Archive for the ‘Supply chain collaboration’ Category

Elephant in the Room: Thoughts on Metrics That Matter in Semiconductor and Hard Disk Drives

Published August 29th, 2014 by CJ Wehlage 0 Comments

Metrics That Matter in Semiconductor and Hard Disk Drives

Supply Chain Insights recently published a Metrics That Matter report covering both the Semiconductor and Hard Disk Drive (HDD) industries. Despite being hit hard by the recent recession, overall the research shows that these two industries have fared well over the last decade and are positioned to continue that success.

Success, provided they monitor the 7 “elephants” in the room.

Consolidation

Notice in the Supply Chain Insights report, there are only two HDD companies.  That industry has already gone through consolidations.  Semiconductor is poised to consolidate, which will have huge impact on the metrics.  It’s already happening with Avago/LSI, RF Micro/TriQuint, Micron/Elpida, MediaTek/MStar and Fujitsu/Panasonic.  Speed to integrate the planning functions during an acquisition is critical.

Profitability

With the OEM’s driving down the price, the semiconductor/HDD companies will have to follow (or innovate new products).  Lower price means lower profitability. This will begin to impact the semi/HDD ability to raise capital and innovate/expand.  Cost pressures and faster time to market in the planning processes will be required.

Global pressure

Consider that the Chinese and India governments are investing in the semiconductor industry.  With China already a source for semiconductor raw materials and the China/India end consumer market growing, there will be pressure to supply chips and hard drives to local China/India OEM’s first.  This could create a shortage in the US/Europe OEM chain.  Understanding inventory planning will take on a new dynamic.

Of course, like any industry, Semiconductor and HDD manufactures are faced with a set of unique challenges in their space that puts their supply chain at risk.  The largest risk being a balance between shrinking product lifecycles in the OEM world versus expensive asset utilization.  We are at a time where consumer electronic brands have a 9 month (that’s 270 days) lifecycle, while Semiconductor & HDD supply chains have 6 month component lead-time, with 3-5 year depreciation of capacity.  After reading the research, I would summarize the main obstacles as follows:

Position in the Supply Chain

As suppliers of technology embedded in more complex products, Semiconductors and HDD manufacturers find themselves further back in the supply chain, often 3-5 levels down. This can make it difficult (compared to those closer to the front of the supply chain) to find balance in what Supply Chain Insights calls the Effective Frontier – growth, profitability, cycle and complexity. The ‘bullwhip effect’ certainly plays a role here, creating wide fluctuations (over and under) of supply and demand – due to disorganization, lack of communication or miscommunication, incorrect demand information, etc. – as information moves down the supply chain to the manufacturer.

Potential for Tightening Margins

Related to their position in the supply chain, competitive and consumer pressures that drive down pricing are often pushed down the supply chain, forcing suppliers to tighten their costs.

Supply Chain Length

Reliance on suppliers beyond the US borders has extended the length of the supply chain, and opened it up to significantly more risk, as demonstrated by the impact of the Thailand flooding on both the Semiconductor and HDD segments.

Growing Complexity

As one of several suppliers contributing to the creation of a single product, Semiconductor and HDD manufacturers are susceptible to issues experienced by others in the supply chain, as explained by Broadcom in the Supply Chain Insights report: “Our products are incorporated into complex devices and systems, creating supply chain cross-dependencies. Accordingly, supply chain disruptions affecting components of our customers’ devices and/or systems could negatively impact the demand for our products, even if the supply of our products is not directly affected.”

Despite these challenges, the Supply Chain Insights dive into financial data shows that these two industries have fared well, thanks to strengths in product innovation and supply chain planning functions. More specifically, the research shows strong year-over-year growth and large (and increasing) operating margins (with minimal impact -so far-on from upstream cost pressures).

