Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - June 12, 2012 -  

Gartner Releases Top 25 Supply Chain List for 2012

 

Apple Comes in a Number 1 for Second Year in a Row; Explaining the Methodology

 
     
     
  by SCDigest Editorial Staff  
     
 

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

SCDigest Says:
Leaders are architecting supply chains globally, but providing capabilities and executing more locally, Gartner says.

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For the second year in a row, Apple topped the rankings. Amazon.com jumped to number 2 this year from the fifth spot in 2011.

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.

25 percent 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, 173 such peer responses were received.

It should be noted that the financial components, especially revenue growth, can be variable and significantly impact a company’s position. As an easy example, cell phone maker Research in Motion (RIM) dropped from number 4 in 2011 to 19 this year, no doubt in large part due to the struggles RIM has had with its product line-up given competition from Apple and Android smart phones that have slowed revenue growth.

The top 25 list for 2012, along with how each company ranked in 2011, is shown below.

As can be seen, four companies made the top 25 that were not on the list in 2011. Those were apparel retailer H&M, industrial equipment giant Caterpillar, engine maker Cummins, and consumer packaged goods company Kimberly-Clark.

Leaving the list for 2012 were IBM, Microsoft, Tesco, and Kraft. Gartner notes that IBM and Microsoft left the top 25 because of a change in methodology that eliminates companies that have too high a percentage of revenues that comes from services versus physical products.

 

Gartner's Top 25 Supply Chains 2102

 

 

2012 Rank Company 2011 Rank
1 Apple 1
2 Amazon 5
3 McDonald's 8
4 Dell 2
5 Procter & Gamble 3
6 Coca-Cola 11
7 Intel 16
8 Cisco 6
9 Walmart 7
10 Unilever 15
11 Colgate-Palmolive 13
12 PepsiCo 9
13 Samsung 10
14 Nike 20
15 Inditex 19
16 Starbucks 22
17 H&M Not on List
18 Nestle 18
19 Research in Motion 4
20 Caterpillar Not on List
21 3M 24
22 Johnson & Johnson 21
23 Cummins Not on List
24 HP 17
25 Kimberly-Clark Not on List


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Gartner says that its research this year identified three important trends among supply chain performance leaders:

(1) Focus on Supply Chain Risk Management: Gartner notes that "that a company's ability to post industry-leading financial results year after year, despite demand and supply disruptions, is an indicator of resiliency."

(2) Use of Supply Chain Segmentation Strategies to Simplify Operations: "Supply chain segmentation has emerged as a critical enabler of supply chain simplification, delivering only the level of service required by each customer type and nothing more," Gartner says.

(3) Use of "Multi-Local" Strategies: Leaders are architecting supply chains globally, but providing capabilities and executing more locally, Gartner says.

Gartner says it wishes it had access to four other metrics to create the list: perfect order ratios and total supply chain costs (operational excellence) and time to value from investments and “return on new product launch” (innovation).

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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Until now, that is, as industrial giant 3M tells the Wall Street Journal that it has been working hard to remove a series of hairballs from its supply chain network.

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