The Gartner Supply Chain Top 25: Insight on leaders

From the September-October 2022 edition of Supply Chain Management Review.

September-October 2022

Once again, it’s time for Gartner’s Top 25 supply chains, the annual list of the 25 supply chains that have made it to the top, plus five Masters that have consistently outperformed year after year. You can read…

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Just when supply chain leaders thought the pandemic was behind them, a host of new issues have risen, everything from extreme weather to shortages of everything. Now, we can add rising prices, inflation and the threat of a recession to the list of disruptions. And yet, the best supply chains continue to find ways to outperform their competitors while launching new initiatives to further their company’s ESG goals, perhaps the next frontier for supply chain management.

In this, our 18th edition of the Supply Chain Top 25 (see Table 1), we have an impressive group of leaders with new lessons to share. Once again, we also feature our five Supply Chain Masters (see sidebar), companies that have consistently out-performed their peers year-over-year. Finally, we once again identify four notable trends, which you can read on scmr.com. Along with the Masters category, the Supply Chain Top 25 offers a platform for insights, lessons, debates and contributions to the rising influence of supply chain practices on the global economy. Let’s look inside the numbers.

Lessons and insights

As with prior years, there is much to be learned from where this year’s Top 25 are investing to improve their operations and respond to disruptions. For supply chain leaders seeking to learn from the strategies of this year’s list, we recommend the following.

• Substantiate supply chain as a strategic partner with their fellow C-suite members and board by using what leading supply chains do to differentiate themselves as illustrations of how their company can differentiate its supply chain.

No. 1: Cisco Systems. High-tech leader Cisco Systems maintains its hold on the No. 1 spot for the third consecutive year, with a continued focus on adapting in various ways to the changing environment both externally and internally. Its markets and operating models are moving toward increasing use of the Cloud through hyperscalers, and its supply chain operating models are moving in alignment. ESG continues to be a focus, with circular concepts incorporated in the design, operations and consumption aspect of the products and the supply chain. Sustainability remains top of mind, with progress made in Scope 1, 2 and 3 GHG reductions, reduction in virgin plastic, improved sustainable packaging and a 99.9% reuse or recycle of products returned.

No. 2: Schneider Electric. Energy management and automation specialist Schneider Electric climbs two spots to land at No. 2. As an example of self-stabilizing supply chains, Schneider won the 2022 Power of the Profession Technology Innovation of the Year award for its work on the “self-healing supply chain.” Schneider Electric continues to build on the foundation developed through its Tailored, Sustainable and Connected (TSC) strategy. Sustainability remains a key component of the Schneider Electric supply chain strategy. Its STRIVE (2021-2023) program seeks to have 70 net-zero carbon plants and distribution centers by 2025, and the company continues to look for other efficiencies across its remaining manufacturing and warehousing facilities.

No. 3: Colgate-Palmolive. Consumer products leader Colgate-Palmolive claims the No. 3 spot. Colgate has reimagined its supply chain strategy with a focus on digital and sustainability while delivering agility, efficiency and resilience. The foundation is its segmentation strategy that allows customized supply and demand capabilities to support differing commercial needs and business models. Colgate is also investing in advanced analytics to enhance capabilities and support its end-to-end planning transformation. The company announced the successful offering of a 500 million euro eight-year sustainability bond. Colgate plans to use proceeds from the bond to fund new and/or existing projects with specific environmental or social benefits.

No. 4: Johnson & Johnson. Healthcare leader Johnson & Johnson lands at No. 4. J&J remains a leader in the life science industry, demonstrating strong leadership with its Health for Humanity 2025 Goals and achieving progress toward these goals for a sustainable future. J&J’s supply chain strategy emphasizes an outside-in view of how it can harness its strong foundations to deliver customer-focused growth, with supply chain being a competitive advantage for growth. An example of human-centric digital automation, the supply chain is orchestrated end-to-end, across J&J and externally, with a network-based approach focused on visibility.

No. 5: PepsiCo. Climbing two spots to No. 5., PepsiCo continues to drive innovation to accelerate sales growth and drive productivity across its end-to-end consumer value chain. PepsiCo is leveraging micro-fulfillment centers that were piloted in 2020 to enable accelerated e-commerce capabilities as its digital business expands. The company continues industry-leading efforts to improve consumer transparency through SmartLabel, digital watermarking and smart packaging. Aligned with this, PepsiCo has invested $15 million in Closed Loop Partners’ Leadership Fund, a private equity fund that acquires and develops companies in the packaging sector. The goal is to improve the recycling infrastructure, support circular economy initiatives and provide easier access to recovered packaging materials.

