sc digest
June 15, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Another View of the Best Supply Chains bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts




first thought


Supply Chain Graphic of the Week
Retail Chargeback Levels as a Percent of Vendor Sales


UPS Union Says Yes to Strike Threat

US Boxcar Shortage as CSX Leaves Pool
IMO Sulfur Rule Change to Bankrupt Cargo Ship Lines?
Inflation is the Supply Chain is Growing


May 29, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!

Holste's Blog: Shippers Looking To Increase System Capacity Are Surprised To Find It May Already Exist!


Weekly On-Target Newsletter:
June 13, 2018 Edition

Cartoon, Autonomous Trucks + Drivers, IMO Rules Could Bankrupt Cargo Carriers and more


Discover the power of creating a global supply chain control tower!

Planning Optimized - A Never Ending Journey
by Henry Canitz
Product Marketing & Business Development Director

There's Money in the Material
by Gary M. Barraco
Global Product Marketing
Amber Road

How to Stop Inaccurate ASNs from Stealing Sales and Eating Profits
by Kevin Harris
Director of Freight Audit
Compliance Networks

The Retail Vendor Performance
Management Bulletin


What were US logistics costs as a percent of GDP in 2016?

Answer Found at the
Bottom of the Page

Another View of the Best Supply Chains

I recently summarized both the results and the method used by Gartner to compile the Top 25 Supply Chain list for 2018, an approach first started by the former AMR Research in 2004. Gartner acquired AMR in 2009.

The list, of course, receives much interest, and companies that make it naturally tout that honor. As I noted in my column, I occasionally get calls from companies looking for advice on how to make the top 25.

Let me first say that I do not have a better way to compile a top supply chain list than the way Gartner does it. Only limited information is available for analysis - no one is sharing cost information, as just one example.


Colgate-Palmolive was the number 4 ranked supply chain overall and second highest CPG company in Gartner - but alas Colgate does not even make the Kantar top 10 list of just CPG manufacturer supply chains.


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That said, there are a number of criticisms that I think can be fairly leveled at the process. Those include:

Only large companies of $12 billion or greater revenue are considered.

The way the financial metrics are used does not necessarily connect with supply chain excellence. Does Apple's huge revenue growth really stem primarily from supply chain excellence? Should McDonald's benefit in the rankings because its business model with outsourced food service providers and daily deliveries give it a huge number of inventory turns versus most companies? Even the return on assets metric gives advantage to companies that have outsourced their supply chains and thus have a lower asset bases. But that strategy doesn't necessarily deliver a superior supply chain.

Even the so-called peer rankings, under which some 184 I assume Gartner clients rank the top supply chains (well not really the best supply chains, but those that are tops in "demand driven value network orchestration," a rather unclear criterion) is a bit suspect. How does anyone really know whether, say chemical maker BASF (which made the top 25), has a better supply chain than, say Target stores (which did not)? Is the ranking based on just public perception, vested interests in the outcome, something else?

The same observation could be made for the 42 Gartner analysts that perform a similar ranking. I think many of these analysts have a broader view of supply chain activities than the average peer group participant, but no one really knows how to rank performance across 300 supply chain candidates.

Finally, 10% of the Gartner total formula is now comprised of a corporate social responsibility (CSR) score obtained from third party sources. CSR may be a good thing, but certainly many aspects of these CSR scores are disconnected from what we normally think of as supply chain performance.

I think these are all fair critiques, yet I understand Gartner's position in terms of a lack of other data and and no obvious way to address these questions.

Well, there is actually is another way. That is to directly ask companies that should be in the know about the supply chain performance of other companies because they have on-going experience as trading partners.

That is the approach that Kantar Retail (now Kantar Consulting) has been taking for many years in its annual PoweRankings report, last delivered at the end of 2017.

The full study covers a number of company performance measures for both consumer goods manufacturers and retailers, including such areas as brand power, marketing programs, sales teams, overall business fundamentals, and more. Supply chain management is one of the categories included in the survey.

The rankings for last year, as always, were developed through the interesting methodology of asking retailers to rate manufacturers on each of these categories, and manufacturers to rank retailers on a similar set of attributes. Most major CPG companies and retailers take part, with about 80 participant companies in each group.

Both manufacturers and retailers are from the consumer packaged goods, food and beverage areas. That means manufacturers in such categories as apparel/soft goods, electronics, hard goods, etc., are not included. Similarly, the participating retailers are drawn exclusively from sectors such as mass merchandise, traditional grocery, warehouse clubs, and drug store chains that focus on consumer packaged goods sales, and does not for example include department stores or most specialty retail areas. For the last few of years, however, has been included in the retail group.

