The Supply Chain Top 25: Raising the bar

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September 01, 2012 - LM Editorial

Inside the numbers
In the 2012 ranking, the top five contenders include three perennials and two relative newcomers. (See table on page 14 for the complete rankings.) First is Apple, maintaining its No. 1 position despite some bumps this year, using first-to-market advantage, scale and brand to wield supply chain as a competitive weapon. Already a stellar performer on the financial metrics we use for the ranking and well-respected in the voting portion of the methodology, Apple astoundingly raised the bar even further, getting to a near-perfect score.

Both Dell and Procter & Gamble have been in the top 5 every year of the ranking. Dell, having paved the way with its configure-to-order model, has transformed itself and developed a sophisticated go-to-market strategy that tailors supply chains by segment. Procter & Gamble, an iconic supply chain thought leader, has an unparalleled ability to orchestrate demand and connect the supply chain to the shelf and its customers’ moments of truth. P&G continues to push the envelope of innovation and performance.

Amazon and McDonald’s were both new to the ranking in 2010 and have moved steadily up since then. With a three-year weighted average revenue growth approaching 40 percent, Amazon delivers consistently reliable product supply to its shoppers—no small feat given the range of products it offers, the complexity of its network, and its continued expansion into new channels and services. McDonald’s, back to double digit growth this year, gets a lot of respect from peers for its ability to deliver growth in same-store profitability while managing a more complex product portfolio driven by its McCafe line.

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Movers and shakers in the middle of the ranking include Unilever (10), Intel (7), and Nike (14), three companies that have been steadily rising on the list and leading the way for others in their global supply chain transformations with impressive results. Coca-Cola, known for its “last mile” distribution prowess, returns at No. 6 with strong peer recognition and ROA—even while it navigates the integration of its bottlers in North America. Cisco returns at No. 8, setting the pace with a robust risk management program and collaboration up and downstream in its value chain. Ranked ninth, Walmart remains a mainstay. And despite some challenges in the past year in Mexico, the company continues to get a lot of respect from peer voters for its contributions to supply chain best practices over the years.

Colgate rises to No. 11 this year on consistently industry-leading, double-digit return on assets and a strong governance model. Long a recognized leader in direct store delivery, PepsiCo (12) is collaborating with retail partners to reduce out-of-stocks at the shelf and increase the visibility and accuracy of its demand signal. Samsung (13), well known for its advanced S&OP process, continues with strong growth and profitability in a tough market. Inditex, the European-based retailer best known for its Zara brand and the tight integration between product design and supply chain, returns for the third time to the ranking at No. 15.

Rounding out the list in the 16-25 section we see a combination of newcomers, the newly-returning, and old-timers who continue to lead the way in supply chain.  We’re excited to welcome two heavy industrials among the newcomers: Caterpillar (20), an early leader in the concept of segmentation with its well-known “lane strategy,” and Cummins (23) a major player in the engine and power generation markets recognized for its best-in-class parts and service network. Leading industrials are traditionally strong in upstream supply management, including the agility required to profitably balance their long and complex supply chains against volatile demand. We look forward to seeing them share best practices with the supply chain community through the Top 25.

Two remaining newcomers come from the consumer and retail sectors. H&M, the successful Swedish retail apparel group, joins the list for the first time this year at No. 17, with a consistently high-flying ROA on top of a proprietary distribution network of centrally controlled stores. Kimberly Clark, joining at No. 25, has brought an innovative approach to logistics partnerships to North America and is now focusing on continued improvements in on-shelf availability and predictive demand planning.

Johnson & Johnson (22), the only life sciences company on the list, returns with a compelling vision for an ambitious supply chain transformation program. Hewlett-Packard (24), another perennial, runs one of the most complex supply chains in high tech, and is reaping the cost benefits from being the first PC OEM to move from coastal to Western China.

Research in Motion (RIM), the maker of BlackBerry mobile devices, fell to No. 19 this year, after a difficult 2011. Given that our methodology relies on financial metrics for 50 percent of each company’s score, this fall is not a surprise. Yet RIM also took a hit in the voting portion of the score, despite its impressive Value Chain Express strategy.

New to the ranking last year and coming back strongly this year are Starbucks (16), with a return to growth and a focus on supply chain talent; Nestle (18), focusing on supplier development and raw material sourcing strategies; and 3M (21), best known for product innovation and returning to double-digit growth and ROA.

The companies populating our Supply Chain Top 25 ranking this year are an impressive group and all have some best practice aspect of their supply chain operations that is applicable to the rest of the community of practice. In addition to each supply chain’s unique value proposition, there are commonalities that we see across them in terms of underlying characteristics and trends on where they are focusing their transformation efforts.

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