For the past 10 years, analyst firm Gartner has compiled an annual ranking of companies that have the best supply chains in the world. Now, it needs to be said at the outset that not every company is considered for the Top 25 list. First of all, they have to be public companies. Second, they have to have at least $10 billion in annual revenues. Third, they have to be manufacturers, retailers, or distributors. Fourth… well, Gartner has so many exceptions to what constitutes an eligible company that it’s sometimes a head-scratcher to figure out exactly what kind of a “supply chain” Gartner is looking for.
For instance, any company that provides transportation or logistics of some kind—airlines, railroads, ocean carriers, 3PLs, etc.—isn’t included in the Gartner rankings. Also, quite a few hardcore manufacturing sectors are omitted as well, such as oil & gas, metals, mining, shipbuilders, and construction.
Those companies that ultimately do meet the strict Gartner criteria are then submitted to a group of peer voters, as well as a few dozen Gartner analysts, who nominate their choices for the Top 25 (in the interests of full disclosure, as in years past, I am one of the peer opinion voters). All of the companies under consideration are also evaluated on several metrics: three-year weighted return on assets; three-year weighted revenue growth; and inventory turns. The votes and the metrics are then sorted through, and a composite score for each company is tabulated. Thus, the final rankings are part beauty contest, part financial performance, with inventory turns being the only true supply chain metric but not one that applies equally well to every industry (fast-food giant McDonald’s, for instance, blows the rest of the pack away with 153 turns, which is well more than twice as many as any other company on the list).
As has become standard practice with the Gartner Top 25 lists, the high-tech industry dominates the rankings, holding down seven (28%) of the 25 slots. That could be due to the “sexiness” factor inherent in companies like Apple and Samsung, or to the high inventory turn rates, or to their impressive revenue growth curves. Whatever the case, high-tech clearly has “it” whereas other sectors—such as automotive, aerospace & defense, chemicals and electrical equipment manufacturers—don’t merit inclusion on the list at all. You’ll search in vain if you expect to find companies like Toyota, Boeing, Dow or General Electric in the Top 25.
In fact, Ford Motor was on the list a year ago but fell off the 2014 rankings, presumably due to the fallout from the constant drumbeat of recalls that has rocked the automotive OEMs this year. Another perennial member of the Top 25 and a one-time poster-child for supply chain best practices fell off the list for quite another reason: high-tech giant Dell went private, and since Gartner only considers public companies in its rankings, Dell got the boot. This exposes one of the main problems with the Top 25 rankings, as many of the world’s best supply chain performers are omitted from consideration because Gartner hasn’t figured out a way to include their financial and performance metrics in the mix.
Ultimately, though, the Gartner list has become very popular as it certainly achieves its main goal: It gets people talking about the relevance between top supply chains and top companies, and the importance of talent development to ensure the best people are managing those supply chains. In fact, Gartner’s list and my own book on supply chain management best practices derive from the same belief: Top-performing companies have top-performing supply chain people working for them.
Following in reverse order, in the tradition of Casey Kasem’s Top 40 countdown, are the Top 25 Supply Chains for 2014, based on analysis and research compiled by Gartner analysts Stan Aronow, Debra Hofman, Michael Burkett, Kimberly Nilles and Jim Romano. You can check out the rankings from previous years here:
