In the face of retail’s uncertainty, a new report shows just how key first-rate supply chains are to surviving the struggle.
On Thursday, Gartner, Inc. shared findings from its annual Supply Chain Top 25 list, which recognized companies like Inditex and H&M, for their supply chain efforts. For the companies that nabbed top spots on the list, supply chain digitization, adaptive organizations and healthy ecosystems were the key trends that placed them ahead of the pack.
Companies on the list were ranked according to two main components: business performance and opinion. Business performance in the form of public financial data demonstrates companies’ previous performance, while the opinion component determines future potential in the supply chain sector. Both components are brought together to provide each company with a total composite score.
Although Unilever stole the top spot on the supply chain list for the second year in a row, Inditex and H&M, ranked in the top five. With a total composite score of 4.98, Inditex placed third on the list for its successful nearshoring manufacturing. Unlike other companies that produce apparel in Asia, Inditex took the initiative to expand its manufacturing base in Europe, North Africa and Turkey.
Swedish retailer H&M took the fifth spot on the list with a score of 4.63. Gartner noted H&M’s strong historical financial position and its “stellar” record in sustainability and workers’ rights.
Two years ago, Gartner introduced a separate category from the list to highlight the accomplishments of long-term supply chain leaders. Dubbed supply chain “masters,” these companies have earned top-five composite scores for at least seven years. For the first time this year, Amazon joined as the third company in this category, joining Apple and P&G. Gartner noted how the e-tailer is leveraging its cloud computing platform, Amazon Web Services, to drive its digital business. What’s more, Amazon’s automation technology investments have led the retailer to issue a flying warehouse patent and install 15,000 industrial robots at its fulfillment centers.
In addition to individual supply chain accomplishments, brands overall also demonstrated exceptional performance in supply chain digitization, adaptive capabilities and developing healthy ecosystems. To combat retail’s shifting state, many companies have established digital supply chain operations. Disruptive technologies, including the Internet of Things (IoT), advanced analytics, cloud computing and automation have streamlined companies’ supply chains and shortened production times.
Along with digitizing supply chains, companies have also taken the step to create systems that are adaptable to supply chain changes. Gartner research VP Stan Aronow said these models enable companies to combine functional capabilities into “plug and play” segments, like configure-to-order or engineer to order manufacturing profiles for various consumer needs.
Lastly, companies are also improving their supply chain ecosystems with more compliance regulations. While digitization and advanced capabilities are part of companies’ supply chain goals, relationships with customers, employees and suppliers also remain critical. Leading companies are ensuring ethical treatment of workers and manufacturing transparency, while practicing sustainability along all parts of the value chain.
“Despite some striking performances, however, today’s supply chain leaders face a much different business environment than just 12 months ago. A general trend toward protectionism, as evidenced by Brexit and the policies of the current U.S. administration, has caused some companies to shift supply network design decisions and create contingency plans in anticipation of new trade policies,” Aronow said. “Continued investment in innovative supply chain capabilities will be required to meet this changing landscape.”