And I thought last year’s Top 25 Supply Chain was a surprise

CJWehlage

On the bus ride back to the McDowell Marriott after the 2016 Gartner Top 25 Supply Chain event, I plugged my ear phones into my cell and listened to some Pearl Jam.  Their classic hit, Last Kiss, the song summed up my thoughts about the 2016 rankings.  So, the supply chain version of Last Kiss would go something like this…

“Oh where, oh where, can my supply chain be?

The trends took her away from me

She’s gone peripheral, so I’ve got to think Core

So I can get my supply chain back to reality”

The “Green Washing” of the Top 25

If you take out the new CSR ranking from 2016, your Top 25 rankings would be:

Actual 2016 Rank Without CSR Rank Wehlage Bold Predictions
1 Unilever Amazon Amazon
2 McDonald’s McDonald’s Unilever
3 Amazon Unilever Inditex
4 Intel Intel Intel
5 H&M Cisco Samsung
6 Inditex H&M Cisco
7 Cisco Inditex McDonald’s
8 Samsung Nike H&M
9 Coca Cola Starbucks Nike
10 Nestle Colgate Palmolive Starbucks

 

Three pieces of edgy insights from this:

a. My Bold Predictions were not far off.  I did call the Nike and Starbucks entry into the Top 10.  I am bolder on Samsung, simply because they had the highest 2016 Inventory Turns aside from McDonalds.  As well, Samsung was 7th in Peer Voting rank, so the other “185” Peer voters agree with me.

b. I did nail the highest mover up the rankings with Schneider Electric. They went from #34 in 2015 to #18 in 2016.  Congrats to Annette Clayton and her team.

c. Variety breeds interest.  Interest breeds readership.  Readership helps revenue.  It started last year when the “Masters” category was created.  All data aside, this new category was primarily to remove Apple and P&G, so the words “we have a new #1” could be stated.  In 2016, another category was created, called the CSR ranking.   The new trend to be sustainable is part of the current category: Revenue Growth, so why add another category like CSR when we should be moving towards the core supply chain metrics of total delivered cost and customer service.  I guess supply chain leaders who want to move up the Top 25 now have to persuade their HR & Legal departments to publish a CSR report.

And, since Amazon scored a whopping “zero” on CSR in 2016, Gartner was able to say: “we have a new #1”.

Hold the presses. I made a bold prediction about Amazon being #1, mainly due to their ROA improving.  Amazon had been spending a ton on assets, both data center and distribution, which killed their pre-2016 ROA ranking.  Remember in 2015, Amazon’s ROA was 0.0%.   However, that spending has come to fruition, in terms of revenue growth.

Amazon was #1 in Gartner’s Three Year Weighted Revenue at 20.40%.

Amazon was #1 in Peer Voting, scoring 3356, with 2nd place getting 1841!

Amazon has reshaped the Retail experience, and is in the process of reshaping the distribution industry.  Their spending on assets to take market share is killing their ROA, and as such, killing their Gartner Top 25 position.  This, my friends, is why we need to get back to CORE supply chain metrics when measuring the Top 25.

Peer versus Analyst – the disconnect has widened

I continue to be confused as to how 40% of the Top 10 Supply Chains can be different between the Peers and the Analysts.

Analysts (38) Peers (185)
Unilever Amazon
Amazon Unilever
Cisco Systems McDonald’s
Intel Walmart
McDonald’s The Coca-Cola Co.
PepsiCo Nike
Colgate-Palmolive Samsung Electronics
Samsung Electronics Nestlé
Inditex Inditex
HP Cisco Systems

 

The confusing part is where the Analysts rank Intel, PepsiCo, Colgate Palmolive and HP, especially HP.

