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commentary: industry value chain strategies

commentary: industry value chain strategies June 2010 supply chain top 25 Predictions: Who Will rise and

June 2010

supply chain top 25 Predictions: Who Will rise and Who Will Fall?

by Kevin O’Marah

M ost people want predictions on who will rise and who will fall in the coming year. With the ink barely

dry on this year’s Supply Chain Top 25, it may be foolish to make such predictions, but in the spirit of

continuous learning, here goes.

The AMR Supply Chain Top 25 for 2010 was released this past week at the annual Supply Chain Executive Conference in Scottsdale, Arizona. Apple again topped

the list for the third year in a row, followed by peren- nial leaders Procter & Gamble at No. 2 and Cisco at No. 3. We had five new names on the list this year:

Research In Motion (No. 9), Amazon.com (No. 10), McDonald’s (No. 11), Microsoft (No. 12) and Inditex (No. 23). We also had some intensive discussion about what this list means and what we, as

a community of supply chain profes-

sionals, want from it in the future.

Rising

Research In Motion (RIM) — With phenomenal financial scores but a light vote total, RIM has lots of potential. If the business can stay on track, it’s hard to imagine voters failing to lift RIM a few notches.

Hewlett-Packard (HP) — The huge, complex sup-

ply chain HP runs has a tough time scoring well against our financials. After all,

growth on a $120-billion-plus base is a tall order. That said, I can’t say I’ve ever seen a CEO speak more articulately about supply chain as a strategic weapon than Mark Hurd. Watch for HP to gain ground.

LG Electronics — Chief

Everybody wants us to continue publishing the list and, perhaps most importantly, maintain its role as a benchmark for supply chain leaders working to up their games.

One thing everybody definitely wants

is for us to continue publishing the list

and, perhaps most importantly, main- tain its role as a benchmark for supply chain leaders working to up their

games. This we can promise, largely because so many of you are willing to share the lessons you’ve learned with your peers.

supply chain officer Didier Chenneveau spoke at our confer- ence and impressed the audience with a story about his efforts to transform the Korean electronics giant. Sitting just outside the list this year at No. 27, LG doesn’t need too much of a push to crack the list next year.

The other thing I find most people want is predictions on who will rise and who will fall in the coming year. With the ink barely dry on this year’s Top 25, it may be foolish to make such predictions, but in the spirit of continuous learning, here goes.

Kraft — Although not in the Top 25, Kraft jumped from 62 in 2009 to 37 this year. Internally at AMR, Kraft is well regarded, and among the peer community, efforts at collaboration are obvi- ously making an impression.

General Mills — Another consumer packaged goods (CPG) company that’s close (No. 34 this year) and on the rise, General Mills has solid numbers for its size and industry. Maybe more important, however, is the leadership demonstrated upstream with the agricultural supply base.

Johnson Controls — The company dropped like a stone this year, as the weak economy hammered its financials. However, trends in sustainability, where Johnson Controls is seeing strong growth, coupled with more aggressive efforts to communicate strat- egy suggest it’ll be back.

Nokia — Although Nokia fell this year all the way to No. 19, I simply cannot imagine the company not finding its way back up the rankings. I’ll never forget walking away from a meeting I had with its supply folks in Espoo, Finland, thinking, “Yikes — these guys are smart!” Call it a hunch.

Falling

Retailers in general — This year, we looked at the list of attendees in Scottsdale and saw most of the big names across industries, with retail the excep- tion. Our list always has a bunch of retailers, and 2010 was no different. I wonder, however, why so few seem to be willing to share lessons learned with the rest of the community. Is it possible that too few really understand where supply chain is headed? Maybe. I have no doubt that supply chain innova- tion is alive and well in retail, but wish that it came hand in hand with a stronger sense of responsibility.

McDonald’s — Debuting at No. 11 is great, but the big driver behind this high score was the company’s 134.6 inventory turns. As we continue to tune the Top 25 methodology, this sort of big, single-factor ranking driver will be dampened. McDonald’s has a great supply chain, but absent of a more balanced view of leadership across the discipline, I wouldn’t be surprised to see it fall a bit in the ranking.

Toyota — Once in the top five, Toyota dropped

from No. 10 in 2009 to No. 49 this year

could get worse. Our financials use three-year aver- ages for ROA and growth, which means this rocky year will still sting when we redo the rankings next year. On top of that, recalls across the product line have nearly killed the company’s once stellar quality reputation. Typically, this kind of scandalous break- down comes to light slowly. I wouldn’t be surprised to see more bad news before the story is closed.

and it