumers’ rising expectations.
Digital enables sustainability, too
Unilever’s digital conversion has also helped to support the company’s commitment to sustainability, particularly in terms of energy efficiency.
One example is the amount of energy used at factories that make Dove soap. Unilever has used Teams to set up a community for Dove factories where they can access energy usage data for all factories, as well as share best practices for conserving energy. Everyone in the community can see how much energy each factory uses per batch of Dove soap and work together on reducing that usage.
Unilever’s technological transformation has already resulted in substantial success across the organization, from the supply chain to research and development, human resources, sales, finance, logistics and more, supporting the company’s ultimate goal of serving consumers.
“We are creating a culture and organization which is data-intelligent across our end-to-end supply chain, supported with the data, analytics and insights to make smarter, faster decisions to understand, anticipate and exceed consumer expectations,” says Penrith.
At the Microsoft Inspire 2019 conference , Microsoft’s executive vice-president of Worldwide Commercial Business, Judson Althoff, spoke to Unilever executives about how Microsoft technology is fueling Unilever’s digital transformation. Above, Althoff greets employees at a Unilever factory in Valinhos, Brazil .
A forward-looking supply chain using demand forecasting
Tomorrow’s demands, forecasted today.
Call for change
Looking out to see within
A leader in food marketing and distribution saw an opportunity to reimagine its supply chain management.
Accenture introduced the idea that by using unified view of demand, the company could develop a supply chain that anticipates and pivots around obstacles.
The goal was to combine internal data with new external data that had emerged during the pandemic to gain greater visibility and flexibility .
From there, the company could scale the new solution across all of its operational sites to better inform inventory position and supply-side dynamics, future-proofing the company’s operations and giving it an edge over competitors.
When tech meets human ingenuity
Stepping towards the future
Accenture proposed a five-week engagement to prove the value of unified view of demand by focusing on analytics and insights.
Accenture combined internal data (like sales and inventory) and external data (like weather and restaurant reservations) into an AI-driven solution that could easily forecast and improve demand sensing.
From there, Accenture replicated and expanded unified view of demand to additional sites while live piloting the solution against the company’s existing supply chain process and system. Following the new solution’s success, Accenture outlined the specific steps needed to implement unified view of demand, from design flow to staffing to project timeline and beyond.
A valuable difference
Test. Analyze. Refine. Repeat.
After piloting unified view of demand across several sites, the company discovered that it could improve forecast errors by roughly 6-8 points, which could lead to $100-$130M in potential benefits .
Accenture also brought operational excellence to the table by introducing AI-enabled exception-based management.
Given the tens of thousands of stock-keeping units (SKUs) the company faces in each iteration, the proposed solution enables planners to focus solely on the SKUs with critical need, saving time and making the entire process more robust.
Now, the company’s leadership is looking for other areas to innovate which has led to a culture of continuous learning.
Today, the unified view of demand forecasting model is an AI-powered solution that can inform demand forecasting and better prepare the company for the future.
Setting up Unilever Foundry and sourcing start-ups and tech companies to solve major business challenges
- Strategic Start-up Engagement
To help capture major new growth opportunities and solve strategic challenges for Unilever through start-up partnerships
- Capability Design : Co-created the operating model, capabilities, governance and KPIs for Unilever to enable Unilever to test and scale new business models and technologies through partnership
- Start-up Radar : Continuous search for the world’s best start-up partners leveraging our proprietary database and network
- Start-up Partnership Execution : Help to execute a rigorous partnership piloting and scaling methodology
A 6 year partnership to date with Unilever partnering with >50 start-ups including:
- Oral care division partnered to launch a digital health service in Europe
- European Supply Chain partnered with freight forwarding solution to deliver huge efficiencies
- Cif partnered with Helpling to launch on-demand cleaning services (also resulting in an investment by Unilever Ventures)
You delivered well in excess of our expectations. The quality of the programme and output were far, far ahead of what they would’ve been had you not been involved
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Identifying new digital revenue growth opportunities and defining the propositions and partners to deliver them at scale
Creating the strategic vision and commercial roadmap for a new digital platform
Multinational Drinks Company
Designing the process for systematically engaging with start-ups at scale
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October 04, 2022
Accenture Collaborates with Mars to Develop “Factory of the Future” Using AI, Cloud, Edge and Digital Twins
NEW YORK; Oct. 4, 2022 – Accenture (NYSE: ACN) is working with Mars, the global leader in confectionary, food, and pet care products and services, to transform and modernize its global manufacturing operations with artificial intelligence (AI), cloud, edge technology and digital twins.