Movers and shakers: No. 6 through No. 15

No. 6: Pfizer. Jumping 15 spots to No. 6 is Pfizer. The life science company has advanced its leadership by building its supply chain strategy and transforming its global supply chain from a cost driver to a competitive advantage. Pfizer won the overall Power of the Profession Award, Supply Chain Breakthrough of the Year, with “Deep Freezing the Supply Chain to Bring COVID-19 Vaccine to the World.” This example of supply chain leadership highlights the trend of navigating complex ecosystems and the partnerships and innovation required to bring its COVID-19 vaccines to patients around the world. Twice in two years, Pfizer has destroyed paradigms and timelines (months versus years) with its lightspeed culture, behaviors and processes to launch new products, integrating product development and supply chain.

No. 7: Intel. No. 7. Intel has managed a multi-tier supply chain for many years, sometimes getting visibility all the way back to the mines to achieve conflict-free material purchasing goals. This multi-tier visibility and partnership is key to managing a highly constrained environment. Intel’s partnership with suppliers is in the form of joint objectives and key results (OKRs), multi-sourcing, establishment of self-monitoring systems, proliferation of decision support tools and joint contingency planning to work toward global optimization. It is opening the aperture of risk management, especially in the areas of what to mitigate and what to measure to maintain supply continuity. As an example of mitigating risk surface area, Intel is starting construction on a $20 billion investment to build two state-of-the-art semiconductor fabrication facilities at its Ocotillo campus in Arizona, which will geographically diversify production options.

No. 8: Nestlé. At No. 8, Nestlé is transforming its supply chain to operate as an integrated end-to-end supply network, with multiple tailored flows for dynamic response to category, customer and consumer needs. Nestlé is also integrating sourcing flexibility to increase resilience and transforming risk management from reactive to proactive through analytics. Nestlé is one of only five companies to score a 10 out of 10 in ESG each year since that component was added in 2016. One example of its commitment is its promotion of regenerative agriculture to restore degraded farmland wherever needed to maximize benefits to farmers’ income environment and society. Nestlé targets sourcing 20% of its key ingredients through regenerative agriculture by 2025, and 50% by 2030.

No. 9: Lenovo. Buoyed by strong community sentiment and solid revenue growth, Lenovo climbs seven spots to No. 9. Customer centricity continues to shape actions, resulting in better quality and improved time to delivery and accuracy. Lenovo has demonstrated the crossover to operational excellence and commercial innovation, one of the trends from the 2022 Future of Supply Chain Survey. Disruption is accelerating Lenovo’s transformation as it continues to improve customer experience capabilities, establish a larger capacity footprint and refocus from efficiency to resiliency. It is driving for more commonality in components and suppliers, higher levels of collaboration, using data for better decisions and leveraging its ecosystem.

No. 10: Microsoft. Returning to the Top 25 at No. 10 is Microsoft. In the past four years to five years, Microsoft has put a concerted effort into establishing data as an asset in its journey to end-to-end visibility. This has paid dividends in enabling the supply chain to move from reactive planning to orchestration, especially with overlapping disruptions such as the pandemic and the semiconductor chip shortage. Microsoft’s Power of the Profession win for “Circularity at Scale—A Zero Waste Plan for Every Part” demonstrates authentic achievement of goals in ESG, an example of making progress against a broader sustainability agenda.

No. 11: L’Oréal. Landing at No. 11, L’Oréal continues to differentiate and innovate—both as a manufacturer and retailer supported by a strong consumer-focused strategy. Utilizing an integrated omni-channel strategy, driven in part by digitizing points of sale and capturing new digital channel opportunities, the company was rewarded with a 25.7% growth in e-commerce during 2021 that now represents 28.9% of its overall global sales. This is driving continued investment in direct-to-consumer, including development of what L’Oréal calls a “fulfillment factory.” This augmented distribution center can provide additional services such as personalization or customized delivery utilizing tools such as advanced stock planning, traceability and automation. L’Oréal continues to be a leader in circular economy principles through a partnership agreement with Veolia, which will supply plastic obtained after processing waste materials derived from consumer packaging.

No. 12: The Coca-Cola Company. Rising six spots to No. 12, The Coca-Cola Company has continued its digital transformation, including innovating its core processes to drive improvements in resilience, agility and efficiencies, as well as building transparency and traceability across its end-to-end supply chain. Coca-Cola recently announced a goal to significantly boost its use of reusable packaging, with a goal of having at least 25% of all beverages globally across its portfolio of brands sold in refillable/returnable glass or plastic bottles, or in refillable containers through traditional fountain or Coca-Cola Freestyle dispensers. Another sustainability initiative is a partnership with technology non-profit The Ocean Cleanup to address 15 rivers by the end of 2022.

No. 13: Nike. At No. 13, Nike’s is focused on creating a digital-first supply chain that is responsive, resilient and responsible. In 2020, as consumers shifted to digital engagement, Nike began transforming its supply chain to serve consumers more directly, a great example of self-stabilizing supply chains. Whether it is fast-tracking the opening of several U.S. and European distribution centers or implementing a dedicated train dubbed Nike’s “Sole Train,” innovation will be key to powering long-term growth. Its acquisition of Celect has enabled extensive consumer insight data that is used through Nike’s demand systems. This allows increased responsiveness and the ability to shape demand, improving supply chain operations.

No. 14: Walmart. The retail giant Walmart continues to expand its retail services footprint. For example, the company continued to grow its marketplace operations and fulfillment services by adding 20,000 new sellers to the U.S. marketplace, which now features nearly 170 million SKUs. Another expansion is its GoLocal initiative. A last-mile delivery solution using its Spark Driver platform, the program helps businesses of all sizes reach more customers. GoLocal is making deliveries for The Home Depot and other large retailers, as well as small local retailers. The number of GoLocal service pickup points is expected to approach 5,000 by the end of the year.

No. 15: HP Inc. With its seventh consecutive year of scoring a 10 out of 10 in ESG, HP Inc. secures spot No. 15. One demonstration of its ESG commitment is its goal of enrolling at least 50% of its HP Amplify partners in the voluntary program by 2025. Presently, 20% of HP’s partners have signed the HP Amplify Impact pledge, exceeding the program’s first year target. Technology enablement is important at HP. It has reached a state in which its ERP system enables resiliency where global end-to-end market operations and logistics can be managed with increased resolution and speed. Operating a global standard process, HP is able to support customers and channel partners end-to-end, from customer engagement and order management through last-mile service.

Rounding out the list: No. 16 through No. 25

No. 16: Diageo. Diageo, the U.K.-based beverage leader’s supply chain, continues to look for new ways to drive efficiencies. Its segmented approach to focus on its “Never Be Out” SKUs has not only increased customer service but has also led to additional approaches to reduce overall complexity to increase both efficiency and resilience. Diageo is also broadening its supply chain ecosystem by integrating sustainability and supplier relationship management. It has opened its first carbon-neutral distillery in Kentucky. The site will source 100% non-GMO corn locally and can produce up to 10 million proof gallons per year. The facility uses electrode boilers powered by 100% renewable electricity to distill Bulleit Bourbon.

No. 17: Dell. High-tech company Dell continued to perform well in 2021 despite the pandemic still looming and a semiconductor shortage prevailing. This performance is enabled by Dell’s digital transformation over the years, driven by a robust digital transformation ecosystem. This includes capabilities such as clear unifying strategies and experimentation and innovation processes leveraging agile methodology supported by a foundation of data science and analytics skills. The other differentiator is the level of detail this digital transformation is being tracked at, such as the number of models built, number of digital tools deployed, and even number of canonical objects harmonized.

No. 18: Inditex. Fast-fashion retailer Inditex takes the No. 18 spot. Inditex delivered exceptional 2021 financial performance, with increases in revenue, profits and online sales, which represented nearly 26% of total sales. A key element to this success has been its near-sourcing of production for European sales, combined with a segmented approach that blends both rapid design-to-shelf with long-lead time production for basics/core items. Inditex’s RFID-enabled single pool of inventory has also been a critical factor, allowing the business to grow overall sales while closing 11% of its store network in the last two years. A leader in sustainability, scoring 10 out of 10 on the ESG scale for six consecutive years, Inditex plans to increase its use of sustainable cotton by 100% before 2023, offer fully sustainable cellulose fibers by 2023 and only offer recycled or sustainably manufactured polyester and linen by 2025.

No. 19: BMW. Luxury auto manufacturer BMW rises one spot to No. 19. Focused on sustainability, BMW Group is stepping up its expansion of electromobility with plans to release about 10 million fully electric vehicles over the next 10 years. BMW targets to have at least half of the BMW Group’s global sales come from fully electric vehicles by 2030, driving an increased need for lithium. To provide a more planet friendly lithium extraction process, the BMW Group is investing through its venture capital fund—BMW i Ventures—in an innovative process developed by Lilac Solutions, a U.S. startup. Lilac Solutions has developed and patented an ion exchange technology that extracts lithium from brine resources, natural deposits of salt water, which is more sustainable and less costly.

No. 20: AbbVie. At No. 20, life sciences company AbbVie continues to demonstrate strong leadership, aligning its global distribution and logistics strategy with its supply chain sustainability strategy to accomplish its science-based targets in this area. It is also focused on digitalizing multiple supply chain functions to provide real-time operational data for better decision making across the supply chain. AbbVie encourages a culture of innovation, utilizing technology and data, which allows it to deliver on its promise to patients.

No. 21: Siemens. Industrial company Siemens makes its Top 25 debut, rising 23 spots to No. 21. This jump was driven by increased recognition by the supply chain community as Siemens continues to share ideas and lessons, and Siemens’ ability to demonstrate that business results and supply chain sustainability can coexist. With the launch of its new READI (regional + empowered and digital + interlinked) strategy in 2022, Siemens articulated the powerful blend of people, process and technology that make this combination possible. From crowdsourced coding to engage and develop employees to a functioning digital twin that models emissions impacts in real time, Siemens continues to show that it is investing and executing at supply chain’s leading edge.

No. 22: AstraZeneca. A life science leader, AstraZeneca (AZ) climbs 14 spots to make its Top 25 debut at No. 22. Patient expectations have become more sophisticated, requiring life science companies to demonstrate greater agility and supply chain flexibility while recognizing increasingly diverse market segments and the need for patient-centric products and devices. AstraZeneca has demonstrated strong leadership in delivering results in sustainability, declaring the ambition to be zero carbon by 2025 and carbon negative by 2030. With its DEI commitment, AZ has launched programs to develop diverse talent with rotation programs in supply chain. AZ launched its COVID-19 vaccine, delivering more than 2.5 billion doses in more than 180 countries in 2021. It launched more than 110 products and delivered more than 99.5% supply performance for its entire portfolio.

No. 23: General Mills. Holding steady at No. 23, General Mills continues to make significant strides in the digitalization of its supply chain. Part of its transformation includes evolving to a digital ecosystem that is intelligent and interconnected. The team is focused on implementing integrated planning that will lead to intelligent execution to translate strategy from S&OP into real-time decisions that optimize cost and service. A leader in sustainability, General Mills is on a journey to advance regenerative agriculture on 1 million acres of farmland by 2030, which will help it to achieve its climate and water goals.

No. 24: British American Tobacco. In early 2021, No. 24, British American Tobacco announced Quest, a program to accelerate BAT’s transformation to create the “Enterprise of the Future.” This program is driving BAT’s evolution of its portfolio, structure, culture and ways of working. BAT is building new capabilities with a focus on digital while sharpening its science and innovation pipeline. From a supply chain perspective, this includes investments in synchronized planning, intelligent supply, smart factories and dynamic fulfillment.

No. 25: Alibaba. Chinese mega-retailer Alibaba continues to expand its ecosystem and global supply chain operations to enable the business to grow in its home market and internationally. Logistics arm Cainiao is serving businesses in 200 countries and regions. Alibaba’s global logistics capability investments include its international cargo network, logistics hubs, line-haul, sorting centers, smart clearance systems and the deployment of more than 4,000 sets of smart pick-up lockers across Russia, Spain, France and Poland. Alibaba is also focused on logistics decarbonization by developing several technical applications such as intelligent box cutting and packaging algorithms, combined with Big Data algorithms to optimize the design of carton models.

Lessons and insights

As with prior years, there is much to be learned from where this year’s Top 25 are investing to improve their operations and respond to disruptions. For supply chain leaders seeking to learn from the strategies of this year’s list, we recommend the following.

• Substantiate supply chain as a strategic partner with their fellow C-suite members and board by using what leading supply chains do to differentiate themselves as illustrations of how their company can differentiate its supply chain.
• Create supply chain ecosystems that move beyond individual company interests and toward co-opetition-based relationships that drive advantaged customer outcomes that can only be delivered through these emerging relationships.
• Develop self-stabilizing supply chains that can continually flex resources between addressing mission-critical operational challenges and driving their next vital transformations.
• Expand their ESG agenda by holding internal and external partners accountable, providing 360-degree visibility and transparency to social and environmental performance, and investing in capabilities that transform environmental performance in their networks.
• Maintain balance across their digital trans- formation journey by aligning investments in automation for the long-term with land- ing technologies in the immediate-term that make work easier, safer and more rewarding for associates

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