Gartner’s Annual Supply Chain Ranking Reflects Historic Disruption Of 2020

Everyone is learning a lot about supply chains in 2020. As we work, study, and intern from our living spaces, we are getting new insight into the importance to the economy — and to our daily lives — of the organizations, people, and resources involved in moving needed products or services from manufacturers to consumers. The “middle man” — retail — has largely been sidelined, and the coronavirus pandemic has brought the supply chain directly to our front doors.

How companies have managed this transition, and how they have managed another, more long-term change — the move to grater social responsibility — is the theme of the 16th year of its ranking of the world’s top supply chain companies by research and advisory company Gartner. Rewarding the adaptable and resilient in a time of unprecedented disruption, Gartner highlights companies with these qualities in the Gartner Supply Chain Top 25, released this month.

The ranking is not just a way for chief supply chain officers (CSCOs) to gain insights into “people, process, and technology” that they can use to compete. It is also a finger on the pulse for MBA programs. In 2020, as Gartner says and repeats throughout its report, organizations that are leading the race to define the post-pandemic world get bonus points; at the same time, the ranking’s methodology places new importance on being “purpose-driven,” which it defines as a recognition “that solving the world’s largest problems only works through a partnership with others in the broader community,” and through total transparency.

Who met and exceeded these criteria in 2020? Coming out on top is a new No. 1, Cisco Systems, the Silicon Valley telecommunications giant. Rounding out the top five are last year’s No. 1 Colgate-Palmolive, followed by Johnson & Johnson, Schneider Electric, and Nestlé.

THE TOP SUPPLY CHAIN COMPANIES ARE ALREADY DEFINING THE POST-COVID FUTURE

Gartner’s report includes a category for “Masters,” companies that “lead the way with lessons for all,” and that are not ranked like the rest — sort of a hall of fame, though not a permanent honor. This year five were named to the prestigious list: Amazon, Apple, McDonald’s, P&G, and Unilever, with P&G a newcomer that dislodged Procter & Gamble, a listee from 2019. Each 2020 Master has at least nine years of top-five composite scores in previous rankings. On the opposite side of the scale, making their first-ever appearance in the ranking, are six companies: Lenovo, AbbVie, British American Tobacco, Reckitt Benckiser, Biogen, and Kimberly-Clark.

Covid-19 has upended traditional metrics in many ways, at least in the short term. Perhaps Gartner’s most important methodology change introduced in 2020 (see below) is an increase in weight given to environmental, social, and governance (ESG), part of its effort to reflect “the voice of the community on emerging facets of supply chain leadership.” It’s about being purpose-driven, greater emphasis on which makes sense in the midst of a coronavirus pandemic, though Gartner had already collected much of its data for the ranking when the U.S. and other major economies began shutting down in March. Notably, however, 13 of the top 25 ranked companies in 2020 earned a top score in ESG. “Many organizations felt the financial impact of the disruption beginning in early 2020, after we pulled all the financial information used as part of the business measurement component of the methodology,” Gartner’s report reads. “The peer and analyst voting components occurred in March and April of 2020 and reflect voters’ perspectives on how companies dealt with the pandemic. It is instructive to see how many of the Top 25 companies have reacted and positioned themselves for success during and post disruption.”

2020 has seen negative economic factors on a scale not experienced since the first half of the the 20th century, Gartner’s report notes, and huge uncertainty remains about the viability of measures to achieve economic recovery. But here again is where the top supply chain companies are leading the way. Already, Gartner says, they are defining what the post-coronavirus future will look like for markets and consumers.

Leading companies are defining scenarios to predict how markets will recover post-lockdown with a focus on accelerating competitiveness in the recovery curve, while also building in risk-mitigation strategies in case of a second wave of COVID-19,” Gartner’s report continues. “Leaders need an agile, or adaptive, strategy that allows the supply chain organization to sense and respond to changes in the business context as they happen. They also need to think long term and forecast for the upturn.”

HOW GARTNER HAS CHANGED THE WAY IT RANKS COMPANIES

GOOD CORPORATE BEHAVIOR ACKNOWLEDGED

High-tech leader Cisco Systems earned its No. 1 spot on the Gartner list this year based on “strong revenue growth, strength in ESG, and recognition of leadership in the community opinion polls.” Cisco was No. 5 in 2019 and No. 3 in 2018. The San Jose, California-based company’s transformation from product-centric to offer-based “continues to drive multiple business models within the company,” Gartner’s report reads. “These digital businesses are supported by a digital supply chain that can take advantage of data and is predicated on security as a foundation. Supply chain security needs evolve, and Cisco has been on an improvement journey of its own, operationalizing the ability to monitor and mitigate partner IT security capabilities. In addition, Cisco has driven significant value in predictability in lead-time, cost savings, and inventory reduction, while launching many new products, offers, and services.”

Cisco also gets kudos for its ESG efforts, particularly in regards to the concept of circular economy (CE), part of a larger trend toward ethical and sustainable supply chains. Gartner research shows that 70% of companies are making some level of investment in CE models.

Consumer products leader Colgate-Palmolive is ranked No. 2 in 2020. Colgate was No. 1 last year and No. 4 in 2018. It was lauded by Gartner foremost for a commitment to reducing its impact on the environment, “evident in its effort to go beyond zero waste and be certified as ‘TRUE Zero Waste'” through certification by the U.S. Green Building Council. In the last three years, Gartner reports, 15 of Colgate’s manufacturing sites have achieved TRUE Zero Waste certification, with 10 achieving platinum status, the highest level of recognition.

Johnson & Johnson, the healthcare conglomerate, climbs five spots to No. 3 this year; J&J was No. 8 last year and No. 18 in 2018. The company, a mainstay in the Gartner ranking, “continues to look for ways to advance, seeking to define what a high-maturity supply chain looks like for the life science industry. J&J’s embrace of supply chain innovation is unparalleled in the life science industry, where innovation is usually reserved for product development.” Gartner also praises J&J’s Supply Chain Innovation Engine, located in New Brunswick, N.J., as an example of the company putting innovation into practice. “People who work there,” Gartner’s report reads, “prioritize disruptive ideas that will improve healthcare.”

But J&J’s laudable corporate behavior does not end there. “To support the effort to treat Covid-19 patients, J&J is leveraging its 3D printing expertise,” Gartner reports, “through which the company is helping to alleviate the constraint of a limited supply of ventilators. These manifolds, designed by Prisma Health, allow two patients to share the same ventilator.”

See the next page for the Gartner top 25. Read the complete Gartner study here.

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