The following is a guest posting that is also published on the Supply Chain Expert Community web site.

This author recently had the opportunity to view a promotional webcast featuring Gartner analysts,  that set the framework for the upcoming designation of Gartner’s Top 25 Supply Chains in 2012. Some community readers may have viewed this webcast and had reactions to the messages delivered.  We would like to share ours.

According to Gartner, the overall criteria, among others, for being designated on this prestigious listing are supply chains that are:

• Predictable and reliable
• Flexible to changing business conditions
• Exhibit a profitable response to product demand
• Exhibit sustainable growth and satisfied customers
• Move from words on a PowerPoint slide to attitudes and demonstrated practices

Readers might recall last year’s the top ten listing, which included:

1. Apple
2. Dell
3. Procter & Gamble
4. Research In Motion
5. Amazon
6. Cisco
7. Wal-Mart
8. McDonalds
9. Pepsico
10. Samsung

The year 2011 was very challenging for these supply chains, not only from the perspective of a rapidly changing and dynamic global economy but also major incidents of supply chain disruption. My first reaction was to take note of the listed supply chains and reflect on how many of them had a reported stumble during the year.  I came up with at least four.  Even Apple has had to deal with the challenge of heightened visibility to labor practices. Community readers may come up with the same or a different number.  That triggered a pointed reminder that even the top supply chains are not immune to vulnerabilities. The real criteria are how each responds to such challenges.

Another theme brought forward by the Gartner presenters was the possibility of changed ranking or new names appearing in the 2012 ranking. That brought forward a reminder that no supply can rest in the satisfaction that it has reached the pinnacle of capabilities. The global economy and events move far too quickly, and there will always be next objective to address. One supply chain stumbles and another takes advantage. One supply chain is mandated to reduce costs to the detriment of certain capabilities while another aligns to business needs and business outcomes.  The result is the shifts that we continually observe.

If this listing included mid-market supply chains, those that included the challenge of far more limited resources and higher stakes, perhaps the listing would further reveal how wide the gap in capabilities has become. Many mid-market companies were severely impacted by either the global recession, or the disruptive consequences of the tsunami in Japan, and the floods in Thailand.  Their influence over suppliers was morphed by larger supply chain dominants, perhaps some of those listed in the Top 25. Perhaps they who have successfully overcome these challenges and maintained an objective for responsiveness and resiliency should have recognition as well.

The takeaway from this commentary is that we as a community sometimes place too much emphasis on a singular tenet or goal.  In one year it may be lean, another demand-driven, resilient or agile.  Perhaps the reality is that the top supply chains must have the ability to respond to many challenges, along with multiple objectives. They must have a lens that extends well beyond the current quarter, or current fiscal year.

Finally, Supply Chain Matters would like to provide a helpful suggestion to those of you that have volunteered to be Peer voters for the 2012 Gartner rankings. It might be helpful for all in the supply chain community if your lens of ranking included multi-dimensional, multi-geographical and multi supply chain tried perspectives of the top supply chains. The reality is perhaps that the entire value-chain eco-system of partners really determines which supply chains are top ranked. Perhaps the lens of ranking is really weighted toward attitudes and consistent demonstrated practices in spite of the realities of constant change.

Bob Ferrari

The business and supply chain management community has had time to reflect on the recent announcement of labor violations discovered by the Fair Labor Association in audits of Apple’s massive Foxconn contract manufacturing facilities. As can be expected, the responses vary in perspectives. Labor rights advocates feel that Apple’s efforts demand constant scrutiny. Other business media have opined that this development is a sign of strategic shifts or an overblown reaction to the reality of low-cost manufacturing environments such as China.

We cite three articles of particular interest.

In a Washington Post blog entry, Jena McGregor noted that the stakes for Apple are far higher than that for Foxconn.  By proactively responding to working condition findings, CEO Tim Cook could face the wrath of Apple shareholders for eventually increasing supply chain costs. McGregor astutely points to far bigger stakes, namely that Apple walks a fine line by not also pointing the finger of labor abuse to other high tech competitors such as Amazon, Dell and HP who also manufacture in similar facilities within China. Supply Chain Matters expressed similar opinion months ago when the Apple’s social responsibility efforts initially became very public.

The New York Times, who managed to provoke Apple with its superb in-depth article of Foxconn working conditions has been rumored to be attempting to gain positive favor with the company.  That aside, an April 1 article penned by Nick Wingfield places a rather positive spin to this development, namely the new direction and sensitivity that CEO Tim Cook has steered for Apple.  According to NYT sources, Steve Jobs never visited the factories in China where Apple products were made. Conversely, Cook, who has spent a lot of time in factories, is steering Apple toward higher levels of leadership and visibility to respond to greater scrutiny by media and consumer groups reflecting  on how its products are manufactured and how serious the company is committed to labor rights.

We were somewhat surprised to read a posting from Supply Chain Digest which implied that Apple’s issues related to working conditions and pay were quite modest, with the implication that this was no big deal. With all due respect, that comment completely misses the mark.

