PHOENIX--(BUSINESS WIRE)--Gartner, Inc. has released the findings from its annual Supply Chain Top 25, identifying supply chain leaders and highlighting their best practices. Analysts announced the findings at the Gartner Supply Chain Executive Conference, which is being held through today at the JW Marriott Desert Ridge Resort and Spa in Phoenix, AZ.
"2016 marks the 12th year of our annual Supply Chain Top 25 ranking," said Stan Aronow, research vice president at Gartner. "In this year's edition, there are several longtime leaders with new lessons to share and a number of more recent entrants from the high-tech, industrial, chemical, auto and life sciences sectors."
For the first time, Unilever topped the ranking, followed by McDonald's, Amazon, Intel and a newcomer to the top five, H&M (see Table 1). Five new companies made the Supply Chain Top 25 this year with Schneider Electric, BASF and BMW joining the list for the first time, and HP and GlaxoSmithKline rejoining after several years.
Apple and P&G continued to qualify for the Masters category, which Gartner introduced in 2015 to recognize sustained supply chain leadership over the last 10 years. While this category is separate from the overall Supply Chain Top 25 list, these companies continue to be evaluated as part of Gartner's annual research study.
Apple continues to succeed by offering platforms that ecosystems of partners build on to meet customers' needs. The big forward-facing question for Apple and its supply chain is whether it can deliver on the next big innovations to continue the revenue and earnings pace of the last decade.
For the majority of its products, P&G is running an end-to-end synchronization program. Every part of the supply chain operates based on the daily cadence of consumption, in some cases triggered by demand at the shelf. The supply chain team brings data and analysis skills to the process with the ultimate goal of increasing the value that each active SKU contributes to the company.
Along with the Masters category, the Supply Chain Top 25 continues to offer a platform for insights, learning, debate and contribution to the rising influence of supply chain practices on the global economy.
Table 1. The Gartner Supply Chain Top 25 for 2016
|9||The Coca-Cola Co.||1459||253||8.3%||5.7||-2.9%||9.00||3.69|
|21||Johnson & Johnson||950||165||11.6%||2.6||-0.4%||4.00||2.65|
1. Gartner Opinion and Peer Opinion: Based on each panel's forced-rank ordering against the definition of "DDVN orchestrator."
2. ROA: ((2015 net income/2015 total assets) * 50%) + ((2014 net income/2014 total assets) * 30%) + ((2013 net income/2013 total assets) * 20%).
3. Inventory Turns: 2015 cost of goods sold/2015 quarterly average inventory.
4. Revenue Growth: ((change in revenue 2015-2014) * 50%) + ((change in revenue 2014-2013) * 30%) + ((change in revenue 2013-2012) * 20%).
5. CSR Component Score: Index of third-party corporate social responsibility measures of commitment, transparency and performance.
6. Composite Score: (Peer Opinion * 25%) + (Gartner Research Opinion * 25%) + (ROA * 20%) + (Inventory Turns * 10%) + (Revenue Growth * 10%) + (CSR Component Score * 10%).
2015 data used where available. Where unavailable, latest available full-year data used. All raw data normalized to a 10-point scale prior to composite calculation. "Ranks" for tied composite scores are determined using next decimal point comparison.
Source: Gartner (May 2016)
In recognition of the fact that running an ethical and sustainable supply chain is a key aspect of leadership, Gartner has added a quantitative measure of corporate social responsibility (CSR) to the Supply Chain Top 25 methodology. CSR is one of three standout trends highlighted for supply chain leaders in 2016.
Customer-Driven Partner Integration
Gartner's supply chain research is centered on the concept of running a demand-driven value network (DDVN). While customer-centricity is a natural extension and enabler of DDVN, in the past year, some companies and ecosystems have raised the bar in terms of what this means. More broadly, digital business has emerged as a key enabler of tighter integration across value chains.
"Leading companies in the process and industrial discrete manufacturing industries, for example, are not only getting better visibility to their own manufacturing and outbound transportation networks, but integrating that visibility with similar data from upstream partners," said Mr. Aronow. "This provides a holistic view of supply to their customers and the ability to sense and respond to potential disrupters earlier than they have in the past."
Adoption of Advanced Analytics
Another trend at leading supply chains is the use of advanced analytics to aid in running multiple parts of their operations, spanning the entire end-to-end supply chain. Some consumer products companies have enabled permission-based auto-replenishment of their products based on signals from internet-connected smart sensors embedded in the products at consumers' homes. The usage data captured as part of this process is used to generate better demand forecasts based on usage personas and to inform the design of new products entering the pipeline. In each case, the value for these companies is in the algorithms that convert disparate data points into operational insights.
Increasing Emphasis on Corporate Social Responsibility
Running socially responsible supply chains aligns with what investors, customers, employees and the general public expect from companies today. "Mainstream institutional investors are paying greater attention to a company's nonfinancial performance indicators, including its handling of environmental, social and governance (ESG) factors," said Mr. Aronow. "Supply chain executives should expect their organizations to become a bigger part of their company's investor relations story as these stakeholders expand their awareness of ESG issues."
More detailed analysis is available in the Special Report "The Gartner Supply Chain Top 25 for 2016."
About the Gartner Supply Chain Top 25
The Supply Chain Top 25 rankings comprise two main components: business performance and opinion. Business performance in the form of public financial and CSR data provides a view into how companies have performed in the past, while the opinion component offers an eye to future potential and reflects leadership in the supply chain community. These two components are combined into a total composite score.
Gartner analysts derive a master list of companies from a combination of the Fortune Global 500 and the Forbes Global 2000. In an effort to maintain the list of companies evaluated at a manageable level and in recognition of the inflation and growth these larger companies have experienced, in 2015 the general revenue threshold was increased to $12 billion, up from $10 billion.
About Gartner Supply Chain Executive Conference
Analysts are discussing the future direction of the supply chain industry at the Gartner Supply Chain Executive Conference, taking place through May 19 in Phoenix. The Gartner Supply Chain Executive Conference will also be held September 19-20 in London.
Follow news and updates from the event on Twitter using #GartnerSCC.
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 7,900 associates, including more than 1,700 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.