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Gartner Announces Rankings of Its 2014 Supply Chain Top 25

Gartner, Inc. has released the findings from its 10th annual Supply Chain Top 25. A primary goal of the Supply Chain Top 25 research initiative is to raise awareness of the supply chain discipline and how it impacts the business.

Analysts announced the findings from this year's research 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.

"2014 marks the 10th year of our annual Supply Chain Top 25 ranking," said Stan Aronow, research vice president at Gartner. "As we reach this milestone, we have several longtime leaders with new lessons to share and a number of more recent entrants from the high-tech, consumer product and industrial sectors in the Top 25."

The top five-ranked organizations in 2014 include four that topped the list last year — Apple, McDonald's, Amazon and Unilever — plus another familiar leader, P&G. Two new companies joined the Top 25 this year with Seagate Technology (No. 20) appearing for the first time and Kimberly-Clark (No. 21) re-emerging after a year's hiatus.

Apple took the No. 1 slot again, its seventh year running, continuing to outpace everyone else by a wide margin on the composite of financial and opinion measures used (see Table 1). McDonald's landed at No. 2 for the second year in a row, followed by Amazon.com in the third spot.

Table 1. The Gartner Supply Chain Top 25 for 2014

Rank   Company  

Peer
Opinion (1)
(188 voters)
(25%)

 

Gartner
Opinion (1)
(32 voters)
(25%)

 

3-year
weighted
ROA (2)
(25%)

 

Inventory
Turns (3)
(15%)

 

3-year
weighted
Revenue
Growth (4)
(10%)

  Composite Score (5)
1   Apple   3187   371   20.5%   69.2   31.2%   8.85
2   McDonald's   1612   369   15.6%   153.0   4.0%   6.25
3   Amazon.com   3171   510   0.8%   8.9   27.2%   6.08
4   Unilever   2031   517   9.9%   6.9   2.6%   5.32
5   P&G   2166   513   8.2%   5.9   2.2%   5.20
6   Samsung Electronics   1871   351   11.4%   18.1   12.7%   5.13
7   Cisco Systems   1092   480   9.1%   12.3   6.3%   4.57
8   Intel   908   475   12.8%   4.8   3.8%   4.51
9   Colgate-Palmolive   891   322   17.4%   5.1   3.1%   4.22
10   The Coca Cola Company   1820   265   10.1%   5.3   6.2%   4.03
11   Inditex   751   259   17.7%   3.9   9.1%   3.99
12   Nike   1192   225   14.2%   4.2   11.0%   3.89
13   H&M   690   108   26.7%   3.6   6.4%   3.83
14   Wal-Mart Stores   1764   215   8.0%   7.9   3.5%   3.52
15   PepsiCo   1000   298   8.6%   8.2   3.2%   3.37
16   Lenovo Group   808   210   3.3%   17.5   24.4%   3.14
17   Starbucks   1044   185   8.5%   5.7   11.9%   3.06
18   3M   975   146   13.6%   4.1   4.1%   3.05
19   Qualcomm   193   56   14.1%   6.8   30.6%   2.95
20   Seagate Technology   67   39   19.5%   12.5   8.1%   2.75
21   Kimberly-Clark   605   206   9.9%   6.1   1.6%   2.65
22   Johnson & Johnson   957   149   9.6%   2.8   5.2%   2.65
23   Caterpillar   696   245   5.4%   3.0   3.3%   2.43
24   Cummins   153   144   12.1%   5.3   6.0%   2.34
25   Nestlé   1060   99   8.3%   5.4   1.5%   2.30

Notes:

1. Gartner Opinion and Peer Opinion based on each panel's forced-rank ordering against the definition of "DDVN Orchestrator"

2. Return on assets (ROA): ((2013 net income/2013 total assets)*50%) + ((2012 net income/2012 total assets)*30%) + ((2011 net income/2011 total assets)*20%)

3. Inventory Turns: 2013 cost of goods sold/2013 quarterly average inventory

4. Revenue Growth: ((change in revenue 2013-2012)*50%) + ((change in revenue 2012/2011)*30%) + ((change in revenue 2011-2010)*20%)

5. Composite Score: (Peer Opinion*25%) + (Gartner Research Opinion*25%) + (ROA*25%) + (Inventory Turns*15%) + (Revenue Growth*10%)

2013 data used when 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 2014)

Gartner analysts highlighted three standout trends for supply chain leaders in 2014:

Understanding and Supporting the Fully Contextualized Customer

An enduring trait of leading companies is that customer needs and behaviors serve as the starting point for go-to-market and operational support strategies. The best of them present simple, elegant solutions to their customers, driven by conscious supply chain orchestration behind the curtain. Their center-led cultures enable consistently high-quality customer experiences tailored, where important, to local tastes.

