commentary: industry value chain strategies

June 2010

Supply Chain Top 25 Predictions: Who Will Rise

and Who Will Fall?
by Kevin O’Marah

M ost people want predictions on who will rise and who will fall in the coming year. With the ink barely
dry on this year’s Supply Chain Top 25, it may be foolish to make such predictions, but in the spirit of
continuous learning, here goes.

The AMR Supply Chain Top 25 for 2010 was released Rising
this past week at the annual Supply Chain Executive • Research In Motion (RIM) — With phenomenal
Conference in Scottsdale, Arizona. Apple again topped financial scores but a light vote total, RIM has lots
the list for the third year in a row, followed by peren- of potential. If the business can stay on track, it’s
nial leaders Procter & Gamble at No. 2 and Cisco at hard to imagine voters failing to lift RIM a few
No. 3. We had five new names on the list this year: notches.
Research In Motion (No. 9), Amazon.com (No. 10),
McDonald’s (No. 11), Microsoft (No. 12) and Inditex • Hewlett-Packard (HP) — The huge, complex sup-
(No. 23). We also had some intensive discussion about ply chain HP runs has a tough time scoring well
what this list means and what we, as against our financials. After all,
a community of supply chain profes- Everybody wants us to growth on a $120-billion-plus base
sionals, want from it in the future. continue publishing the is a tall order. That said, I can’t say
list and, perhaps most I’ve ever seen a CEO speak more
One thing everybody definitely wants importantly, maintain articulately about supply chain as a
is for us to continue publishing the list strategic weapon than Mark Hurd.
its role as a benchmark
and, perhaps most importantly, main- Watch for HP to gain ground.
tain its role as a benchmark for supply for supply chain leaders
chain leaders working to up their working to up their games. • LG Electronics — Chief
games. This we can promise, largely supply chain officer Didier
because so many of you are willing to Chenneveau spoke at our confer-
share the lessons you’ve learned with your peers. ence and impressed the audience with a story about
his efforts to transform the Korean electronics
The other thing I find most people want is predictions giant. Sitting just outside the list this year at No.
on who will rise and who will fall in the coming year. 27, LG doesn’t need too much of a push to crack
With the ink barely dry on this year’s Top 25, it may the list next year.
be foolish to make such predictions, but in the spirit of
continuous learning, here goes.

Industry Value Chain Strategies | June 2010 ©2010 AMR Research, Inc. 1
 • Kraft — Although not in the Top 25, Kraft
jumped from 62 in 2009 to 37 this year. Internally
at AMR, Kraft is well regarded, and among the
peer community, efforts at collaboration are obvi-
ously making an impression.
• General Mills — Another consumer packaged
goods (CPG) company that’s close (No. 34 this
year) and on the rise, General Mills has solid
numbers for its size and industry. Maybe more
important, however, is the leadership demonstrated
upstream with the agricultural supply base.
• Johnson Controls — The company dropped like a
stone this year, as the weak economy hammered its
financials. However, trends in sustainability, where
Johnson Controls is seeing strong growth, coupled
with more aggressive efforts to communicate strat-
egy suggest it’ll be back.
• Nokia — Although Nokia fell this year all the way
to No. 19, I simply cannot imagine the company
not finding its way back up the rankings. I’ll never
forget walking away from a meeting I had with its
supply folks in Espoo, Finland, thinking, “Yikes —
these guys are smart!” Call it a hunch.
2 ©2010 AMR Research, Inc.
Falling
• Retailers in general — This year, we looked at the
list of attendees in Scottsdale and saw most of the
big names across industries, with retail the excep-
tion. Our list always has a bunch of retailers, and
2010 was no different. I wonder, however, why so
few seem to be willing to share lessons learned with
the rest of the community. Is it possible that too
few really understand where supply chain is headed?
Maybe. I have no doubt that supply chain innova-
tion is alive and well in retail, but wish that it came
hand in hand with a stronger sense of responsibility.
• McDonald’s — Debuting at No. 11 is great, but the
big driver behind this high score was the company’s
134.6 inventory turns. As we continue to tune the
Top 25 methodology, this sort of big, single-factor
ranking driver will be dampened. McDonald’s has
a great supply chain, but absent of a more balanced
view of leadership across the discipline, I wouldn’t be
surprised to see it fall a bit in the ranking.
• Toyota — Once in the top five, Toyota dropped
from No. 10 in 2009 to No. 49 this year ... and it
could get worse. Our financials use three-year aver-
ages for ROA and growth, which means this rocky
year will still sting when we redo the rankings next
year. On top of that, recalls across the product line
have nearly killed the company’s once stellar quality
reputation. Typically, this kind of scandalous break-
down comes to light slowly. I wouldn’t be surprised
to see more bad news before the story is closed.
Industry Value Chain Strategies | June 2010