AMR Research spotlights supply chain standouts in 2010 Supply Chain Top 25 report

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2010 AMR Supply Chain Top 25 (part 1)

AMR Research has just released its 2010 Supply Chain Top 25 list, and for the third year in a row, Apple is in the #1 spot. The annual report’s goal is “to raise awareness of the supply chain discipline and how it impacts business” by recognizing companies that deliver both operational excellence and innovation excellence. In fact, this year’s report mentions a recent study by researchers from University of Alabama and Texas A&M, led by Dr. Alex Ellinger, that used the Altman Z-score to show that companies in the Supply Chain Top 25 do enjoy greater financial success than their competitors.

To be considered for the Supply Chain Top 25, companies must be large, public companies in the manufacturing or retail sector; most are among the Fortune Global 500. Working from a master list of companies, researchers rank companies with a formula that gives equal weight to financial measures (inventory turns, return on assets (ROA) and revenue growth) and opinion (votes from a peer panel and an AMR/Gartner panel). According to the report’s authors, Kevin O’Marah and Debra Hofman, these rankings help show “which companies are furthest along toward the demand-driven ideal of supply chain excellence.”

After Apple, the next companies on the list are Procter & Gamble, Cisco Systems, Wal-Mart Stores and Dell. The figures to the right list the complete 2010 AMR Supply Chain Top 25, along with scores and rankings, while the full report offers a snapshot of each company’s supply chain successes. The diversity of the Top 25’s collective accomplishments is notable and makes the report an interesting read. About Apple, for instance, the study authors say:

“Apple has broken new ground in the area of transforming its supply chain into a value chain, starting with the consumer experience and designing its network to serve that master first and foremost. This means demonstrating some of the behaviors we look for in Top 25 companies, including embedded innovation, networked supply and demand shaping. It’s also instructive that Apple, which most observers think of primarily as a design and software company, in reality has a vertically integrated value chain that reaches from logo-bearing, pure-play retail all the way back to superfast chipmaker Intrinsity, which was recently acquired by Apple to ‘steal a march’ on competitors looking to enhance the performance of mobile devices. Not shying away from any operational challenge, Apple’s value chain controls its most strategic nodes all the way from silicon to synapse.”

2010 AMR Supply Chain Top 25 (part 2)

PepsiCo (#6) is cited, among other reasons, for the “increasingly high-profile role being played by CEO Indra Nooyi on matters of social justice and consumer health. These initiatives appear to be more deeply embedded in daily operations than what’s typical and may offer benefits in the future as emerging markets increasingly drive profit growth.”

The report lauds Intel (#18) for a new supply chain strategy focused on “cut[ting] cycle times by as much as half and accelerat[ing] planning in order to simultaneously double the rate at which customer requests can be met, while still dramatically reducing unit costs.” In the authors’ opinion, this “is a testament to the potential of applying supply chain principles across the entire business rather than in functional silos.”

While the report focuses on the accomplishments of large companies, it offers a number of recommendations that small and mid-size manufacturers may wish to consider too:

* Apply demand-driven principles to coordinate and integrate the functional areas of supply, demand and product management in order to better sense, shape and respond to changes in market demand.

* Take a cue from the leaders when designing your own supply chain strategy. Think outside in, starting with your customers and working back through your trading-partner network to design a profitable response. Remember that one size does not fit all. Define how many supply chain types you have and design a customized response for each.

* Balance operational excellence with innovation excellence for superior overall performance.

* Focus on acquiring, mentoring, growing and retaining supply chain talent.

* Measure your supply chain as your customer experiences it. Use the right supply chain and product metrics to consciously manage performance, and foster a culture that embraces measurement for continuous improvement.

[source: AMR Supply Chain Top 25 for 2010 report]

To learn more about the study methodology and read about the supply chain accomplishments of the companies on the list, read the full AMR Supply Chain Top 25 for 2010 report on the Gartner website.

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