Executives usually have a short list of companies they admire. When we ask supply chain business teams to name the best-performing companies in supply chain management, the most frequent responses are Amazon.com Inc., Procter & Gamble Co. (P&G), and Wal-Mart Stores Inc. While we agree that these companies are leaders that have made significant contributions to the practice of supply chain management, we do not find that they are outperforming their peer groups on a balanced portfolio of metrics. (The portfolio of metrics that we look at includes: market capitalization, price to tangible book value, growth, operating margin, inventory turns, and return on invested capital.) In other words, the court of public opinion is often out of sync with balance-sheet performance.
I have long maintained that supply chain excellence is easier to talk about than to define. But having a clear definition is important. Why? The answer makes or breaks a supply chain leader's career and defines corporate value.
To analyze supply chain excellence more holistically, my company, Supply Chain Insights, created the "Supply Chains to Admire" methodology four years ago. The goal of this work is threefold:
1) to help supply chain leaders set realistic supply chain goals;
2) to provide industry benchmarks to gauge progress; and
3) to recognize those companies that have achieved high levels of supply chain excellence.
We started the analysis to guide our own research and began sharing it with the industry in 2013.
We start the process in March, when full-year reporting is available for the prior year. This analysis is a study of companies' improvement, value, and performance against an industry peer group. This year, we analyzed 495 companies in 31 industries. The 24 winners for 2017 are shown in Figure 1. You can find the full report and a summary slide deck about the winners here.
What can we learn from the 2017 analysis? Here are some of our main findings:
The Supply Chains to Admire analysis is part of a larger study to understand how the choices companies make impact their balance sheets and income-statement performance. Using "big data" mining techniques, this larger study will include the Supply Chains to Admire analysis, over 7,000 quantitative survey responses collected over the past five years from supply chain leaders, and relevant market indices. The focus will be on understanding which of the choices companies made over the last decade have improved corporate value through improvements in supply chain excellence. Stay tuned!