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Gartner: Cisco Systems is Top Supply Chain Leader

May 20, 2020

Gartner has released the results from its annual Supply Chain Top 25, identifying supply chain leaders and highlighting their best practices.

"In our 16th edition of the Supply Chain Top 25 we have an impressive group of leaders with new lessons to share, including a diverse set of six new entrants," said Mike Griswold, vice president analyst with the Gartner Supply Chain practice. "With substantial amounts of the economy closed due the COVID-19 pandemic, leaders need an agile strategy that allows the supply chain organization to sense and respond to changes in the business context as they happen. Our ranking highlights companies that possess these strategies and other differentiating capabilities.”

Cisco Systems scored the top spot in the ranking, followed by Colgate-Palmolive, Johnson & Johnson, Schneider Electric and Nestlé (see Table 1). Six new companies joined this year’s list: Lenovo, AbbVie, British American Tobacco, Reckitt Benckiser, Biogen and Kimberly Clark.

"Cisco’s revenue growth, strength in environment, social and corporate governance (ESG) and recognition of leadership in community opinion polls drove the move up from the fifth position in 2019 to the top spot today,” said Mr. Griswold. “Its ESG focus includes the circular economy, with the goal of having 100% of new Cisco products incorporate circular design principles by the financial year 2025.”

To recognize sustained supply chain excellence, Gartner introduced the “Masters” category in 2015. To be considered Masters, companies must have attained top-five composite scores for at least seven out of the last 10 years. All of last years’ Masters - Amazon, Apple, P&G, McDonald’s, and Unilever - qualified for the category this year. “The Masters continue to demonstrate advanced lessons for the supply chain community,” Mr. Griswold added. “The Supply Chain Top 25 offer a platform for insights, learning, debate and contributions to the rising influence of supply chain practices on the global economy.”

Table 1. The Gartner Supply Chain Top 25 for 2020

Rank Company Peer Opinion1
(151 voters)
(25%)
Gartner Opinion1
(44
voters)
(25%)
Three-
Year Weighted ROPA2
(20%)
Inventory Turns3
(5%)
Three-
Year Weighted Revenue Growth4
(10%)
ESG Component Score5
(15%)
Composite Score6
1 Cisco Systems 470 574 300.7% 12.5 2.9% 10.00 6.25
2 Colgate-Palmolive 1113 532 68.8% 4.7 1.0% 10.00 5.37
3 Johnson & Johnson 885 454 77.6% 3.0 3.6% 8.00 4.65
4 Schneider Electric 567 453 63.0% 5.4 4.2% 10.00 4.48
5 Nestlé 1084 350 40.0% 4.8 1.2% 10.00 4.44
6 PepsiCo 857 385 47.9% 8.2 2.7% 10.00 4.42
7 Alibaba 991 316 106.7% 23.9 54.0% 0.00 4.39
8 Intel 583 488 37.4% 3.5 5.8% 8.00 4.12
9 Inditex 737 351 34.7% 4.6 6.8% 10.00 4.11
10 L’Oréal 677 252 71.1% 2.8 7.4% 10.00 4.01
11 Walmart 1333 324 13.2% 8.5 2.4% 7.00 4.00
12 HP Inc. 296 389 51.1% 8.5 5.5% 10.00 3.87
13 Coca Cola Company 1195 207 75.4% 4.4 0.0% 6.00 3.74
14 Diageo 403 280 41.4% 0.9 6.2% 10.00 3.49
15 Lenovo 397 307 16.9% 11.2 7.0% 10.00 3.44
16 Nike 768 265 47.2% 4.0 6.7% 6.00 3.35
17 AbbVie 128 30 262.4% 4.1 7.6% 5.00 3.20
18 BMW 575 182 24.8% 3.9 4.2% 10.00 3.17
19 Starbucks 799 202 52.6% 13.0 7.7% 4.00 2.99
20 H&M 412 161 22.4% 2.8 7.7% 10.00 2.95
21 British American Tobacco 154 56 85.6% 0.7 18.1% 9.00 2.90
22 3M 624 207 54.1% 3.9 1.1% 6.00 2.90
23 Reckitt Benckiser 265 14 99.0% 3.8 8.2% 9.00 2.79
24 Biogen 79 27 152.2% 2.5 7.8% 7.00 2.78
25 Kimberly-Clark 534 80 34.6% 6.6 0.2% 10.00 2.76

Notes:
1. Gartner Opinion and Peer Opinion: Based on each panel's forced-rank ordering against the definition of "DDVN Orchestrator".
2. ROPA: ((2019 operating income) / (2019 Net property, plant equipment + year end inventory)) *50%) + ((2018 operating income) / (2018 Net property, plant equipment + year end inventory)) *30%) + ((2017 operating income) / (2017 Net property, plant equipment + year end inventory)) *20%).
3. Inventory Turns: 2019 cost of goods sold / 2019 quarterly average inventory.
4. Revenue Growth: ((change in revenue 2019-2018) *50%) + ((change in revenue 2018-2017) *30%) + ((change in revenue 2017-2016) *20%).
5. ESG Component Score: Index of third-party environmental, social and governance measures of commitment, transparency and performance.
6. Composite Score: (Peer Opinion*25%) + (Gartner Research Opinion*25%) + (ROPA*20%) + (Inventory Turns*5%) + (Revenue Growth*10%) + (ESG Component Score*15%).
2019 data used where available. Where unavailable, latest available full-year data used. All raw data normalized to a 10-point scale prior to composite calculation. "Ranks" for tied composite scores are determined using next decimal point comparison.

Source: Gartner (May 2020)

Three key trends stand out this year for the supply chain leaders that are accelerating their capabilities, separating them further from the rest of the pack:

Purpose-Driven Organizations

Supply chain teams at leading companies define their work using the language of purpose. They have recognized that solving the world’s largest problems only works through partnership with others in the broader community, as well as through their own radical transparency.

“In the time of COVID-19, it has been a marvel to witness the strength and creativity of the supply chain community in keeping our society fed, supplied and healthy,” Mr. Griswold said. “For example, we’ve seen apparel companies manufacturing personal protective equipment and airlines converting dormant warehouses into food processing centers. Those shifts would normally have taken months or quarters to plan and execute. However, purpose- driven supply chain talent managed to shorten these timeframes to a couple of weeks.

Business Model Transformers

One of the largest external forces impacting corporate supply chains is a dynamic competitive landscape driven by a combination of expanded customer expectations, new market entrants from existing industry ecosystems, and the emergence of non-traditional competitors. Leading supply chain organizations have learned to thrive in that environment and positioned themselves as disruptors – either through reinvention of their offerings and the ability to deliver them or by acquiring start-ups that offer the expertise to compete in new and reinvented markets.

Digital Orchestrators

Leading companies on the Supply Chain Top 25 are early and frequent adopters of digital technologies. More importantly, these investments enable business capabilities and outcomes that allow them to thrive in even the harshest economic conditions.

“In the current environment, the natural tendency of many companies is to pull back spending, including money tied to transformational programs. Advanced supply chains are pressing forward, and in some cases, accelerating investments in real-time visibility, planning and agile supply execution capabilities that are well-suited for supporting uncertain demand mixes and volumes,” Mr. Griswold concluded.

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