In conjunction with its Supply Chain Executive Conference held this week, industry analyst firm Gartnerannounced its annual Top 25 Supply Chains rankings for 2014. This author attended this year’s conference and the Top 25 Supply Chains announcement dinner held at the conference. Supply Chain Matters will feature our summary impressions regarding the messages delivered at the Gartner 2014 conference in a separate commentary.
As has been our tradition, Supply Chain Matters provides our readers with our perceptions of the named Gartner Top 25 Supply Chains in the context of both this year and with previous Gartner’s Top 25 Supply Chains rankings. We now include a five year span of history in our perspectives commentary. To reiterate our previous declarations, our commentary should not be construed in the context of positioning our own or any other firm’s proprietary ranking process, but as a voice that has observed and provided commentary and insights concerning global supply chain industry activities and developments these past six years. It is a means for ongoing social-media based interaction regarding what it takes to be recognized as a top-performing supply chain given today’s complex and constantly changing business challenges.
Readers can click on Gartner’s press release announcing the 2014 Supply Chain Top 25 which provides the detailed rankings and comparative scores that led to the rankings. Subscribers to Gartner’s supply chain management and certain other research have access to detailed research reports concerning the Top 25 Supply Chains.
As a reference to our Supply Chain Matters readers, below is the announced 2014 ranking compared to four prior years of ranking:
First and foremost, Supply Chain Matters extends congratulations to each of the named supply chain organizations for achieving such recognition. There is obviously hard work that goes into achieving such recognition and citation.
Overall, we were a bit taken back by the similarity of this year’s rankings to that of 2013. In assembling the above comparison, we noted just subtle changes. With the exception of two new well deserved entrants, Kimberly Clark and Seagate Technology, the named Top 25 Supply Chains remain essentially the same. Perhaps that is a sign that world class supply chain capabilities overcome multiple years of challenges. That is, of course how Gartner is communicating the 2014 ranking.
The supply chain of Apple now occupies the number one ranking for seven running consecutive years. However, this year, the peer opinion voting was recorded as much closer, with number three ranked Amazon.com’s peer votes noted as 16 points below that of Apple. That was not the case in the 2013 ranking. Candidly, we expected Amazon to be the best candidate for dethroning Apple for the number one ranking in 2014. Apple’s rival Samsung Electronics did not achieve a top-five recognition but the firm’s composite score of 5.13 fell just below number five ranked Procter and Gamble, a stalwart in the Top 25 rankings for many years. P&G’s composite score was recoded as 5.20 and garnered the second highest ranking from Gartner’s analysts.
Reflecting on consistently number one ranked Apple, the bulk of that company’s supply chain capabilities exist from the scale and constant responsiveness of predominantly outsourced manufacturing and logistics partners. The cited Gartner 2014 Top 25 Supply chains of 3M (#19), Intel (#8) and Seagate Technology (#20) are major suppliers to Apple. One wonders why other major Apple suppliers such as Foxconn Technology Group (Hon Hai Precision), Flextronics International and Pegatron, along with a collection of other global scale Apple suppliers, have not been recognized. Perhaps that is attributed to Apple’s zeal for supplier responsiveness at the cost of overall financial and margin performance among its major suppliers, as well as major suppliers having a considerable dependency on Apple’s new product release (NPI) cycles. We brought that out in a commentary reflecting on the financial results of Hon Hai Precision, the parent of Foxconn.
The supply chain of Unilever has made steady progress over the past three year window in achieving a top five ranking and deserves special recognition. As in 2013, we continue to be perplexed how a restaurant services firm such as McDonald’s can be consistently ranked in the top five given a far different supply chain services model that is less asset intensive than others reside in manufacturing-centric supply chains.
We continue to note the remarkable progress and recognition of Lenovo Group, which despite having an emphasis weighted toward vertical integration of its supply chain capabilities, has climbed to Top 25 Supply Chains recognition for the past two years. Supply Chain Matters has previously made mention of Lenovo’s efforts to leverage its global supply chain scale via two major product acquisitions.
Dropping out of the Gartner Top 25 Supply Chain ranking for 2014 was the supply chains of Dell and Ford Motor Company. At the announcement dinner, Gartner provided honorable mention significance to the supply chains of Dollar General, DuPont, Ford Motor Company and Walgreens, and indication of perhaps future Top 25 rank possibilities.
As noted in our Supply Chain Matters commentary concerning Gartner’s 2013 ranking, the unfortunate aspect of Gartner’s Top 25Supply Chain ranking remains the relatively high threshold of corporate revenues which precludes up and coming manufacturers and retailers to be recognized. There remains too much of a dependency on Return on Assets which favors firms who elect to outsource the bulk of their supply chain activities. Supply Chain Matters does not subscribe to the opinion that financial metrics should be the majority driver for recognizing supply chain performance. It precludes noteworthy turnarounds in performance, overall supply chain process innovation and abilities to rise to a challenge in rather difficult industry settings. However, we were pleased that Seagate Technologies achieved recognition primarily due to its supply chain response to market opportunity after the devastating flooding in Thailand in 2011, which severely impacted the high tech disk-drive sector.
Our takeaway from Gartner’s 2014 Top 25 Supply Chain ranking is that more supply chains need to be recognized. While each of the cited 2014 Top 25 Supply Chains have earned such recognition, far more deserve recognition. On this blog, we will continue to strive to provide such recognition.
© 2014, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.