Supply Chains to Admire
Supply chains have never been tougher to manage. Functional excellence is not enough. Companies have to understand the consumers have the power. If they don’t have end-to-end visibility and control of their supply chains, they will struggle to be competitive.
Supply Chain Insights recently announced their list of Supply Chains to Admire. This report is based on analysis of financial balance sheet and income statement data for the period of 2006-2013. To determine the companies to include in the Supply Chains To Admire list, progress of companies within thirteen industries were analyzed for performance and improvement.
Interestingly, no companies from Retail, Packaging, Pharmaceutical or Medical Devices were included on the list, and some major brands like P&G, Toyota, Samsung and Walmart didn’t make the list.
Many of the companies with higher performance levels have faced the toughest challenges while companies with high margins and less pressing issues have made less progress with their supply chains. Companies performing above their peer group and demonstrating improvement were chosen for the list:
TMSC (Taiwan Semiconductor)
Intel
EMC Corporation
Cisco
Apple
Seagate
Colgate
General Mills
BASF
Eastman Chemical
TRW Automotive Holdings Corp.
Audi
Nike
Ralph Lauren
AB InBev
The report also provided a breakdown by industry.
Semiconductors
According to the report, Taiwan Semiconductor (TMSC) and Intel Corporation have done the best job of performance and improvement. Intel’s size seems to be providing it with an advantage. Economics of scale combined with significant work on talent development and network design gave them the edge. TMSC’s work on open design networks and collaboration with upstream consumer electronics manufacturers helped them make the list.
Consumer Electronics
The competitive nature of the industry, combined with changing demand patterns and shortening life cycles, has required high competency. While Apple, EMC Corporation and Cisco top the list, of all of the industries studied this one has outperformed the rest, according to the report. They are a case study of why supply chain excellence is fundamental for survival.
Automotive
The automotive industry struggled during the recession and then boomed. While revenue is strong, financial results are mixed. Audi demonstrates supply chain leadership by performing at a higher plateau on average of operating margin, inventory turns and ROIC.
Automotive Suppliers
Automotive suppliers were hit hard during the Great Recession and the weakest didn’t survive. Coming out of the recession many diversified. The best overall performance is demonstrated by TRW Automotive Holdings Corporation. However, the report indicates that more cooperative partnerships with automotive manufacturers are needed before significant improvement can be realized.
Food and Beverage
General Mills makes it to the list. When other companies outsourced IT and depended on more third-party resources, General Mills invested in building an internal IT team. As a result, they excel in the implementation of supply chain technologies. They are one of the best companies in both supply chain planning, driving innovation through new technology approaches, and supply chain design. Anheuser Busch InBev N.V. also makes it to the list. With a strong global management team, the InBev organization has focused on the reduction of complexity and the design of the supply chain for global reach.
Apparel
The Apparel industry was transformed by outsourcing and burdened by related risks but the industry is stabilizing. Nike and Ralph Lauren outperform their peer group and drove significant supply chain improvement.
Consumer Packaged Goods
Colgate posted the best performance while driving improvement. With over 42 consecutive quarters of improving operating margin and driving superior performance on ROIC, Colgate makes the list of companies to admire.
Retail
The Retail industry is going through massive change as they struggle with the omnichannel model. The report found their supply chain performance uneven and no retail firm made the list.
Chemical
With slowing growth, and product proliferation of their downstream customers, chemical companies have struggled to sense demand. Two companies from the chemical industry make the list: BASF and Eastman Chemical. BASF has been aggressive in the adoption of analytics, and the building of supply chain centers of excellence and Sales and Operations Planning (S&OP). Eastman’s progress is one of slow, deliberate and steady focus. They have implemented three supply chain planning systems gaining knowledge each time on how to do well at planning.
Medical Device
Medical device companies are resilient, but they are not strong. They have made little progress over the last decade; but with the passage of the Affordable Care Act, and in the face of growing regulations, the industry is consolidating and supply chains excellence is becoming more important. However, no company in the medical device industry made the list.
Pharmaceutical
No company in the pharmaceutical company meets the criteria to be listed on the Companies to Admire list. The problem, according to the report, is that the companies in the pharmaceutical industry are driving results in singular, not a portfolio of metrics making uneven progress.
Packaging
No company from the packaging industry makes the list. These companies face a tough market. Each is being squeezed for margin, and the payment terms are being elongated. Additionally, they have historically been laggards in the adoption of technologies and new supply chain processes.
Defining Supply Chain Excellence
The report recommends the following criteria to define supply chain excellence
–Are you making improvement?
–What is the potential of your supply chain?
–How fast can change happen?
Click here to view the full report.