On the downside, it appears that these industries are struggling with inventory issues. The research shows the cash-to-cash cycle has increased, as have days of inventory, and inventory turns are on the decline. Supply Chain Insight’s look at four key Semiconductor companies and two key HDD companies indicates these inventory issues are not the result of poor inventory management but rather an industry trend. The research suggests that both product complexity and the length of the supply chain are contributing factors.

Based on the above, it seems clear that putting a focus on optimizing inventory management practices, making risk management initiatives a priority, and building strong collaborative S&OP practices with their customers, will help Semiconductor and HDD manufacturers continue to see success in the coming years.  This comes with a solid planning system of record.  One that will remove manual steps in the process, drive real time information from the semiconductor/HDD testing to the OEM demand, and connecting the end-to-end decisions with the planning model.

P.S. The Supply Chain Insights’ research report covers additional areas than what I’ve summarized here, and supplies comparative financial data. If you’d like to read the Supply Chain Metrics That Matter: Semiconductors and Hard Disk Drives report in its entirety, you can download a copy here, with no registration required.

 

Posted in Demand management, Inventory management, Supply chain collaboration, Supply chain management


An Open Confession – Please Don’t Fire Me, I Promise to Learn Laugh Share and Connect on the Supply Chain Expert Community

Published August 14th, 2014 by Bill DuBois 0 Comments

Before I start let me confess something. I am not a social media guy. I only go on Facebook to see my latest invitations to play Candy Crush and I still think a Twitter is 3 hits away from a no-hitter. However the idea of an online community seemed a bit more appealing since it was all about a group of people with a common interest sharing information on that topic. Obviously one community I pay attention to is the Supply Chain Expert community powered by Kinaxis. That leads me to the second part of my confession. I haven’t been on the community for a little while. Recently I was doing a demonstration of the Dashboard capabilities in RapidResponse. One participant asked about authoring Dashboards and I suggested they visit the Supply Chain Expert Community to check out a short video on authoring dashboards. The third part of my confession is that I had not seen the video for myself. I knew it was there but after making the recommendation I thought I should see it firsthand. The final part of my confession is that I had been taking the content of the community for granted.

The first thing I took for granted is that anyone can get to the dozens of training videos, for free, without having to be a Kinaxis customer. The video I suggested on authoring Dashboards was only one of many. If you look at the 6 menu items below, 5 are open to anyone. Only the support is closed to customers because it deals with specific customer data and use cases.

supply chain expert community header

If you look at the Content section you’ll see everything from ways to better utilize RapidRepsonse to information of key Supply Chain topics and strategies. Sorry, it’s lacking a bit on motivational quotes and links to the latest celebrity wardrobe malfunctions. Notice I’m only in as a guest and still have access to everything from blog posts, discussions and videos.

supply chain expert community content

Next you can see who is participating. This group includes RapidResponse users, Kinaxis customers along with Supply Chain Analysts, consultants and many people just looking to learn more about Supply Chain.

Places and the Supply Chain Hub easily take you to some of the most popular and informative places in the community. One of those places is the Just for Laughs section which includes the most popular Supply Chain show in western Ottawa, the Late Late Supply Chain Show. Some people say it was just a way I could  get free Coronas but it was really a group of employees that wanted to shed light on a vital part of any organization and the opportunities available to radically change the way we manage Supply Chains…while drinking beer.

supply chain expert community places

The RapidResponse section is a goldmine of information for all users and anyone interested in getting into the details of the new generation of Supply Chain tools and processes. I still can’t believe this section isn’t locked down to customers but the Kinaxis team feels that more participation will lead to faster breakthroughs and stronger Supply Chains for their customers.

supply chain expert community RapidResponse

There you have it. The truth will set you free, I feel much better after my confession. So go check out the community or drop me a comment to see if I got fired for my lack of social media savvy.

 

Posted in General News, Supply chain collaboration, Supply chain comedy, Supply chain management


David and Goliath: Lessons for supply chains

Published July 30th, 2014 by Carol McIntosh 0 Comments

David and Goliath | supply chain perspectiveI just finished a great book called ‘David and Goliath’ by Malcolm Gladwell.

