SCDigest editorial staff
The News: Market research and consulting firm Cannondale Associates has just released its 2006 PoweRankings report, which measures the perceptions of consumer goods companies and retailers about each other along a number of variables, including supply chain effectiveness.
The Impact: As usual, Procter & Gamble led the CPG supply chain rankings, and Wal-Mart the retailers, both by almost astoundingly wide margins. The questions: is there bias in the perceptions because of their dominant size, or our their supply chains really that much better? The supply chains of several other CPG companies and retailers seem to be on the move, though.
On a more general retail note, Cannondale observes that low end and high end retailers appear to be having the most success, with those in the “mass middle market” struggling for both growth and profits. The report also suggests collaboration is one of the most fundamental determinants of overall success between specific manufacturers and retailers, and that operating against a common metric around in-store performance, can drive real improvements.
The Story: Cannondale Associates has just released its 2006 Power Rankings, which rate the perceptions of CPG manufacturers and grocery, mass merchandiser, and drug store chains about each other.
The report is available only in hard copy, but can be requested from Cannondale (go to 2006 PoweRanking Results for a summary article and contacts for the full report).
The research goes across a number of product, marketing and operations areas, and is based in input from dozens of leading manufacturers and retailers.
Each year, supply chain management effectiveness is one of the attributes measured.
On the CPG side, Procter & Gamble was again the clear leader, cited by 59% of retail respondents as having one of the top 3 CPG supply chains, while the next highest, Kraft, was cited by only 32% of respondents.
A graphic of this year’s CPG results is shown below:
Source: Cannondale Associates PoweRanking Survey 2006
While P&G dominates again this year, and actually increased its percentage by 4 points over 2005, others, such as Pepsi and Unilever, also made large gains.
On Pepsi, one respondent is quoted as saying, “PepsiCo is coming to us with a more integrated program on supply chain. While they still have some room for improvement, particularly in their bottling systems, overall they are much more flexible than they used to be.”
Another cites improvements at Kellogg’s by noting, “Kellogg’s has done some innovated supply chain initiatives with new items. Their focus on speed to the shelf and their willingness to work with us to improve performance has paid off.”
Finally, one retailer noted that while Kimberly-Clark has always has a good supply chain, their increased “willingness to work more closely with us than they have in the past to share ideas” led to a stronger rating.
On the retail side, overall it was a rout, as Wal-Mart was cited by no less than 96.1% of manufacturers as having one of the top 3 retail supply chains, versus a distant 31% for second place Target.
These two were followed by Costco (22%), Kroger (19.6%), Publix (17%), Meijer (14%), HEB (12%), Safeway (8.7%), Wegmans (7.8%), and CVS (4.9%).
Both Kroger and Publix, however, rose more than 3 percentage points from last year’s position, a significant improvement in relative terms.
Said one manufacturer: “Publix was very smart about adding distribution centers at a point when it needed to support its expansion. The new warehouse is very well run and reduces costs throughout the supply chain.”
While intriguing, this data always leaves some questions, especially about perceptions versus reality, and what really makes a great supply chain in the minds of consumer goods companies and retailers.
But since in general perception is reality, this is a good gauge of the leaders in the consumer-to-retail supply chain.
What are your observations on the 2006 PowerRankings? Do you think market position causes a bias in supply chain perceptions? Or did supply chain effectiveness lead to the market position? Let us know your thoughts.
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