Benchmark against the best and then set the bar high. It's what better manufacturers do to improve their own performances. When it comes to developing superior supply chain capabilities, however, finding that right performer to benchmark against can be tough to do. Because, of course, it raises questions: What constitutes great supply chain performance? Can any single manufacturing company excel across all the functions that comprise supply chain management? Does it pay to benchmark organizations outside of one's own industry?

What is easy to identify is the importance manufacturers place on top-performing supply chains. "We think that supply chain is a core capability and having a resilient supply chain is an obligation that Cisco treats as paramount to our customers and our shareholders," explains John O'Connor, director of global supply chain management for technology products and services provider Cisco Systems. And Procter & Gamble emphasized the need for a strong supplier network at the consumer goods manufacturer's first-ever supplier summit held last year. "Our suppliers are critical partners in helping us bring innovation to life, manage our costs and improve productivity," P&G Global Product Supply Officer Keith Harrison said. "With the current economic uncertainty, strong relationships with suppliers are more important than ever to achieving P&G's sustainability goals and supporting the company's growth today and going forward."

Both Procter & Gamble and Cisco Systems were among companies named to AMR Research's latest Supply Chain Top 25, which was announced in May. The ranking, according to AMR, "highlights companies that display superior supply chain performance, capabilities and leadership." Of P&G, which ranked No. 3 and has been among the top five performers for five years, AMR commented, "P&G remains a leader in demand-driven concepts, now using this advantage to vault into emerging markets." About Cisco, ranked No. 5, the research firm noted that the company "combines a far-reaching supply chain vision, strong execution and deep collaboration with customers and suppliers." Other manufacturers on the list include Apple and Dell among high-tech firms, PepsiCo and Toyota Motor, as well as Johnson & Johnson.

AMR's annual list does offer one method for determining superior supply chains. The research firm chooses its list via a methodology that includes polling of a peer opinion panel, an AMR Research opinion and three financial metrics (three-year weighted average for return on assets and revenue growth, as well as inventory turns). What metrics to use is always a source of continuing discussions, said Kevin O'Marah, AMR's chief strategy officer, during a recent podcast.

Supply Chain Defined Where does it begin and where does it end? These definitions may help: • The Supply Chain Council definition: Plan, Source, Make, Deliver, Return • The down-and-dirty definition: The sequence of events and processes that extend from your suppliers' suppliers to your customers' customers • The Council of Supply Chain Management Professionals definition: Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistics management activities, including coordinating and collaborating with channel partners, including suppliers, intermediaries, third parties and customers.

Pockets of Excellence

The University of Tennessee's J. Paul Dittmann suggests that the complexity of supply chain management makes it difficult to name a manufacturer that excels across all supply chain aspects. It may be more appropriate to identify "pockets of excellence" or supply chain aspects in which certain manufacturers excel, says Dittmann, who is the director of the Office of Corporate Partnership in the Department of Marketing and Logistics at the university.

For example, Dittmann, a former Whirlpool supply chain executive, believes Honeywell may be among the best in the sales and operations planning (S&OP) process. It's a process that requires a lot of cross-functional coordination, which is difficult for many firms to manage. Companies with cross-functional clashes can suffer from too many SKUs, or stock-keeping units (they are nearly impossible to reduce because the task requires cross-functional effort, he says), slow-moving inventory and problematic forecasting.

Manufacturers have an edge in supply chain excellence when they've mastered the art of internal and external collaboration, but "precious few" have developed a method to make it work, the educator says. Dittmann notes that it's much easier to manage if all aspects are under one's control, but "it's exponentially more difficult when things aren't in your control."

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