The book references the story about two men, Goliath from the Philistines and David from the Israelites in the days of the Old Testament in ancient Palestine.

As most of you know, in the battle of David and Goliath, David, a small man, the underdog, was confronted by a giant, a man so formidable it would have seemed impossible for David to even survive such a fight. But he did. He won using skill and techniques that were not typical for this fight. Goliath was weighed down by his armor. David was flexible, responsive and targeted. He knew that he couldn’t rely on his size if he wanted to win.

Having been in supply chain for so many years, I immediately made a connection.

The correlation I saw is with organizations. I have worked with numerous organizations in multiple industries and it is disappointing to see that quite often the bigger they get the more difficult it is for them to make effective decisions. It is very easy for a large organization to, over time,  apply more and more armor. They develop more guidelines, decision hierarchies, rigid processes which end up making it more difficult for employees to achieve their goals than before. The end result is latent decision making, lack of flexibility, costly errors, and politically charged decisions.  The company may be doing well from a shareholder view but when you peel back the onion you see the issues. What impresses me is the caliber of the employees. They are many intelligent, forward thinking individual contributors tangled up in the armor.

On a positive note, I did recently have the pleasure of working with a very large company who acted like David. At one time I expect that they were the underdog. Their advantage stems from their culture. It is a company with a culture of rewarding innovation, empowering employees, providing a clear line of communication to senior executives, succinct communication in meetings and emails, and the use of process to ensure execution to plan.

As you can see, I am a big believer in the David’s. I work for a David and we are winning many battles. The story of the underdog winning the battle is always appealing to everyone. Just remember that it is with just cause and there is no reason why any company, large or small can’t maintain the skills of a David.

 

Posted in General News, Supply chain collaboration


What the Analysts Are Saying About…A&D Supply Chains

Published July 18th, 2014 by Bill DuBois 0 Comments

What the Supply Chain Analysts Are Saying About A and D

Are you looking for some reading material to pass the time on your next flight? Even if you’re not you should check out Supply Chain Insights, Supply Chain Metrics That Matter. For the past several years, Supply Chain Insights has been delivering this research series.  What caught my eye is that for each report, they do a deep dive on a specific industry and use a mix of financial data, survey research results and interactions with their clients to help get a better understanding of various industries’ supply chains.

I spread my Supply Chain wings at an Aerospace company and since Aerospace and Defense is a key vertical market for Kinaxis, the recent Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report was downloaded on my laptop to read on my next flight. The research benchmarks A&D companies against other industries and looks at the top five A&D companies over the last decade. Although it didn’t give any suggestions on what to do when you find yourself in row 32, you know the one next to the washroom, it did discuss the challenges the industry is facing as well as offering up solid recommendations for areas of improvement.

From a challenges perspective, here are the highlights covered in this report.

The obvious challenge is the complexity in the A&D industry. The report uses the Boeing 747-8 International as an example. It has about 6 million components which are manufactured in 30 countries by 550 unique suppliers. Think about those design, sourcing and delivery challenges. I always thought getting through security these days was complex.

With such a heavy reliance on first, second, third, fourth and fifth tier suppliers and in some cases having only one or two suppliers for specific components, it’s easy to see how delays and budget overages can happen. A supply chain based so heavily on external sources is susceptible to more risk than catching a flight on time out of Newark. As Supply Chain Insights mentions, this is having a significant impact on the company’s bottom line.

Interestingly, to help address the issue of ensuring materials are available when needed; the research indicates that A&D companies have “developed some of the most advanced sourcing techniques and practices.” Companies like Lockheed Martin, are looking at new strategies for materials (raw or otherwise) that are harder to source, especially in the cases where increased Supply Chain volatility have thrown a wrench in their “Just In Time” approach. The challenge is balancing reduced material delays with rising inventory levels and longer Days of Inventory.

