The Best Supply Chains

Last year there were five. This year there are seven. Yes, consumer products companies are gaining steam in the AMR Research Supply Chain Top 25. This year, they are the runners-up to the high tech and electronics industry segment and they made progress against all other segments. However, are they really getting better or is the increase in ratings due to the fact that consumer products sell better in the recession? It is a little of both.

Each year, AMR Research evaluates company performance to determine who has the best supply chain. This year, seven consumer products companies placed within the Top 25 in this order: Procter and Gamble (No. 3), PepsiCo (No. 9), Johnson & Johnson (No. 12), Coca-Cola (No. 13), NIKE (No. 14), Colgate Palmolive (No. 20) and Unilever (No. 22). The average growth of the consumer products companies in the Top 25 was 11.8 percent, compared to the average growth for the total population of consumer products companies of 7.3 percent.

The growing importance of supply chain excellence....
While there is a lift in the overall rankings -- versus other industries -- due to the relative impact of the recession on sales, we also feel that the recession has made the industry stronger.  Companies have a greater appreciation of supply chain excellence, and they are redefining processes, building talent and designing networks to fuel growth.

However, are they strong enough for the future? The winds of change are blowing. They are going to be ferocious. The industry is facing increasing compliance, shrinking market baskets with a 6 percent decline in consumer spending, rising competition with a 25 percent increase in private label market share, pending forecasted commodity inflation and rising taxation. Rankings in 2010 will be the true litmus test for supply chain excellence.

What can we learn from the winners?

As we evaluate the companies that made the list, there are four primary themes underlying success:

• Attitude and Focus. The best supply chains have the basics right. They have balance cross-functionally in metrics. They are equally successful in managing growth, inventory management and return on assets. They have an outside-in focus to drive alignment.
• A One-Two Punch. The Supply Chain Top 25 formula rewards growth. Companies that have the one-two punch of growth in global markets and successful launch of new products finish best in the rankings. While P&G best typifies this one-two punch, it was a strong factor in the placement of other contenders.
• Strong Brands. No doubt about it. Companies with the strongest brands perform the best in the Supply Chain Top 25. There is a halo effect for the rankings that has an adverse affect on competing industrial and chemical value networks.
• Industry Commitment. The names on the Supply Chain Top 25 are the same as the companies that lead the cross-industry committees for standards development and process evolution. They are active. They are known. They garner the most peer votes. They are actively investing in the development of supply network process evolution, especially with retail.

Facing the storm on the horizon....

As the storm of competition swells in 2010, it will threaten iconic brands and supply chains will grow in importance. The sector will fight for margin, and the tough will have to get tougher. It is clear. Supply chain excellence will be a factor in helping the strong get stronger and the weak get weaker. It makes a difference. We can see it in the results of the winners each year.

1    Apple
2    Dell
3    Procter & Gamble
4    IBM
5    Cisco Systems
6    Nokia
7    Wal-Mart Stores
8    Samsung Electronics
9    PepsiCo
10    Toyota Motor
11    Schlumberger
12    Johnson & Johnson
13    The Coca-Cola Company
14    Nike
15    Tesco
16    Walt Disney
17    Hewlett-Packard
18    Texas Instruments
19    Lockheed Martin
20    Colgate-Palmolive
21    Best Buy
22    Unilever
23    Publix Super Markets
24    Sony Erickson
25    Intel