Great supply chains apparently also need great product innovation!
Earlier this month, Gartner announced its annual Supply Chain Top 25. Like many awards, the discussion around the methodology and those that didn’t make the cut but possibly should have, is often as interesting as the listing itself. The basis on public financial data is one of the positives of the Gartner Top 25 and sets it apart from many others. But as a pure supply chain measure, is it also in danger of being one of its greatest weaknesses?
With 50% of the scoring rooted in financial metrics, we cannot divorce company financial success from supply chain effectiveness. Much as we would like to believe in the power of a world-class supply chain, the reality is that there are successful companies with less than stellar supply chains and companies that compete in more challenging environments that only survive because of the effectiveness of their supply chains.
What makes a company like Nokia, ranked number 1 in the 2007 ranking and described as a pioneer in value chain management, slip down the rankings and disappear completely from the top 50 in 2011? Has its supply chain processes faltered to that extent? I expect that the responsible executives would challenge that assertion and from my limited exposure to that business I would still see it as one of the leaders in embracing demand-driven supply chain principles.
How should we interpret the performance of companies like RIM who entered the Top 25 in 2010 and climbed to 4th in 2011 before dropping back to 18th this year? Its ascent was primarily on the back of solid financial results. Unless RIM shows some progress on that front they will be challenged to remain in the Top 25 next year. How much of that is a reflection of its core supply chain performance?
What makes Apple’s supply chain performance deserve to dominate the nearest rival by more than three points on a 10 point scale? To Apple’s credit it leads all elements of the ranking – financial, peer vote, analyst vote.
It is a real example of an integrated value chain, where the success of product, brand and channel strategies are supported by a very effective global supply chain organization. It is a strong argument in favour of a more holistic value chain management approach. The value creation engine of a company includes the extended supply chain and its intersection with brand, product and customer strategies.
As a traditional supply chain measure, there is a danger that product performance may outweigh supply chain performance based on the current ranking system.
That said, I offer my congratulations to those that have made the prestigious Top 25 listing. Let’s continue the debate on how to truly recognize all those that are advancing the knowledge and practice of the supply chain profession and not lose sight of supply chain excellence that exists beyond the Top 25.