To help address these challenges, Supply Chain Insights makes a few recommendations that I think are spot on. Suppliers, in particular of materials that are sole sourced, play such a large and important role in the A&D supply chain, it’s vital that there be a focus on supplier collaboration and communication at every level.  A big part of this is increasing visibility into the supply chains to ensure they can anticipate and plan for potential disruptions. Focusing in these areas will help reduce supply chain risk, and make A&D companies better prepared to deal with inevitable disruptions when they do occur.

Thanks to Metrics That Matter, not only did I get some valuable A&D insights but it took my mind off of sitting in row 32 on a delayed flight out of Newark. The report covers a lot more ground than what I’ve discussed here, so feel free to download a full copy of Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report here. (No registration required.)

Posted in Best practices, Demand management, General News, Supply chain collaboration, Supply chain management


Celestica recognizes suppliers with its 2013 total cost of ownership supplier awards

Published June 16th, 2014 by Melissa Clow 0 Comments

On this Monday morning, we would like to share some good news with our readers: We had the great pleasure of being awarded a 2013 Total Cost of Ownership (TCOO) Supplier Award from Celestica, which recognizes suppliers that support Celestica’s TCOO sourcing strategy and demonstrate excellence in quality, delivery, technology, service, pricing and flexibility.Celestica Recognizes Suppliers With its 2013 Total Cost of Ownership Supplier Awards

Kinaxis is very proud to be awarded “Best IT Technology Partner” by their valued customer.

Celestica’s global network has over 3,000 suppliers making the competition tough. To be recognized as a top partner from all the other candidates is something we are incredibly proud of.

We’d like to congratulate the other winners as well! See the full list here: http://www.celestica.com/News/News.aspx?id=4774

Learn more about Celistica’s supply chain operation, by viewing past blogs and videos:

 

Posted in Awards, General News, Supply chain collaboration


Mentoring, Sponsorship and Quotas: What are their relative merits in bringing more women into supply chain management?

Published May 27th, 2014 by Melissa Clow 0 Comments

Next week, June 5, 2014, we are excited to host a webcast on women in supply chain management.

We have a fantastic panel of accomplished female supply chain practitioners as well as industry expert Lora Cecere serving as the moderator. Register for the webcast to hear them discuss the thorny issues of mentoring, sponsorship, and quotas as mechanisms to get more women into supply chain, and the relative merits and drawbacks of these approaches.

Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?

Event Details:
Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?
Date: Thursday, June 5, 2014
Time: 2:00 PM to 3:00 PM ET

There is a consensus that since women constitute over half of the workforce but just 10% of top supply chain executive positions in Fortune Global 500 companies that something needs to be done to address this imbalance. While a great deal of attention gets placed on the ‘glass ceiling’ concept, there are a lot of women who face barriers and discrimination at mid and entry level positions too.  There is a clear social responsibility need and this panel will focus on the practical advantages to having more women in supply chain including:

  • Do women and men make decisions differently? If so, why does this matter to supply chain?
  • Has supply chain become more relevant to women as a career option?
  • What does a career path look like for women in supply chain?

Reserve your spot!

P A N E L I S T S :
Verda Blythe, Director, Grainger Center for Supply Chain Management, Wisconsin School of Business
Laura Dionne, Director, Worldwide Operations Planning, TriQuint
Elisabeth Kaszas, Director, Supply Chain, Amgen Inc.
Shellie Molina, VP, Global Supply Chain, First Solar

M O D E R A T O R :
Lora Cecere, Founder, Supply Chain Insights

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Posted in General News, Pharma and life sciences supply chain management, Supply chain collaboration, Supply chain management


Gartner Supply Chain Leaders Conference – What will be Hot?

Published May 20th, 2014 by Trevor Miles @milesahead 0 Comments

My friend and colleague CJ Wehlage has weighed in on what he believes will happen on the Gartner Top 25.

