Gartner has come out with Top 25 Supply Chains for 2016. One of the significant change in this year’s rating is introduction of CSR as one of the scoring criteria.
There are companies that have managed to hold their positions, few have joined the bandwagon for the first time and some have moved up & down the ranking noticeably. See here the list of Top 25 Supply Chains 2016.
The key highlights of the changes in the ranking are:
- Both Apple and P&G continue to hold their position as the Masters, having attained top 5 position for 7 out of 10 years. Apple’s revenue has come under pressure lately, however, they continue to perform strongly on other parameters.
- Unilever upsets Amazon to score the top position. A major contributor to this change is the zero CSR score for Amazon (??) and perfect score of 10 to Unilever. Amazon continues to be in top 5 due to its leadership in innovation in products and supply chain.
- H&M overtakes Inditex (Zara) on account of higher Return on Assets and Revenue Growth.
- Walmart drops by 3 ranks due to a low score of 3 on CSR and reduced Revenue Growth.
- Nestle has jumped up by 7 rankings. The world’s largest consumer food supply chain scored a perfect 10 out of 10 for CSR, including a 99 out of 100 in the environmental dimension of the Dow Jones Sustainability Index for its use of “zero-water” factories and conversion of biowaste into renewable energy.
- France-based L’Oréal, the world’s largest cosmetics company, ranks at No. 19, up three slots from last year. Its supply chain has focused on improving demand forecasting and supply and demand matching capabilities. The results have been impressive, as it has been able to improve service levels by more than 2%, while holding inventory constant.
- New entrants – Schneider, HP, BASF, BMW and GSK
What these companies are doing differently to earn their position in top 25? Gartner has highlighted 3 trends of the leading companies:
- Customer Driven Partner Integration
- Advanced Analytics
- CSR and Sustainability
Let’s see few examples of the initiatives taken up by the companies occupying top 15 positions, summarized from the Gartner’s report.
Customer Driven Partner Integration:
- Apple continues to succeed by offering platforms that ecosystems of partners build upon to meet customers’ needs, whether that relates to core product features such as access through touch-based security, media content and applications or third-party accessories that convert its products into smart diagnostic devices or payment terminals.
- McDonald’s corporate supply chain team excels at orchestrating the upstream supply network. It promotes and acts as the conduit between outsourced vendors, suppliers, corporate stores and franchise partners. It uses council meetings to collaborate with suppliers on new product innovation and technology, as well as on plant safety.
- Intel’s supply chain group has proven to be a worthy partner for growth in the past. Over the course of 2014, the team enabled an entirely new ecosystem of China-based technology providers to support the ramp up of new tablet products.
- Cisco has leveraged technology along with process improvement is in supplier collaboration. The team deployed a cloud-based partnering platform with suppliers that serves as a single source of truth for data, eliminating the bullwhip effect between Cisco, contract manufacturers and suppliers. There is full demand visibility, and suppliers can address shortages through alerts in a more automated way.
- Nike’s supply chain has extended visibility to outsourced factory production and compliance, as well as to how stores are executing on merchandising, inventory and operations plans.
- P&G’s supply chain team is using advanced techniques to drive elimination of truck residence time at mixing centers. The company has also embedded sensors in some of its products, such as toothbrushes and air fresheners. The data transmitted from these products aids the company in understanding consumer usage patterns to support replenishment of supplies for existing products and design features for future offerings.
- Unilever has made significant investments in regional operational centers that support all facets of the customer order-to-cash process. This work is yielding cost savings through economies of scale and common processes, as well as the ability to better support customer needs by applying analytics to a common CRM system.
- H&M operates its supply chains tailored by product type, with 80% of volume built to plan at standard, cost-efficient lead times and the remaining 20% that is agile and can respond to fashion trends by going from design to hanger in as little as 20 days, using digital technology.
- Inditex has set up a planning and analytics team that sorts through real-time sales trends to inform future design and production. Another team converts voice of the customer feedback gathered from the store and district network into prescriptive advice for the design teams.
- Cisco, as part digitizing the logistics function is connecting logistics to the broader supply chain with data, standards, automated event management and machine agents. Cisco is also bringing new technologies to bear in its warehouses, including augmented reality, telematics and video analytics.
- Samsung’s supply chain team continues to focus on improving customer collaboration and gaining insight into consumer behaviors through connected devices.
- Nestlé is investing in predictive analytics for demand planning and enabling growth in its e-commerce business, which includes packaging tailored more for delivery than display in a store.
- Colgate-Palmolive team has partnered with its enterprise software provider to co-develop supply chain control tower capabilities, including better demand sensing, inventory optimization and supply network planning. The pilot implementation of this capability has enabled daily responsiveness and reduced inventory levels, while minimizing out of stock impacts.
- PepsiCo’s supply chain is partnering with commercial teams to deploy a total portfolio optimization governance process and tool that allows for data-driven assessment of portfolio health, detailed analysis relative to evaluation criteria and targets, and a process for final portfolio decisions. Pilots of the new portfolio optimization platform are yielding double-digit percentage improvements in profit per volume measures.
- Apple has improved the degree of transparency into its extended supply chain in recent years. In the area of conflict minerals, its 2015 Supplier Responsibility Progress Report states that all of its 242 smelters and refiners of tin, tantalum, tungsten and gold are subject to third-party audits to ensure they are not funding violence in the Democratic Republic of Congo (DRC).
- Unilever says that it is achieving zero waste through its “four R approach” — reducing, reusing, recovering or recycling — and treating waste as a resource with alternate uses, such as converting factory waste to building materials or composting food waste from staff cafeterias. Longer term, it aspires to be “carbon-positive” by 2030.
- Intel is the largest U.S. purchaser of renewable energy certificates and when combined with in-house sources, gets 100% of the 3.1 billion kilowatt-hours of electricity its operations consumes annually from green sources.
- H&M was part of a recent coalition of top clothing companies that called on governments to agree to a strong climate change deal based on concerns that long-term climate effects could harm production of one if its major inputs, cotton.
- Inditex has set a goal to run 100% eco-efficient stores by 2020. The new Zara flagship store in Manhattan tracks sustainability measures across all of its processes and will consume 30% less energy and 50% less water compared to a conventional store.
- Cisco is leveraging in-house Internet of Everything (IoE) technology to improve product quality, gain energy efficiency in operations and reach universal order visibility.
- Samsung has recently received two awards for sustainability from the U.S. Environmental Protection Agency (EPA) for its use of sustainable materials in the Samsung Galaxy S6 and its long-term commitment to the proper disposal and recycling of e-waste in the United States.
- Coca Cola has set out ambitious sustainability goals for 2020 that include improving water and emissions efficiency by more than 20%, empowering five million women across its value chain and several programs to improve nutritional content and reporting.
While the scoring criteria and weightage given are open to debate, but key takeaway is the breakthrough innovations the leading companies are focusing on to stay ahead of the curve.