The following commentary can be viewed and commented upon on the Supply Chain Expert Community web site.
Last year, after the announcement of the AMR /Gartner Research ranking of Top 25 Supply Chains for 2010, I penned a Supply Chain Expert Community commentary, Should Contract Manufacturers be Included in Anyone’s Top 25 Supply Chains?. My commentary was directed at the lack of consideration of any major contract manufacturer in the AMR ranking, and for that matter, any Asia-based global manufacturer.
Since many contract manufacturers (CM’s) have become such a key participant in industry value-chains, my view was that contract manufacturers should be considered in this or any other ranking. At the same time, if the broad rating criteria of being demand-driven, financial performance, time-to-market, S&OP and market responsiveness were weighted in the ranking, than the dilemma may be whether a CM is a major ‘contracted supplier’ or a self-contained brand owner and distributor. The one critical performance metric of return-on-assets (ROA) may well be the Achilles heel in the AMR Top 25 ranking since we all know that CM’s came into existence as a means of brand owners to shed expensive design and manufacturing assets.
In a March 14, Gartner First Thing Monday commentary, (complimentary sign-up account required) AMR’s vice-president Kevin O’Marah acknowledges that Asia based supply chains should be considered in the overall ranking, and further notes that the overall ranking may have been flawed. AMR will soon release a cut of 2010 data based on the highest-scoring companies based in Asia Pacific, but industry peer ratings among Asia-based manufacturers have become a challenge.. Further noted is that the top five 2010 listing would include the names of Samsung, LG, BHP Billiton, Toyota. The primary advantage for these companies are their performance in ROA.
According to the commentary, the only CM to make the 2010 listing would have been Flextronics, primarily from the enthusiasm of key customer Research In Motion (RIM). O’Marah also questions: “Where is Foxconn?” The largest of all the CM’s is not considered in noted capabilities by Asia industry peers.
From my lens, AMR should be complimented for extending the Top 25 ranking to include Asia based manufacturers and retailers. Overcoming the challenge of garnering an industry peer level forum resident within Asia, I’m sure, can be overcome in time.
The more knotty issue perhaps continues to lie on the weighting of ROA in the ranking criteria, and whether this presents a obstacle for inclusion of major CM’s. In another words, if names like Apple, IBM, Dell, HP and others qualify as Top 25, are their major CM’s a key enabler of that ranking?
Is it time for a listing of just the Top 25 CM’s, with different quantitative and qualitative ranking criteria?
What’s your view/