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Mhlnews 11444 Talking To Myself
Mhlnews 11444 Talking To Myself
Mhlnews 11444 Talking To Myself
Mhlnews 11444 Talking To Myself
Mhlnews 11444 Talking To Myself

Talking to Myself about the Top 25 Supply Chains

Aug. 19, 2019
Sorting out what it actually means to be ranked as one of the top supply chains in the world.

The latest ranking of the Top 25 Supply Chains has got me talking to myself, trying to sort it all out…

As they’ve done every year for the past 15 years, analyst firm Gartner has ranked what they consider the Top 25 Supply Chains in the world, with Colgate-Palmolive ranked # 1, supplanting Unilever. Do you think Colgate-Palmolive deserves to be at the top?

First of all, Colgate-Palmolive isn’t really at the top. To keep the rankings from looking exactly same year after year, a few years ago Gartner decided to move the highest vote-getters into a separate category that they call the “Master” group, which allows them to acknowledge that Apple is still the best, but they get to promote a “new” # 1 every year. This year it’s Colgate-Palmolive’s turn to be at the top.

So Unilever…

… is now considered one of the Masters, along with Apple, Procter & Gamble, Amazon and McDonald’s.

But getting back to Colgate…

Are they worthy of being # 1? It depends on what criteria you use. As we’ve noted before, the Gartner Top 25 is a bit of a beauty contest, since half of the rankings is purely based on opinion: 25% of the rankings are based on the opinions of 38 Gartner analysts, and 25% are based on the opinions of what they call “peer voters,” including supply chain practitioners and other industry experts.

Aren’t you also one of the peer voters?

Like I said, industry experts.

Hah!

Anyways, the other 50% of the rankings is based on things like return on assets, inventory growth and revenue growth, as well as a corporate social responsibility (CSR) score. The CSR score, though, seems to be based as much on promises as it is on actual accomplishments.

So getting back to Colgate…

Colgate-Palmolive has proactively taken a “no deforestation” stance, and has the goal of sourcing palm oil only from sources that are responsibly and sustainably produced by 2020. The company also plans to only source paper and packaging from recycled and responsible sources that do not contribute to deforestation and that respect human rights. Which is great and admirable, but Colgate, along with other food and consumer packaged goods companies on the Gartner list (such as Unilver and Nestlé), was cited a couple years ago by Amnesty International for things like supply chain labor abuses and deforestation. Nothing motivates a company to focus on CSR efforts more than being exposed in public, so it’s not quite accurate to assume companies are acting entirely altruistically when it’s their reputation that’s at stake if they do nothing. In the case of Colgate, the labor abuse charges were aimed specifically at one of its suppliers, not Colgate itself, but since the Gartner ranking is, in fact, of supply chains, not just companies, then it stands to reason that any company that has a recent past of employing suspect suppliers probably needs to do a lot more work to clean up its act, supply chain-wise, than just firing a supplier and announcing initiatives.

Point well taken. But what is Colgate doing right, supply chain-wise, that got it to the top of the list?

For one thing, the company is using an end-to-end digital control tower that provides daily visibility throughout its supply chain. Colgate is also using predictive analytics and AI to improve production throughput and quality. Are they better than anybody else at supply chain? Probably not, but their return-on-asset average was phenomenal, and that helped push them to the top spot.

Were there any surprises on the list?

Every year a couple new companies join the list, which is no surprise, and this year two new companies appeared for the first time. AkzoNobel, a Dutch paint and coatings manufacturer, entered at # 24, near the bottom of the list, which is where first-timers usually appear. However, e-retailer Alibaba made its debut all the way up at # 13. Given the size of China’s economy, the idea that Alibaba could give Amazon a run for its money is a distinct possibility. And like Amazon, Alibaba’s growth is largely due to its logistics strategies.

So who fell off the list, then?

Unilever, as noted, moved up into the Masters group, so only one company actually fell off from 2018.

Don’t keep us in suspense…

Kimberly-Clark, who makes Huggies and Kleenex and other personal care and paper goods, was the only one to slide out of the Top 25 this year. They were ranked at # 21 in 2018.

Why do you spend so much time poring through the Gartner analysis every year, and then commenting on it, and putting together a big slideshow summary of it?

What I appreciate the most is that the Gartner rankings help shine the spotlight on the specific supply chain proficiencies of major companies, and goes into great detail to describe exactly how these companies’ success depends on how good they are at supply chain management. That’s a story well worth telling, and Gartner tells us very well. So for all the flaws in the methodology of the rankings, I think it’s an important study and one worth discussing.

A tip of the hat to Cleveland Plain Dealer columnist Terry Pluto, whose “talking to myself” format inspired this take on the Top 25.