Dell, Nokia, P&G Top Supply Chain Innovators List

IBM, Wal-Mart round out top five in AMR ranking of leading companies embracing supply chain best practices, technologies

IBM, Wal-Mart round out top five in AMR ranking of leading companies embracing supply chain best practices, technologies

Boston — November 16, 2004 — Computer maker Dell, cell phone producer Nokia and consumer packaged goods (CPG) giant Procter & Gamble are leading the way among companies in embracing supply chain best practices and technologies, according to a listing of the top supply chain innovators released this week by technology consultancy AMR Research.

Boston-based AMR issued a report that names the leading 25 companies embracing supply chain best practices and technologies. Billions in operating margin and trillions in market capitalization separate supply chain winners from losers, the consultancy said, and the AMR report seeks to identify who is winning the supply chain horse race and how.

The list was compiled using financial metrics such as return on assets, inventory turns and trailing 12 months growth. These metrics, combined with AMR Research opinion of each company's supply chain performance (which is based on field research and case studies), led to the composite ranking score.

"We now know that such metrics as perfect order performance and supply chain management costs say more about next year's profits than last quarters' earnings," said Kevin O'Marah, vice president of research and lead analyst for the report. "The final ranking reflects both what is known about these supply chain leaders and what is expected for future growth."

According to the report, entitled "The AMR Research Supply Chain Top 25 and the New Trillion-Dollar Opportunity," the maturation of the Internet as a business tool has given companies the ability to integrate software applications and databases with business processes. For many companies, properly executing on this strategy translates directly into substantial, previously unidentified shareholder value.

The top 25 companies in ARM listing, along with their composite score in the consultancy's ranking, were:

  1. Dell - 20.75

  2. Nokia - 13.31

  3. Procter & Gamble - 11.70

  4. IBM - 11.31

  5. Wal-Mart Stores - 11.27

  6. Toyota Motor - 11.08

  7. Johnson & Johnson - 10.93

  8. Johnson Controls - 10.70

  9. Tesco - 9.43

  10. PepsiCo - 9.10

  11. Nissan Motor - 9.09

  12. Woolworths - 8.80

  13. Hewlett-Packard - 8.30

  14. 3M - 8.09

  15. GlaxoSmithKline - 7.95

  16. POSCO - 7.85

  17. Coca-Cola - 7.69

  18. Best Buy - 7.53

  19. Intel - 7.47

  20. Anheuser-Busch - 7.45

  21. The Home Depot - 7.29

  22. Lowe's - 7.00

  23. L'Oreal - 6.98

  24. Canon - 6.94

  25. Marks & Spencer - 6.89
International Business Machines (IBM) is one company harnessing the benefits of supply chain best practices. In 2002, it began to tie all the pieces of a supply chain together. This required managing more than 30,000 suppliers, offering 78,000 products and operating 13 manufacturing plants in 9 different countries. IBM transformed its supply chain from a cost of doing business into a competitive advantage, AMR said.

The results of the company's transformation have made a significant impact on IBM's business. Over the last two years, IBM has reduced cost and expense by more than $12B. Inventory levels are at a 30-year low while sales force productivity has increased by more than 20 percent by off-loading more of the supply chain activities from its sales team. Intra-division part reuse increased from 2 percent to over 50 percent and annual part number reductions range from 20 percent to 38 percent.

"In the on-demand era, the real opportunity is about how you design a business and all its supplier relationships in ways that really haven't been possible until now," said Bob Moffat, senior vice president of Integrated Supply Chain for IBM. "Advantage will flow to companies that embrace this new model and demonstrate the ability to simultaneously excel at the fundamentals of supply chain and leverage next-generation management practices."

For an in-depth look IBM's supply chain transformation initiative, read the interview with Linda Cantwell, IBM vice president for business growth initiatives, in the article "Breaking the Silo Mentality" in the April/May 2004 issue of Supply & Demand Chain Executive.