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Supply chain efficiency still at Apple's core


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Major shippers aiming for simpler and more local operations, say analysts.

Resilience, simplification and “multi-local operations” are the most notable supply chain trends among the world’s top shippers, according to analysts at US IT research and advisory firm Gartner.

This week Gartner released its eighth annual Supply Chain Top 25 – a research initiative aimed at raising awareness of supply chain discipline and how it impacted a business.

“Last year, we noted that companies were starting to invest in resources and assets again, reflecting a newly recovering economy,” said Debra Hofman, managing vice-president at Gartner.

“This year, that trend continues even more strongly, with many companies investing for growth.”

Average annual revenue growth of the companies in the study increased 29% over the previous year, said Gartner. The average return on assets and net profits improved by more than 50% in 2010, and then stabilised this year, signaling profitable growth.

The supply chain top five included three regulars – Apple, Dell and Procter & Gamble – and two that have been rising steadily: Amazon and McDonald’s. Coca-Cola, Intel, Cisco Systems, Wal-Mart and Unilever make up the top ten.

Gartner analysts said Amazon was a great example of an “orchestrator”, that went beyond simply borrowing and adapting others’ best practices and consistently defied conventional wisdom.

On resiliency, Gartner said many of this year’s Supply Chain Top 25 companies had been impacted by natural disasters, such as the Japanese earthquake and tsunami, and the massive flooding in Thailand.

Hofman said: “Overall, leaders have remained focused throughout the past year on building resiliency into their global supply chains, and we see it continuing to be a highly valued supply chain characteristic.”

Stan Aronow, research director at Gartner, said companies needed to streamline supply flow and eliminate less profitable product and portfolio complexity.

Meanwhile, said the analysts, manufacturers and retailers have long sought ways to balance the trade-off in their supply network designs between global economies of scale and the demand for local responsiveness.

“Leading companies are reassessing their sourcing and manufacturing networks, and rebalancing their supply network strategies in favour of multilocal design, supply and support. More specifically, they are shifting from a centralised model, where these functions support global markets, to a regionalised approach, where capabilities are placed locally, but architected globally.”

Gartner’s 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 future potential and reflects future expected leadership, a crucial characteristic. These two components are combined into a total composite score.

[ ] 2012-05-26