Supply chain leaders are expanding this demand-driven concept in terms of how they relate to their customers. It is about understanding customers in a deeper way and blending seamlessly into their daily routines. Ultimately, a deeper understanding of customers in their local environments is helping supply chain leaders capture more revenue for their businesses and improve operational effectiveness.

A Convergence of Digital and Physical Supply Chains Delivering Total Customer Solutions

Leading companies have moved past selling only discrete products or services to their customers and are now focused on delivering solutions. Regardless of industry, these companies want their customers to be loyal subscribers to their solutions. Several of the leading consumer product companies on this year's list are offering e-commerce subscriptions for their products, in partnership with retailers, to create a seamless multichannel experience. This approach offers convenience and privacy to end customers that would normally buy these products in a physical store and might switch to another consumer brand during any given store shopping visit.

The more progressive industrial companies have suggested order replenishment systems with their dealer networks, based on a superior ability of the manufacturer to forecast demand for their dealer. Some have gone further and are now acting as virtual consultants to their customers' planning organizations. They recognize that helping improve customers' internal capabilities is part of a total solution, making them more competitive suppliers.

"Another significant aspect of the total customer solutions we see deployed by leaders relates to the remote management of aftermarket services, leveraging Internet connectivity," said Debra Hofman, research vice president at Gartner. "The Internet of Things allows for monitoring of performance across the value chain; in the field at customer sites, but also to collect and analyze the big data generated as part of upstream manufacturing and logistics flows. This additional connectivity has also elevated the importance of supply chain security to prevent theft, counterfeiting and other forms of fraud. One thing is clear — future supply chains must seamlessly integrate the digital and physical worlds of customers to be competitive."

Supply Chain as Trusted and Integrated Partner

Growth is a top priority for the C-suite in 2014, with 63 percent of senior executives picking growth as a top imperative in Gartner's 2014 CEO Survey. Leading supply chains are enabling this growth both organically and through successful M&A integration. At the same time, supply chain leaders are emerging as trusted and integrated partners to business groups. Their focus on profitable growth often leads to smarter, more conscious decision making, saving business groups from spiraling out of control in the drive to maximize revenue.

However, in the quest for growth, many companies are finding the business models they were famous for dominating are now under attack from competition. Supply chain has a large part to play in enabling the business to compete for the future, concurrent with protecting existing business. The most advanced companies in Gartner's ranking are not afraid to rethink the design of their global supply networks if that is required for success. In some cases, this has led to increased vertical integration where leaders are getting into their customers and their suppliers businesses in an attempt to dominate value chains, redrawing the lines of competition in the process.

"Deeper contextual understanding of customers, leveraging digital business as part of broader customer solutions and supply chain leading balanced growth are this year's most common trends among supply chain leaders," said Mr. Aronow. "At its 10-year anniversary milestone, the Supply Chain Top 25 continues to offer a platform for debate, learning and helping the supply chain community push the envelope of innovation in its contributions to the global economy."

More detailed analysis is available in the report "The Gartner Supply Chain Top 25 for 2014." More information is available at http://www.gartner.com/technology/supply-chain/top25.jsp.

About the Gartner Supply Chain Top 25

The Supply Chain Top 25 rankings comprise two main components: financial and opinion. Public financial data gives a view into how companies have performed in the past, while the opinion component provides an eye to potential and reflects future expected leadership, a crucial characteristic. These two components are combined into a total composite score.

Gartner analysts derive a master list of companies from the Fortune Global 500 and the Forbes Global 2000, with a revenue cutoff of $10 billion. Gartner then pares the combined list down to the manufacturing, retail and distribution sectors, thus eliminating certain industries, such as financial services and insurance.

About Gartner Supply Chain Executive Conference

Analysts are discussing the future direction of the supply chain industry at the Gartner Supply Chain Executive Conference. The U.S. event is taking place through today at the JW Marriott Desert Ridge Resort and Spa in Phoenix. For more information about the conference, please visit http://www.gartner.com/technology/summits/na/supply-chain/.

The Gartner Supply Chain Executive Conference 2014 will also be held September 10-11 at the Park Plaza Westminster Bridge in London. For additional information about this conference, please visit http://www.gartner.com/technology/summits/emea/supply-chain/. Members of the media can register to attend this event by contacting [email protected].

Additional information from the events will be shared on Twitter at http://twitter.com/Gartner_inc and using #GartnerSCC.

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner 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 a valuable partner in more than 14,000 distinct organizations. 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 6,100 associates, including more than 1,460 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

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