Analyst Rank Peer Rank
Intel 4 11
PepsiCo 6 14
Colgate Palmolive 7 16
HP 10 24

 

HP at #10?  The company just restructured into two companies, as their original structure (including supply chain) lacked the capability to succeed.  CNN Money, Greg Wallace and Chris Isidore, October 6, 2014, “The company said the split will give both companies the focus, financial resources, and flexibility to adapt more quickly to the market…” So, what has been in place lacked focus, financial resources, and flexibility!

This is probably driven by the significant change in HP leadership over the past 10 plus years.

1992-1999 – Lew Platt

1999-2005 – Carly Fiorina

2005-2010 – Mark Hurd

2010 – Leo Apotheker – 11 months

2011-2015 – Meg Whitman

2015 – Don Weisler

This is one where I’d love to hear follow up on what the 38 Gartner Analysts saw in HP that the 185 Peers did not see.

A Challenge to get back to the “Oscars”

When I was at AMR Research, the Top 25 just seemed more like the Oscars.  A gala event with some unique and significant speakers.  I must say that I do enjoy hearing the keynotes, and throughout the past 10 years, they have provided great learnings to apply to supply chain as well as personal growth.  However, I would like to see more globally impactful keynotes.

2006 Alan Greenspan 13th Chairman of the Federal Reserve
2006 Bill Clinton 42nd President of the United States
2007 Colin Powell 65th US Secretary of State, Four Star General
2007 Bill Bradley US Senator New Jersey
2008 Vincente Fox 55th President of Mexico
2009 Michael Eisner CEO Walt Disney
2010 T Boone Pickens BP Capital Mgmt
Gartner acquires AMR Research
2011 Rick Frazier VP SC Coca Cola
2012 John Kern SVP SC Cisco
2013 Jim Collins Author – Good to Great
2014 Mark Jefferies Author – The Art of Business Intelligence
2015 Guy Kawasaki CTO Apple, The Art of Innovation
2016 Joby Ogwyn Mountain Climber

 

Perhaps it’s just me, but my ask to Gartner is to bring back the “Awards” feel.  Pass out trophies and have the winners come to the stage… just like the Academy Awards.

Early Prediction for 2017

The easy prediction is Amazon into the Masters category.  2017 will make Amazon be in the top 5 for 7 out of the past 10 years.

While Gartner has been pushing Intel for many years (Analyst have Intel at #4, while the Peers have Intel at #11), Intel is facing some significant structural changes and competition.  So, Intel stays at #4 for a third straight year.

The early indicators show that Unilever won’t lose the top spot in 2017.  Unilever has strong Peer and Analyst ranks, which should keep them from falling in the Composite Score.

I am predicting that H&M will rise up into the Top 3 for 2017.  H&M has a big strategy to grow into the Indian Middle Class.  2016 Peer rank of #17 and Analyst rank of #19, provides good flexibility to move up in those two categories.

Here’s to hoping a new trendy category doesn’t get created in 2017… unless it’s got something to do with CORE supply chain value.

CJWehlage

CJ joined Kinaxis in 2013 with the responsibility to guide the company’s industry strategy within the high tech vertical. With extensive experience, both as a supply chain practitioner and an industry research analyst, CJ serves as a strategic advisor to the company, while also supporting global field teams and working with prospects and customers as they define and pursue supply chain excellence strategies. C.J. Wehlage has over twenty three years of industry experience as a supply chain professional, researcher, and technologist. Before joining Kinaxis, he was VP of High Tech Sales at Jonova, and prior to that, VP of Supply Chain at Sony Electronics. CJ was also ran the High Tech Practice at AMR Research, responsible for supply chain best practice research & thought leadership in the high tech industry. In addition, Wehlage has held leadership roles at EMC, where he was responsible for S&OP, Manufacturing M&A, Supply Chain IT, and Lean design; Bose, where he led a large scale ERP integration, and Apple, where he led Pacific Operations & WW Desktop Planning. C.J. has also served as an adjunct professor at Northeastern University, APICS CSCP, Six Sigma Black Belt, and a frequent speaker at supply chain conferences.

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