CJ is most certainly being bold and I cannot fault his analysis beyond the usual carping that the Top 25 generates. Instead I want to focus on what seem to me to be major trends that are maybe below the surface but will inform a lot of the discussion. I go to and speak at a lot of conferences so I hear a mixture of over stated claims, future initiatives, and concerns about the state of Supply Chain Management.

Over the past 3-4 years Sales & Operations Planning (S&OP) has seen a resurgence in interest, including the many variants such as Integrated Business Planning (IBP) and SIOP. More recently there has been a lot of discussion, including from Christian Titze, Ray Barger, and others at Gartner on Visibility, usually coupled with the term end-to-end. What I have been hearing more and more recently, let us say late 2013and early 2014, is end-to-end planning. Kinaxis led the charge in this space first calling this a Control Tower in 2012-2013, but that was quite confusing because the 3PLs were already calling their capabilities Logistics Control Towers. Which got even more confusing when Visibility became more popular because how is that different from a Logistics Control Tower?

To me this is all semantics. At the core what people are trying to do, whether during execution or within operational, tactical, or strategic planning is to bring in a wider set of data so that they can investigate more alternatives during the planning phases and get early warning of things not going to plan during the execution phase. Perhaps even more importantly it is about getting different functions within the organization and even across organizations to work together to resolve issues, which is of course the essence of S&OP:

Sales and operations planning (S&OP) is an integrated business management process developed in the 1980s by Oliver Wight through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization.

Substitute the words “executive/leadership” for any other group and you have what I am hearing over and over as End-to-End Visibility and End-to-End Planning. It is about lowering the walls between functions and organizations so that we can finally replace inventory with information.

But this isn’t what is in the core of the bubbling cauldron. End-to-End Planning and Visibility are driving a core need for a rethink of the entire supply chain data layer. Gartner went through this rethink a few years ago, and, as much as I hate to admit it, they were ahead of me. This is when Gartner moved from a 4 stage demand-driven maturity model to a 5 stage model in March 2013 by inserting a stage in the middle called Integrate. (Introducing the Five-Stage Demand-Driven Maturity Model for Supply Chain Leaders, 26 March 2013, Noha Tohamy, Matthew Davis)

Gartner states that what is required to achieve this stage of Integrated DDVN are

Technologies to support end-to-end supply chain processes; improved data rationalization and integration capability.
Cross-functional decision making across internal supply chain; process-focused COEs to enable the business.

I bring out these description of technology and process needs because they show the dependency of the process on the technology. They also show that my statements above are totally consistent with Gartner’s perspective.

But the elephant in the room is the technology. In fact it is really the data. Many companies have several instances of ERP, each deployed differently. Despite many moving to a single instance of ERP there are still many ‘shadow IT’ required to do what the core ERP solution cannot. And then there is the planning layer, which is even less harmonized or standardized. Most business people consider this an IT problem. Guess what? It isn’t going away until the business makes solving the data issue their issue. And it isn’t about consolidating down to a single ERP system. Even though consolidating down to one ERP instance is a step forward, with manufacturing outsourcing accelerating in many industries, heterogeneous data sources are here to stay. The question is what will the future data layer look like?

As Josh Greenbaum states in a blog published just today and titled “Security, Privacy, Big Data, and Informatica: Making Data Safe at the Point of Use

Our data warehouse legacy treats data like water, and models data management on the central utility model that delivers potable water to our communities: Centralize all the sources of water into a single water treatment plant, treat the water according to the most rigorous drinking water standard, and send it out to our homes and businesses. There it would move through a single set of pipes to the sinks, tubs, dishwashers, scrubbers, irrigation systems, and the like, where it would be used once and sent on down the drain.
But data isn’t like water in so many ways.