The scores represent the percentage of respondents that place a given manufacturer or retailer as having one of the top three supply chains in the industry.

So the analysis pool is limited to CPG type companies and their retail channel partners. That said, below are the top rated consumer goods supply chains for 2017:

Top CPG Supply Chain from Kantar PoweRankings Report

See Full Image

Just to be clear, the results says that 42.6% of retailers placed PepsiCo as having one of the top three CPG supply chains, as did 29.3% of retailers for number 2 Coca-Cola, etc.

Interesting, as always - and naturally leading me to wonder how these results compare to the Gartner Top 25.

The top rated overall supply chain across all companies was CPG manufacturer Unilever. It was number 5 in the Kantar rankings of just CPG companies. Colgate-Palmolive was the number 4 ranked supply chain overall and second highest CPG company in Gartner - but alas Colgate does not even make the Kantar top 10 list of just CPG manufacturer supply chains, as rated by their retail customers. There are other such discrepancies.

A somewhat similar story on the retail side, though the comparisons are more difficult:

Top Select Retailer Supply Chain from Kantar PoweRankings Report

See Full Image

Amazon has been placed in the Gartner "supply chain masters" category for consistent appearance in the top 5 of the rankings, and thus was not included in the actual top 25 for 2018. But in the Kantar rankings, based on CPG company ratings, Amazon is number 6, behind Walmart, Kroger, Costco, Publix and Target.

Of those five retail companies, only Walmart made the Gartner top 25. Target (which may or may not have been one of the companies that has called me in the past about getting in the Gartner list) gets some justice in the Kantar rankings.

How to reconcile these differences? Don't know. The methodologies are totally different, so different results should be expected. But ratings from counterparts at trading partners seems about as good an input that you can get to gauge supply chain excellence.

What is your reaction to these comparisons between the Gartner and Kantar lists? How would you improve the Gartner approach? Let us know your thought at the Feedback section below.


On Demand Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Now Available On Demand

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand


We received a number of emails on our column on our recent study of retail-vendor supply chain relationships, especially around the always controversial subject of chargebacks. Below are a few of those emails, some from our partner RetailWire.

Feedback on Use of Retail Chargebacks and Collaboration


Chargebacks are the symptom, not the problem. The problem is compliance, and it has to be fixed at the root. Chargebacks should be used exclusively to drive home the need for vendors to comply with agreed-upon requirements. The financial hit has impact on compliance. Conversely, collaboration can be achieved only between highly ethical, disciplined businesses. If either side of the transaction lacks those qualities, there will be chargebacks.


Bob Amster
Retail Technology Group


There are two types of chargebacks. One type is very legitimate and the other is simply robbery that retailers institute for themselves doing a poor job.

Three examples: My company sold to Walmart, Target and Walgreens among others. We never had a chargeback from Walmart. They gave us specific instructions of how to service them as a customer and we met their needs. Target was another story. They, of course, priced our product higher than Walmart. Every so often they would claim we were selling our products to Walmart for something less than Target so they would deduct what they thought we were charging Walmart. We were not a huge CPG company. We would fight and often lose.

Then there was Walgreens. They ran a huge nationwide promotion on our product. Bought more than we recommended. When it didn't meet their expectations, they didn't pay us.

Chargebacks to a vendor are OK and deserved when a vendor doesn't comply. But chargebacks to a vendor when the retailer makes the mistake is as bad as robbery.

Gene Detroyer
European School of Economics






This study shows that both parties feel the other party doesn't have the skill needed to collaborate, both parties feel there is a need for better tools and data visibility and they also both feel there's little interest in collaboration in general. Hmmm. So, we don't think our trading partners have the skills required, we need better data & tools, but aww, heck, we're not really all that interested in this collaboration thing, anyway.

LOL. Seriously?! These barriers are not all that new. I can remember at least back to the '90s when we also had little overall interest in collaboration. Everyone has talked about it for years. But talk is cheap. Investing in the right tools available today to capture that "dark data" and reap real-time supply chain insights must require significant skills and budget on both parties' parts, right? Not necessarily. I think this is more of an awareness issue, than a level of interest issue.

Chargebacks are probably necessary as long as we continue to operate in the way we have been for years. There will take some key disruptors in the industry to step up and take on this challenge.

Ralph Jacobson
Global Retail and CPG Sales Strategist



Q: What were US logistics costs as a percent of GDP in 2016?

A: 7.5%, as calculated in last year's State of Logistics Report from CSCMP. This year's report will be released next week.

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