Accenture and Mars have been trialing digital twins for Mars’ manufacturing operations since late 2020. Digital twins are virtual representations of machines, products, or processes. Fed with real-time data, they can predict and optimize production processes and equipment performance, from reliability to quality to energy efficiency. Applied to its manufacturing plants, digital twins will enable Mars to simulate and validate the results of product and factory adjustments before allocating time and resources in the physical space.
The companies tested a digital twin to reduce instances of over-filling packages, a common problem in the food industry. The digital twin gave Mars a bird’s-eye view of the production lines at one of its factories in Illinois. The twin fed sensor data from manufacturing machinery into a predictive analytics model, which allowed factory line operators to monitor events in real-time and adjust the filling process. After the successful test, Accenture and Mars introduced the solution across the U.S. and developed similar solutions for its pet care business in Europe and China. Under the new agreement, Accenture and Mars will work together to apply digital twin technology and models to the company’s manufacturing facilities globally. This will give Mars factory line operators real-time insights into current and predictive performance. Mars plans to apply them to dozens of use cases over the next three years. Over the next two years, Accenture and Mars will create a new cloud platform for manufacturing applications, data and artificial intelligence (AI) to lay the foundation for its vision of the “Factory of the Future.” The new platform will provide next-generation robotics, AI and automation capabilities at the edge to make Mars manufacturing operations significantly more efficient and address essential sustainability goals such as water stewardship and reducing waste and total greenhouse gas emissions. William Beery, vice president, and global CIO at Mars Wrigley said, “Our collaboration with Accenture, combined with our partnership with Microsoft, enables us to scale digital twin technology to reach this goal, delivering not just significant cost savings and sustainability, but preparing our manufacturing operations for the future of work.” Larry Thomas, a senior managing director at Accenture and client account lead for Mars adds, “Our work with Mars is about using the power of data, cloud and edge computing to modernize factories, boost business agility in response to change, and put power in the hands of Mars Associates so they can make informed decisions faster.” Accenture brings cloud, engineering, manufacturing, and supply chain capabilities to the project. It also works closely with Microsoft to leverage the Azure platform and Accenture’s proprietary edge accelerators. Earlier this year, Accenture was named Microsoft’s 2022 Manufacturing & Supply Chain Partner of the Year. Thiago Veiga, senior director of Digital Supply, R&D & Procurement at Mars Inc., said, “We at Mars are constantly looking for innovative and sustainable ways to create value in our end-to-end supply chain, and digital manufacturing is a key priority.” Simon Osborne, a managing director at Accenture leading its digital twin work with Mars, said, “The problems we’re solving aren’t new; what’s new is how we use advanced technologies to get real-time data into operators’ hands and apply AI to help them make decisions before problems occur. While many companies are beginning to experiment with digital twins, what sets this project apart is the speed and scaling of the technology across Mars’ operations globally.” About Accenture Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialized skills across more than 40 industries, we offer Strategy and Consulting, Technology and Operations services and Accenture Song — all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Our 721,000 people deliver on the promise of technology and human ingenuity every day, serving clients in more than 120 countries. We embrace the power of change to create value and shared success for our clients, people, shareholders, partners and communities. Visit us at www.accenture.com . About Mars, Incorporated For more than a century, Mars, Incorporated has been driven by the belief that the world we want tomorrow starts with how we do business today. This common purpose unites our 140,000+ Associates. It is at the center of who we are as a global, family-owned business, and it fuels how we are transforming, innovating, and evolving to make a positive impact on the world. Every year, our diverse and expanding portfolio of quality confectionery, food, and pet care products and services delight millions of people and supports millions of pets. With almost $45 billion in annual sales, we produce some of the world’s best-loved brands including Ben’s Original™, CESAR®, Cocoavia®, DOVE®, EXTRA®, KIND®, M&M’s®, SNICKERS®, PEDIGREE®, ROYAL CANIN®, and WHISKAS®. We are creating a better world for pets through nutrition, breakthrough programs in diagnostics, wearable health monitoring, DNA testing, pet welfare and comprehensive veterinary care with AniCura, BANFIELD™, BLUEPEARL™, Linnaeus and VCA™. We know we can only be truly successful if our partners and the communities in which we operate prosper. The Mars Five Principles – Quality, Responsibility, Mutuality, Efficiency and Freedom – inspire our Associates to act every day to help create a better world tomorrow in which the planet, its people and pets can thrive. For more information about Mars, please visit www.mars.com . Join us on Facebook , Twitter , Instagram , LinkedIn and YouTube . # # # Contacts: Tara Burns Accenture +44 78 5043 5158 [email protected] Michelle Jahnke Mars +1 503-360-6796 [email protected] Copyright © 2022 Accenture. All rights reserved. Accenture and its logo are trademarks of Accenture.