My bold prediction is that the data layer isn’t going to be ERP centric as it is now. And we are not going to repeat the marketplace craziness of the late 1990s. Unless cloud native ERPs such as Kenandy, which is based on SalesForce, emerge with built-in semantics to absorb meta-data from many sources and pull data in when needed. But I predict we will see a whole new breed of data providers emerge, possibly out of the wreckage that is the EAI space, that will capture this space and serve up data for analytics and business purposes.

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Posted in Milesahead, Response Management, Supply chain collaboration, Supply chain management


Part 2: Bold Predictions for the 2014 Top 25 Supply Chains

Published May 14th, 2014 by CJ Wehlage 1 Comment

Yesterday, I posted Bold Predictions for the 2014 Top 25 Supply Chains Part 1 where I gave a brief recap on my predictions from last year and the approach I took for this year’s Bold Predictions for the 2014 Top 25 Supply Chains.

Now I’d like to share with you:

  • Biggest Move Up the Top 25 Ranks
  • Biggest Surprises
  • My top 5 2014 Predictions

Biggest Move Up the Top 25 Ranks
This is the supply chain that will make the biggest move up in 2014 from their 2013 ranks.

And the winner is…

Lenovo has been making news, especially with acquisitions:

  • IBM’s personal computer business in 2005
  • IBM’s server lines in 2014
  • NEC joint venture in 2011
  • ~ 3800 patents from NEC in 2014
  • Medion in 2011, giving them 14% of the German computer market
  • CCE in 2012, giving them a local Brazilian partner for regional growth
  • Stoneware in 2012, to expand cloud computing services
  • LenovoEMC joint venture for network attached storage solutions
  • Motorola Mobility from Google in 2014
  • Nok Nok Labs for implementing voice recognition over passwords for security

All this activity will have a positive effect on both their Peer and Gartner Opinion votes.As well, Lenovo had a 18% increase in revenue from 2012 to 2013, and a 18% increase in gross profit.I wouldn’t be surprise if Lenove went from #20 in 2013 to #10 in 2014.

 

Biggest Surprises

The biggest surprise for the 2014 Top 25 Supply Chain will be the year of the Automotive return to glory.Ford, BMW, Volkswagen, Hyundai Motor, and Tata Motors all had a good 2013.The restructuring phase appears to be behind the industry.Global auto sales have been good, especially in China and Japan (15% y/y), along with Western Europe.While there’s reason to cheer the sales growth, the auto industry supply chains will need to step it up.The pressure going forward will be on profits, through lower pricing and raised incentives to keep up sales.Ford issued a profit warning due to pricing pressures in late 2013.The supply chain leaders in the automotive industry will need to drive the profitability challenge, by lowering costs and developing innovative methods in their supply chain strategies.

 

Top 5 2014 Prediction
#5

Ever since Kevin O’Marah and I sat down with Samsung back in 2008 at their Suwon location, I’ve always admired Samsung’s supply chain.They run one of the best S&OP’s, focusing on market share across their multiple business units : Computing Products, Home Appliances, Semiconductors, Digital Displays, Mobile Devices and Home Electronics.They moved from #13 in 2012 to #8 in 2013, driven by strong revenue growth, peer opinion and good inventory turns.What puts them in at #5 will be continued revenue growth.Going from $201T (won) in 2012 to $229T (won) in 2013.2013 year end net income was $30.47T (won), along with $36.47T (won) in operating profit.A 27% on-year increase.And that’s with an $800B (won) “special employee bonus” to commemorate 20 years since Chairman Lee Kun-hee announced a management strategy, as well as a $700B (won) being knocked off by a stronger won.

 

#4

In the 2012 Gartner Top 25, McDonalds beat out Amazon by 1/100th of a point, 5.87 composite score vs Amazon’s 5.86.I have them coming in at #4, simply because their revenue growth was only 0.2% from 2012 to 2013.From their 2013 Annual Report, I also found it concerning they were challenged to respond fast enough to flat forecasts, competition, pricing and customer facing initiatives.

