The Top 25 Supply Chains of 2009

When it comes to determining best-in-class supply chains, inventory turns is the name of the game. That, at least, is the conclusion one reaches when studying the results of AMR Research's annual ranking of the top supply chains in the world (although "the world" mostly means brand-names well known in the United States. You'll search in vain, for instance, if you're expecting to see any companies from the BRIC nations.)

The AMR rankings take a lot of things into consideration, most notably public opinion: 20% of the total scores given to each company is based on "peer opinion," which means folks who work in a supply chain capacity at a manufacturer or a retailer, as well as some supply chain experts in other fields (including at least one journalist who wrote a book on supply chain management best practices). Another 20% of the total comes from AMR analysts. So 40% of the rankings has a bit of the "American Idol" popularity contest feel to it, with the AMR analysts playing the role of the judges (we won't speculate as to which analyst most reminds us of cool and cynical Simon Cowell, and which reminds us of the kooky but gushing Paula Abdul), and the peers playing the part of the audience voting from home.

And as you might expect, the peers and the analysts didn't exactly see things the same way. The two highest vote-getters from the public were Apple and Wal-Mart, with Procter & Gamble a not-so-close third. For the AMR analysts, the top three supply chains were, in order, P&G, Samsung Electronics and Apple. And yet, somehow, Dell managed to nudge aside almost the entire pack to finish second only to Apple in the final round. And the reason Dell continues to be the poster child for supply chain management is its proficiency with inventory turns, a category worth 25% of the total vote. With an inventory score of 46.2 (2008 cost of goods sold / 2008 quarterly average inventory), Dell once again finished at the top, although Apple was close at its heels with a score of 45.5 (the next-closest pursuer in the inventory-turns race was Walt Disney, at 33.0).

Of course, as we noted in last year's post-game summary, the whole nature of "inventory turns" means different things to different companies. While Dell's direct-to-consumer supply chain model is solidly centered on the production of computers, Apple's and Walt Disney's are far more nebulous. Do the sales of digital iTunes count in Apple's inventory turns? Does everybody who saw Disney's "Wall*E" in a theater count as an inventory turn? Whereas Dell sells its products one at a time, Apple and Disney can sell the same product (music, movies, etc.) to millions of different people. So we're definitely getting into "apples vs. oranges" territory when comparing inventory turns.

In any event, the other main factors in AMR's rankings include 3-year weighted return on assets (worth 25% of the total score), and 3-year weighted revenue growth (worth 10%). Texas Instruments ended up with the best ROA score (20.5%), while Apple blew away the rest of the field on revenue growth with 32.7% (Schlumberger was the only other company over 20%).

Anheuser-Busch, which placed at # 10 in 2008, fell completely off the list in 2008, no doubt due largely to its acquisition by Belgian firm InBev.

Here's the full list of the Top 25 Supply Chains of 2009 (in reverse order):

25. Intel
24. Sony Ericsson
23. Publix Super Markets
22. Unilever
21. Best Buy
20. Colgate-Palmolive
19. Lockheed Martin
18. Texas Instruments
17. Hewlett-Packard
16. Walt Disney
15. Tesco
14. Nike
13. Coca-Cola
12. Johnson & Johnson
11. Schlumberger
10. Toyota Motor
9. PepsiCo
8. Samsung Electronics
7. Wal-Mart Stores
6. Nokia
5. Cisco Systems
4. IBM
3. Procter & Gamble
2. Dell
1. Apple