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  - May 29, 2012 -  

Gartner Releases Top 25 Supply Chain List for 2013

 

Apple Comes in a Number 1 for Third Year in a Row, as Unilever Makes Big Move; Explaining the Methodology

 
     
     
  by SCDigest Editorial Staff  
     
 

At its recent supply chain executive conference in Scottsdale, AZ, analyst firm Gartner released its list of the top 25 supply chains for 2013, continuing the tradition of AMR, which Gartner acquired in 2010. It is the ninth such list.

SCDigest Says:
In 2013, leaders are embracing a new imperative for growth, realizing they have to get smarter about how they do it, Gartner finds.

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For the third year in a row, Apple topped the rankings. while McDondald's jumped to the number 2 spot, switching places with number 3 Amazon.com in 2013. Unilever (up from just 10 last year) at number 4 and Intel (up from number 7) round out the top 5.

Dell, meanwhile, fell from the fourth spot in 2012 to number 11 in this year's rankings. New to the top 25 this year are Lenova, Ford and Qualcomm. Dropping off the list are Research in Motion, HP, and Kimberly-Clark.

Many supply chain professionals see the list, but have no idea how it is actually constructed. As we explain below, the results are based on a combination of both objective and subjective inputs.

On the objective side, Gartner uses three pieces of financial data: Return on Assets (ROA), inventory turns, and revenue growth. ROA and revenue are based on three-year averages. The total weighting for the three financial areas are 25%, 15%, and 10% respectively, or 50% of the total score between them.

Of course, this approach does not really consider that different characteristics of different industry sectors, where metrics such as inventory turns and return on assets can vary dramatically. Revenue growth, it could certainlybe argued, is more dependent on secular trends and product portfolios rather than supply chain, but as always, the question is, what would be a better approach?

Apple, for example, clearly benefitted in the rankings from its three-year average annual revenue growth of more than 50%.

25% is then based on the opinion of Gartner’s own analysts, and another 25% is based on "peer" opinions, coming from a survey of supply chain professionals. This year, 172 such peer responses were received, about the same as last year.

The top 25 list for 2013, along with how each company ranked in 2012, is shown below.

 

Gartner's Top 25 Supply Chains for 2013

 

2013 Rank Company

2012
Rank
1 Apple 1
2 McDonald's 3
3

Amazon

 2
4 Unilever 10
5 Intel 7
6 Procter & Gamble 5
7 Cisco Systems 8
8 Samsung 13
9 Coca-Cola Co. 6
10 Colgate-Palmolive 11
11 Dell 4
12 Inditex (Zara) 15
13 Walmart 9
14 Nike 14
15 Starbucks 16
16 Pepsico 12
17 H&M 17
18 Caterpillar 20
19 3M 21
20 Lenovo Not on List
21 Nestle 18
22 Ford Not on List
23 Cummins 23
24 Qualcomm Not on List
25 Johnson & Johnson 22


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Gartner analysts highlighted three key trends for supply chain leaders this year:

A New Frontier of Performance

Many companies are working on building out the foundational components of an end-to-end supply chain across disparate businesses, focusing on improving core supply chain functions, and creating more common processes and systems across them, Gartner said. More-advanced companies describe a wide range of initiatives that build on the foundation, including end-to-end supply chain segmentation, simplification, cost-to-serve analytics, multi-tier visibility and supply network optimization.

"What differentiates the top companies is where they are in the life cycle of these innovations," said Stan Aronow, a research director at Gartner. "The leaders have gone beyond the theory and are now deploying the capabilities that others are just starting to consider. In doing so, they are finding new and creative ways to use these capabilities, exploring synergies and opportunities they hadn't necessarily anticipated in advance. Leaders are discovering that the combination of capabilities they are now implementing brings them to a new frontier of performance, and affords them an entirely new toolbox with which they can orchestrate the optimization of their business and leap ahead of the competition."

A New Imperative for Smarter Growth

Against a backdrop of slow growth, many companies might have been expected to retrench and slip back to focusing their supply chains solely and exclusively on delivering cost reductions and efficiency gains to corporate bottom lines. Instead, in 2013, leaders are embracing a new imperative for growth, realizing they have to get smarter about how they do it, Gartner finds.

"At leading companies in diverse industries, the supply chain organization is no longer narrowly focused on driving efficiencies and cost cutting; it sees itself, and is seen by its CEO, as a growth enabler," said aid Debra Hofman, managing vice president at Gartner. . "Part of 'getting smarter' about growth is partnership across the business. Leading high-tech and consumer product companies, for instance, are approaching new markets with cross-functional teams that include sales, marketing, operations and IT to holistically design a synchronized entry strategy: starting with the customer and designing the right product, pricing, margin targets, service levels, and supply chain network design and tradeoffs that will all work together to achieve the goal."

Getting to the Heart of Talent

Acquiring, developing and retaining supply chain talent continues to be a major focus area for companies, and Gartner continues to publish extensive research in this area. Companies are investing time and resources in expanded university relationships, rotational programs, enhanced career progression planning specific to supply chain, multichannel learning options, supply chain certification programs, supply chain leadership development, and others.

"Leading supply chain organizations are going beyond specific talent initiatives to look at the fundamentals of motivation in their supply chain teams," said Aronow. "For them it's about engaging hearts, not just minds; it's about igniting passion and excitement for the work, not just compliance. These organizations use terms such as wanting to be a 'destination company,' or an 'employer of choice' in supply chain. They're finding ways to connect individual activity not only to their corporate goals, but to a larger aspirational goal."

 

Any reaction to this year’s top 25 list? Who should be on that isn't, or who is on that should be off? How if at all could the methodology be improved? Let us know your thoughts at the Feedback button below.


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