Leading the Logistics Pack

Companies that prepared for the recession by coordinating their supply chain divisions with departments that manage engineering and marketing are in the best position to emerge stronger than ever.
That’s the key message from this year’s edition of AMR Research’s Supply Chain Top 25 report released recently. The leading companies on AMR’s rankings of supply chain leaders are manufacturers and retailers that have a strong earnings history. All of them are making supply chain mastery a key to their profitability after demand rebounds.

There’s nothing surprising about the top of the list — Apple, Dell, Procter & Gamble, IBM and Cisco. Apple headed the list last year. Sixty percent of the ranking is derived from the companies’ financial performance, as publicly reported. Companies are rated objectively by their return on total assets, inventory turns and revenue growth. However, 40 percent of their score is derived from the subjective assessments of individual voters who work for and with the leading companies. The voters include 20 AMR analysts, each with a different supply chain specialty, and 170 supply chain executives in a broad range of sectors.

“The purpose is to elevate discussion of supply chain management, to clarify the impact of the supply chain on companies’ financial performance and to use it as a platform for the discussion of best practices,” said Debra Hofman, vice president of AMR Research,
The value of the study rests on what is called the Delphi method, Hofman said. If you poll a group of people who are knowledgeable and independent from each other, the result should be closer to reality than the views of any one individual, no matter how knowledgeable. Only larger companies participate in the survey, but Hofman acknowledged that some small companies are leading supply chains in their sectors.

Apple leads the pack this year because the company “still gets killer financials,” measured by inventory turns, return on assets, and other supply chain metrics despite the recession, she said. “Apple combines operational excellence and innovation excellence.”
In that regard, Apple is not unique. The other companies on the list all “bring together supply, demand and production,” Hofman said. “The people in marketing, engineering, and supply chain all know what the others are doing, and they have very deep collaboration with their customers and suppliers.”