When a company like Apple is deservedly ranked number one on nearly every researcher’s top supply chain listing, the ranking comes with a high bar of expectations.  We all expect Apple to set world class benchmarks in many supply chain capabilities including supplier and social responsibility.  Apple may be feeling the heat, but there are many other firms dealing with the same challenges.  It is a rather, big deal, one that does not provide simple solutions, and one that should not be hidden.

Today, The Wall Street Journal is reporting that Hon Hai Precision Industry, the parent of Foxconn, announced plans to “significantly” raise wages for its employees located at its headquarters in Taiwan, which is expected to take effect in July.  Readers may recall that last year, when Foxconn finally announced meaningful wage increases for its assembly workers in China, a ripple effect of other cascading labor rate increases incurred throughout China’s southern manufacturing regions.

In a Supply Chain Matters commentary posted in mid-March, we provided our point-of-view that many current signs point to the need for changing supply chain strategies for Apple, some of which may be conflicting. There are a number of strategic directions to which Apple’s supply chain can shift, but any will be dependent on the business and customer outcomes desired by the company.  A socially responsible supply chain may be a component of that direction, and the fallout will not just be Apple alone.

The time is long overdue for high tech and other industries to find a balance point between supply chains driven by cost and those that may also be driven by innovation and social responsibility.

Bob Ferrari

We pen this commentary at the conclusion of the Supply Chain World North America 2012 conference, sponsored by the Supply Chain Council.

The highlight of today’s session was the keynote, Making Supply Chain Management Truly Strategic, delivered by Dr. Steven A. Melnyk, Professor of Operations and Supply Chain Management at Michigan State University.  Dr. Melnyk’s messages regarding moving from a supply chain that it is strategically decoupled and cost-driven, to one that is business outcomes driven were very insightful and ones that all of us in the supply chain community need to think about. Without giving away the complete concepts shared, Supply Chain Matters will highlight some very important thoughts shared regarding Dr. Melnyk’s concepts of defining of six possible supply chain outcomes:

• Cost
• Responsiveness
• Security
• Sustainability
• Resiliency
• Innovation

His counsel was for supply chain executives is to try to avoid single outcome initiatives, for instance cost savings, namely because the supply chain lives or withers under the single outcome of cost.  Instead, the recommendation is blend outcomes, with perhaps 3 focused outcomes.  The first would be characterized as strategically critical, and not to be compromised. The second outcome, strategically important, and the third, strategically necessary. Another important message is that some outcomes may not mix well, for instance, lean driven cost avoidance and innovation. Professor Melynk offered an example, communicating his belief that the outcomes of the Apple supply chain are innovation, security and responsiveness.

One presentation we neglected to mention from yesterday’s sessions was that of Dell and its efforts in supporting direct retail fulfillment.  Dell’s current successful efforts in transforming its supply chain from a predominate configure-to-order customer model, is a successful transition to supporting forecasting based, direct retail sales via major electronics retailers. Behind the scenes, and a major enabler of this direct retail transformation is the existence of a highly experienced supply chain analytics team based in Bangalore, India.  Supply Chain Matters will be arranging a follow-up briefing with this group to share with our readers the breakthrough efforts in demand sensing and accurately predicting customer buying trends.

This author was pleased to facilitate the Pundits and Influencers panel discussion which discussed a number of topics related to the current state of global supply chains and the consistent messages that continue to be brought forward from these conferences.  One observation that all the panelists concurred with is the requirement on a renewed emphasis on the strategic, collaborative and organizational alignment skills for today’s senior supply chain leaders. Once again, Supply Chain Matters will feature a separate dedicated commentary regarding the panel exchange.

Bob Ferrari

We pen this commentary at the beginning of day two of the Supply Chain World North America 2012 conference, sponsored by the Supply Chain Council.  The theme for this year’s gathering was Taking Supply Chains to the Next Level. As was the case last year, our speakers have been extraordinary and the messages have been fairly consistent. For the most part, speakers reinforced that current efforts toward transformation are focused more toward the ‘soft’ skills of managing required organizational and business change, and the recruiting of skilled supply chain professionals.

Donald Wirth, Vice President, Global Operations and Corporate Supply Chain delivered an insightful day one keynote, and providing some candid observations regarding supply chain transformation. One example was: “We spent way too much time on six-sigma efforts while never moving the needle on the competition.”  He then shared his council on leading transformation, which included:

• Leverage scale and skills of the entire organization.
• Focus on standardization and simplification.
• Align management practices, including shifting from functional execution to more collaborative based metrics.
• Continually build the culture and capabilities required to support the business.
• Link supply chain performance and plant excellence, which is a very important required learning and challenge for inexperienced supply chain professionals.

Wirth further shared his belief in visual management boards as a very powerful tool of communicating management commitments toward change.  His key takeaway for attendees was the statement that the business strategy is the supply chain strategy.

