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  First Thoughts

    Dan Gilmore


    Supply Chain Digest

June 4, 2021

The Habits of Gartner Top 25 Supply Chains

Purpose, Customer-Driven Transformation, and Digitization

Last week, we took our annual look at the Gartner Top 25 Supply Chains, with a graphic showing not only the just released 2021 edition but how that compared to the top 25 in 2020 and 2019. (See Understanding the Gartner Top 25 Supply Chains 2021.)

I also reviewed again the methodology Gartner uses to construct the top 25 list, which had some modest changes from 2020.

Gilmore Says....

"Overall, the supply chains most able to adapt to shifting business conditions won in the marketplace," Gartner says.

What do you say?

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The quick highlights: to be considered, you had to be at least a $12 billion, publicly traded company in 2020 with a significant physical supply chain.

Amazon, Apple, McDonald's, Procter & Gamble and Unilever all remain as "supply chain masters" - a sort of hall of fame - and thus were not ranked in the top 25 list.

For the second year in a row, Cisco topped the list, followed by (2) Colgate-Palmolive; (3) Johnson & Johnson; (4) Schneider Electric; and (5) Nestle. In fact, the top 5 was unchanged from 2020.

As it has done for several years at least now, Gartner offers three areas that top 25 caliber supply chain are putting special focus on. Those are:

Building the Purpose-Driven Organization: Of course many years ago Rick Warren gave us "the purpose-driven life." A few years ago, Unilever came up with a few "purpose-driven brands." (I wondered at the time if my mayonnaise really needed a purpose beyond making my sandwich taste better.)

"If ever there was a time that supply chain has operated at the intersection of people, planet and purpose, it is now," Gartner says, adding "Now, with the environmental sustainability domain a hotbed of activity, there is an opportunity to solve longer-term environmental and social challenges."

Gartner says that corporate plans to achieve more ambitious sustainability goals look more prescriptive than they have in years past, and that most investments are now made to benefit both planet and business.

Sustainability and diversity are increasingly key factors in both B2C and B2B buying decisions, Gartner observes. Some companies are "even leveraging product marketing budgets to fund their [sustainability] work and integrating it into brand messages, instead of treating environmental, social and governance (ESG) investments as a purely operational cost."

I will note that an ESG score, derived mostly from third-party sources, represented 10% of the top 25 calculation this year.

Customer-Driven Business Transformation: This one intrigued me, as the business schools have been talking about becoming more customer-driven for decades - so what is new here in 2021

Gartner notes the well-known, likely permanent surge in ecommerce volumes in 2020 stemming from the pandemic, which really just accelerated the existing trend. It also points out that many consumer brand companies needed to rapidly expand direct-to-consumer strategies as many of their retail channels dried up.

It says that some retail supply chain chiefs are adding real estate and site construction to their responsibilities to signal that "unified commerce" is the future, across a much different distribution network and store footprint.

On the consumer goods side, Gartner says a number of companies reduced SKU count by as much as a third - in part to squeeze more throughput out of a smaller number of SKUs in the surge of demand seen for many products.

"Overall, the supply chains most able to adapt to shifting business conditions won in the marketplace," Gartner says, adding "We expect this to be a winning trait for the foreseeable future."

I guess I can agree while saying this isn't exactly something most of us don't know. I frankly would expect something a little more insightful or nuanced from Gartner.

The Digital-First Supply Chain: Most everyone is chasing digitization strategies, though as I have written a number of times, a definition of digitization remains elusive.

Like most, Gartner offers examples of new technology adoption as measures of going digital. So, for example, it notes "In planning, artificial intelligence (AI) and machine learning (ML) analyze supply constraints in real time and balance market share, profit and customer support objectives."

It also notes the accelerated adoption of automation/robotics in distribution, as well as leading manufacturers now using centralized, remote factory monitoring.

Gartner, however, observes the change management and skill set challenges associated with these new technologies.

In concludes by writing that "Supply chain leaders position new digital technologies as a means for employees to stop spending time on manual, non-value-added activities, so they can focus on customer value."

So there are the top three things supply chain leaders are focused on, Gartner says. Given the space limitations, each is presented at a very high level, but has references to more in-depth Gartner research.

That said, I think this summary of what supply chain leaders are doing 2021 is not as prescriptive as it has been in years past. Maybe we'll get some better insight next week from some examples of what top 25 companies are doing in their own supply chains.

What do you think of Gartner's three practices of supply chain leaders? How could it be done better? Let us know your thought at the Feedback section below.

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