Don Thompson, CEO, McDonalds – “Though McDonald’s continues to grow, our performance fell short of our high expectations this past year.Challenging conditions – including a flat or contracting informal eating out category in most of our major markets, increased competitive activity and consumer price sensitivity – impacted our results.In addition, some of our customer facing initiatives didn’t generate the comparable sales lift and incremental guest visits needed to overcome external pressures in today’s highly fragmented market.”

These are challenges that an effective supply chain should know sooner and be acting faster.

#3 Unilever

Unilever has been doing a lot of things right, especially to influence their Peer and Gartner Opinion votes.They’ve done a significant amount of keynote presentations:

  • SCM World Live 2013, Marc Engel, CPO Unilever
  • SCM World Leaders Forum 2014, Paul Polman, CEO Unilever and Pier Luigi Sigismondi, Chief Supply Chain Officer Unilever
  • SCM World Live 2014, Jorg Brouwer, Group Vice President, Sales & Operations Planning Unilever
  • Gartner Supply Chain Executive Conference Australia 2013, Dhaval Buch, SVP Supply Chain, Asia, Africa, Russia, Unilever
  • ISMC2013, Pier Luigi Sigismundi, CSCO Unilever
  • Logicon 2014, David Beauchamp, VP Global Logistics Unilever
  • Sustainable Supply Chain Summit, 2013, Dirk Jan de With, VP Procurement Ingredients & Sustainability Unilever
  • Supply Chain West Africa 2013, Adedoyin Ashiru, Manufacturing Director, Unilever Nigeria

I would have been thinking #2, as Unilever posted a 4.3% increase in 2012 to 2013 sales growth.But turnover was down 3% from $51.2B (euro) to $49.8B (euro), largely due to the impacts of foreign exchange and net acquisitions & disposals.Despite an increased spend in advertising and promotions, Unilever’s core operating margin only improved 0.4%.

#2 Apple

Things are still going very well for my previous employer. Revenue went from $156B in 2012 to $170B in 2014. The Gartner vote dropped from 651 in 2012 to 470 in 2013. It may continue to drop, but the Peer vote should stay in the 3000 range, nearly 1200 points above the competitors (excluding Amazon at 3115 in 2013). My main concern about dropping them to the #2 position is that their margins have fallen on an annual basis for seven straight quarters. And the press has been questioning when new products will arrive. I remember the negative responses when Tim Cook said: our teams are hard at work on some amazing new hardware, software and services that we can’t wait to introduce this fall and throughout 2014. Information like this makes for nervous investors, and creates articles like the one in Business Insider, which calls into question the strategic roadmap. Even this week, with the news that Apple is buying Beats by Dre, that is somewhat concerning. Not only is this type of acquisition out of character for Apple for inorganic growth, it begins to show the strategic importance of streaming music, something that iTunes strategy has lacked.

#1 Amazon

It’s going to take a big effort for Amazon to improve their 2013 composite score of 5.86 to the level of Apple’s 2013 score of 9.51. Amazon already compares with Apple in the Peer Opinion vote and Gartner Opinion vote. Net sales continue to grow, going from $61.1B in 2012 to $74.5B in 2013. Where Amazon got knocked in 2013, Three Year Weighted ROA (at 1.9%), is where they stand to improve dramatically in 2014. Amazon was able to reduce the percentage of sales devoted to cost of goods sold from 75.25% to $72.77. This was a driver behind a 2012 Earnings from Continuing Operations loss of ($39M), to a positive $274M in 2013. Finally, Amazon hit it well for innovation when CEO Jeff Bezos announced on 60 Minutes about developing a drone based delivery service called Prime-Air, giving customers their product in only a half-hour after they click “buy”.

Send me your thoughts on my Bold predictions. What other profiles should I consider? What factors should I weight more or less? Send me your Top 5 predictions!

 

Posted in General News, Inventory management, Supply chain collaboration, Supply chain management