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We've published the Supply Chain Top 25 since 2004, and although the universe of companies is always global, the peer voter pool has generally been more than 70 percent American, leading to a frustrating lack of visibility and, therefore, discussion on supply chain leadership in the world's currently dominant economic engine, Asia. We will soon release a cut of last year's data featuring the highest-scoring companies based in Asia/Pacific, and while the list isn't totally crazy, it certainly needs some attention if we're going to get anywhere close to the kind of useful discussion we've enjoyed in the U.S. and Europe over recent years. So let the debate begin.
Starting with the top of the list, Samsung holds a commanding lead in the composite score, partly because of balanced strength across the financial metrics, including one of the highest return on assets (ROA) figures, very strong growth and inventory turns that are solid, to say the least. More important to its huge lead is the dramatically higher vote totals won by Samsung both among peers and Gartner analysts. I have no problem with Samsung being ranked first, partly because it "walks the talk" of good demand-driven supply chain principles, but also because it's willing to talk in the first place. We've always emphasized the importance of demonstrated leadership in defending the legitimacy of this ranking because we want to see the discipline of supply chain advance. Companies willing to stand up and share the lessons they've learned deserve recognition for taking that risk.
This bias for visible leadership justifies the high rank earned by Samsung's cross-town rival, LG. Although the company is down a solid notch from No. 1, it had good financials and a hard-earned opinion score that reflects efforts last year to share its experiences through conferences, the press and informal networking. Interestingly, we ran an ad hoc Top 25 poll among a group of about 100 supply chain people at a conference in Singapore last fall, and in an audience with no Koreans, the voters chose these same two companies as Nos. 1 and 2. It appears that Korea is leading the way for supply chain in Asia/Pacific.
Below these top two, things start to get squirrelly. No. 3, according to the composite score, is BHP Billiton, carried almost exclusively by a staggering ROA figure. In fact, if judged on votes alone, BHP would be the lowest-ranked of our top 15 Asia/Pacific companies. Having spent a week myself in Pilbara and Perth with Rio Tinto a few years ago, I have to say mining is pretty far from the ideal, despite an abundance of top supply chain talent, including a gentleman who was then leading a sophisticated effort to change the iron mining supply chain from push to demand pull. Too bad he never got to finish the job. Also dubious in my mind is Toyota, which continues to hold a top five slot. The financials are appalling, and even though Gartner voters show little respect, peer voters have Toyota in a virtual dead heat with Samsung. I'm sorry, but this is impossible to justify when the Japanese icon has had so much trouble in recent years with quality. Hyundai, for comparison, which I know has experimented with supply chain technology successfully in recent years, and whose ROA, turns and growth are all way ahead of Toyota, somehow scores far fewer peer opinion votes.
Two retailers make the list: Woolworths of Australia and Seven & I Holdings of Japan. Certainly these two deserve a slot, but I would argue both should be much higher. I've seen some genuinely cutting-edge thinking from Seven & I, and I've visited some of Woolworths' properties down under. Both, I believe, are substantially underestimated by voters.
Another issue I see with the current cut is the companies that are missing. Lenovo is the sole representative of the PC industry, and while I certainly believe it belongs here, I wonder, where is Acer? Also conspicuously absent is Taiwan Semiconductor Manufacturing Company (TSMC), who, as "fab to the world," deserves a fair amount of credit for the miracle of digitization.
And how about Chinese companies, in general? Where, for instance, is the ultimate icon of global supply chain innovation, Li & Fung? Thank heavens Flextronics makes this list, in a well-deserved nod to the electronic manufacturing services industry (thank you, Jim Rowan of Research In Motion [RIM], for calling this out last year at our conference), but where is Foxconn? Considering Apple's stranglehold on No. 1 for the past three years, doesn't it seem odd that its top manufacturing partner doesn't show up at all?
The main message here is not that the ranking is flawed - we know that. It's simply that the ranking, like anything else in life, depends on how much thought and effort goes into it. Asian voters have been slow to come forward, and our analyst team can only do so much on its own. We've added to our Asian team and will launch an Asia/Pacific Supply Chain Top 25 later this year. Our intent is very much to continue driving the advancement of supply chain as a discipline worldwide. Supply chain professionals in Asia should contact us directly (debra.hofman@gartner.com) if you'd like to add your opinion to the debate. You'll, of course, receive a free copy of the report and - perhaps more importantly - help shape the direction supply chain takes going forward.
I can be reached at kevin.o'marah@gartner.com.
Source: Gartner
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