Last week, in conjunction with its Supply Chain Executive Conference, Gartner announced its annual Top 25 Supply Chains rankings for 2013. As has been our tradition, Supply Chain Matters provides our readers with some of our perceptions in the context of both this year and previous year’s rankings, along what we have observed in multiple industry settings.  We do this not in the context of positioning our own proprietary ranking process or flattering potential or existing clients, but as the voice of an experienced global supply chain industry observer and influencer.

We begin with the listing of Gartner’s 2013 ranked supply chains coupled with previous history.

 

Gartner Top 25 Supply Chain Rankings History

 

 

For the fourth year in a row, Apple again topped this year’s ranking.  While not a surprise, Wall Street moguls and the investment community have not been all that flattering towards Apple in 2013, driving a perception that Apple may have peaked. This year, Gartner added more transparency by providing the detailed scoring results that make-up the composite ranking score.  Notice that Apple garnered an overwhelming #1 from Gartner’s peer group panel voters but it company not gain the highest ranking score among Gartner analyst opinion.  The highest Gartner analyst score was garnered by Unilever, and Supply Chain Matters applauds that view. More than many consumer goods supply chains, Unilever has demonstrated agility in supporting expanded revenue growth tapping emerging global markets and agility in managing its extended value-chains.

This year’s top five ranking from included three from last year, Apple, McDonald’s and Amazon. We continue to question 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. While Samsung Electronics re-entered the top ten, its performance in global supply chain scale and product innovation, by our view, merits a top five ranking.

We were pleased to observe the addition of Lenovo and Qualcomm to this year’s Gartner rankings, with each well deserved.  In last year’s Supply Chain Matters commentary related to the Top 25, we cited Lenovo as the best turnaround candidate. We were surprised to observe the addition of Ford, given that the company has incurred quality prone new product introductions among key models, as well as being rather late to invest in production capacity in China’s exploding auto market. We continue to be disappointed by the lack of recognition toward Hyundai, who continues to make notable strides in product introduction and  market share gains, supported by a supply chain vertical integration strategy.

This year, along with Amazon, three other global retailers, Inditex, Wal-Mart Stores and Hennes & Mauritz (H&M) made the top 25 ranking as opposed to six in the 2012 ranking. Wal-Mart, a previous supply chain icon, has slipped from the number 4 ranking in 2010 to number 13 in 2013. While it still garnered a rather high peer group ranking, the Gartner analyst vote and business results paint a different picture.  The Amazon effect is very real and very concerning.

Dropped from the Top 25 ranking this year was Hewlett Packard, Kimberly-Clark and Research in Motion. Just making the number 25 ranking was Johnson & Johnson, which slipped an additional three ranking spots.  As was the case in our observation last year, we again believe that J&J has not demonstrated a capability to be ranked in any Top 25.

The unfortunate aspect of Gartner’s Top 25 ranking remains the relatively high threshold of corporate revenues, 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 an 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. Privately-held companies and those from emerging markets are often precluded from rankings that place the majority of emphasis on financial metrics.

Bob Ferrari