Gartner Announces Annual Supply Chain Top 25
Gartner, the world’s leading research and advisory firm, has released the results from its annual global Supply Chain Top 25, identifying supply chain leaders and examining exactly what their best practices are ─ something that all supply chain professionals could do with reading, courtesy of our recent COVID-19-disrupted times.
“In our 17th edition of the Supply Chain Top 25, we saw organisations continuing to deal with the effects of COVID-19 on their businesses. Therefore resiliency and agility capabilities became essential to survival,” said Mike Griswold, VP and team manager with the Gartner Supply Chain practice. “Our ranking highlights companies that possess these strategies and other differentiating capabilities.”
Lessons from Leaders
Every year, analysts at Gartner research the supply chains of hundreds of companies ─ a behemoth task, given how globally interconnected supply chain networks now are. Throughout this work, the analysts note what leaders are focusing on, where they are investing the bulk of their time and effort, and what can be applied broadly.
This year, Gartner has identified three key trends that stand out for the listed leading companies that are accelerating their capabilities and further separating themselves from the rest of the pack:
Integrated, Purpose-Driven Organisations
In 2020, many of the supply chains in Gartner’s top 25 study ranking helped keep society running during the darkest days of the pandemic. Now there is an opportunity to solve some of the world’s longer-term social and environmental challenges.
A maturity differentiator among purpose-driven organisations is that those further along in the journey are not simply supporting a varied list of “green” initiatives and people-related programs. Instead, they integrated these into a larger strategy alongside commercial partners. Some are even leveraging product marketing budgets to fund this work and integrating it into brand messages instead of treating environmental, social, and corporate governance (ESG) investments as a purely operational cost.
Customer-Driven Business Transformation
Along with intermittent supply disruptions and larger-than-normal demand swings, the pandemic has driven an accelerated level of business model transformation across industries which required supply chains to be highly adaptive.
“Many changes were driven by an outsized uptick in products and services delivered [directly] to customers and patients, instead of through more traditional, centralised locations such as physical stores and medical facilities,” Mr Griswold said.
Digital First Supply Chain
A Gartner survey of board of directors, taken late in 2020, showed that nearly 70% of companies accelerated their digital roadmaps during the pandemic. Some leading supply chains have reached a point in their transformation journeys where they consider themselves “digital first” in the use of technology to enable more seamless customer experiences and more automated and insightful decisions in supply and product management at scale.
However, digital transformation would not be possible without the right talent. Leading companies conduct formal skills assessment and strategic workforce planning. AI, machine learning and big data analysis are the most common capabilities, and most are simultaneously recruiting and developing these skills in their organisations. Several advanced supply chain organisations run digital literacy and dexterity programs to enable employees to better understand and exploit digital business opportunities.
“Leaders must position new digital technologies as a means for employees to stop spending time on manual, non-value-added activities, so they can focus on providing value for their customers,” Mr Griswold concluded.
More information is available in the report The Gartner Supply Chain Top 25 for 2021: Leaders and Their Stories.
Who’s Got The Best Supply Chain Practices?
Unsurprisingly, Cisco Systems is at the top of the list for the second consecutive year, with its highly diverse, extensive, and global supply chain ─ which spans 300 product families ─ being upheld as a masterclass in the best practice realm. Cisco is closely followed by the usual suspects, including Colgate-Palmolive, Johnson & Johnson, Schneider Electric, and food giant, Nestlé.
“Strong revenue growth, strength in environmental, social and governance (ESG) initiatives, and recognition of leadership in the community opinion polls drove Cisco to the top spot for the second consecutive year,” said Griswold. “Cisco’s agility helped them prioritise video conferencing and critical infrastructure capabilities for hospitals and vaccine research.”
To recognise the stellar work by some of the leading companies, Gartner introduced the “Masters” category back in 2015. To get onto this high-end list, your company must have attained top-five composite scores for at least seven of the last 10 years in the annual reports. This year’s Masters were the same as last: Amazon, Apple, Procter & Gamble, McDonald’s, and Unilever.
“During times of disruption, these companies continue to lead by example and provide advanced lessons for the supply chain community,” Griswold added. “The Supply Chain Top 25 offer a platform for insights, learning, debate and contributions to the rising influence of supply chain practices on the global economy.”
New Kids on the Block
This year, there are also four newcomers on the list: Dell Technologies, General Mills, Bristol-Myers Squibb, and, no doubt, due to their innovative manufacture and excellent distribution of their COVID-19 vaccine across Europe and beyond, Pfizer.
If you’re wondering how your company could join these newcomers on Gartner’s all-important rankings, consider this: the Supply Chain Top 25 ranking comprises two main components: business performance and opinion ─ these two components are combined into a total composite score.
Business performance is judged based on public financial and ESG data, which gives analysts a view into how companies have performed in the past, while the opinion component allows them to see what future potential there is for a company and how the leadership within a company works ─ if you’re visionary and have an excellent plan for the coming years, it’ll catch Gartner’s eye.
“Gartner analysts derive a list of companies from a combination of the Fortune Global 500 and the Forbes Global 2000. In an effort to maintain the list of companies evaluated at a manageable level, a general annual revenue threshold of $12 billion has been applied.”
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”