Lalit Wadhwa, Vice President of Global Supply Chain Operations for Avnet, Inc., a global high tech electronics distributor provided insights to continually changing high tech and consumer electronics supply chains and the critical importance of fostering multi-tier visibility to inventory, capacity and order activities. Avnet has the unique situation of having capabilities located at both the downstream design and upstream supply points of high tech supply chains.  Lalit also described for the audience Avnet’s current design principles and deployment of a supply chain control tower rollout.   Supply Chain Matters plans to follow-up with Avnet and provide further detail on this control tower deployment effort.

Other speakers stressed a variety of common themes that emphasized strategies for:

• Balancing globalization vs. regionalization
• Learning from other industries
• Importance of risk management
• Segmentation of supply chains
• Focus on required customer and business outcomes
• Understanding and paying attention to the power of analytics and business intelligence applied to areas such as cost to serve, anticipated product demand, or total landed cost analysis.
• Developing a flexible roadmap of transformation

Conversations at last night’s evening reception provided attendees the opportunity ample time to renew acquaintances and reinforce conversations related to supply chain transformation.

Stay connected for further commentary later this week.

Bob Ferrari

The Wall Street Journal is reporting today that Google is making plans to sell a variety of co-branded tablet computers directly to consumers via an online store concept similar to the online fulfillment sites of Amazon and Apple. According to the WSJ, hardware manufacturers Samsung Electronics, AsusTeK Computer, and possibly Motorola Mobility Holdings will be tapped to provide the tablet models.

Similar to Google’s failed experiment with its branded Nexus One phone in 2010, the effort is directed at providing a direct consumer fulfillment model, but this time will include the ability to also up-sell various electronic content services. The WSJ quotes people familiar with this strategy as indicating that Google believes that the current model for selling tablets is broken, including the inability of wireless carriers to gain any market traction as a fulfillment channel.  Also reported was that the company is considering subsidizing the cost of future tablets in order to be able to compete on pricing with Amazon’s Kindle Fire. The article stresses however, that physical stores will still remain an important channel for Google.

If this development turns out to be accurate, it will represent another effort by the search leader to directly make a new presence in the consumer electronics sector.  We recently provided commentary on Google’s entry into the home entertainment device area.

The current tablet and e-reader wars are intense and Apple continues to outpace the market in terms of the consumer “wow” factor and overall market share. Supply Chain Matters trusts that Google will apply the learning from its previous past Nexus One flawed experiment in understanding the required strategies, underlying supply chain support processes and technology capabilities that make up worldwide direct e-fulfillment presence. The bar is set rather high with the current online direct fulfillment capabilities that exist at Amazon and Apple sites.

The WSJ points out that Google is prepared to invest big bucks in the marketing and advertising support of its planned online site. We suggest that some of those monies be allocated toward investments in world-class supply chain planning, execution, intelligence and decision-making capabilities, or to an existing online fulfillment services provider that has the potential to outpace the current capabilities in the market. Supply chain strategy needs to support desired business outcomes. For Google, that outcome is a cool tablet, delivered at a market competitive price, with a seamless online ordering and customer service experience, with adequate supply to meet global consumer demand.

Bob Ferrari

This is a brief reminder that there is but one week remaining to register for the upcoming Supply Chain world North America Conference, sponsored by the Supply Chain Council.  As in previous years, there is a great lineup of keynote speakers and concurrent sessions.

Supply Chain Matters via this author will be facilitating one of the conference’s premiere events, the  Pundits and Influencers panel discussion which will be held on the final day of the conference. The Supply Chain Council has provided a dedicated web page to introduce our panel. I was very fortunate in being able to assemble this panel, which will represent years of experience in observing and commenting on supply chain insights and future trends.  Knowing each of the panelists personally, I’m expecting a lively and information exchange.

After collaborating with each of the panelists, we have lined-up the following topics slated for panel discussion this year: (time permitting)

• How and why supply chains must be positioned to be driven by business strategy outcomes?
• Should organizations be revisiting the determination and assessment factors of supply chain risk?
• Will technology play a more instrumental role in transforming supply chains to required new levels of capability?
• Supply chain executives have been of the belief that continuous improvement programs that introduce gradual change are the means for implementing transformation. Will this approach suffice in this new era of constant business change and increased risk?
• What do you believe are the next logical steps for organizations in their S7OP journey?
• How do you observe current supply chain skill gaps being articulated and what do you view as the key management skills required to manage in the “new normal” of business?  Are universities and training organizations focusing on the right skill areas?

At this year’s conference, our panel will also be conducting a dedicated informal networking session with conference attendees, a day prior to our panel. This will be the opportunity to meet one on one with any panelist and provide other questions or exchange topics of interest.

Supply Chain Matters readers who plan on attending the conference are also welcomed to share topics that they would like the panel to address.  Send us an email: info <at> supply-chain-matters <dot> com.

Readers can easily register for the conference by double-clicking on the icon located in our Upcoming Conferences panel on the right-hand panel of this blog.

Bob Ferrari