Agile and Disruptive Supply Chain Leaders in 2020

Manufacturers and distributors of personal care, hygiene and nutritional products all feature highly in Gartner’s Supply Chain Top 25 Companies of 2020.  Gartner is a research and advisory firm that ranks global companies annually, based on their business performance and their demonstrated leadership in supply chain.   

As well as being leaders in their sectors, many companies are currently exhibiting their expertise and capabilities by making a difference during the most significant disruption in our lifetime.  Some of the top 25 have shown their supply chain agility by venturing into the manufacture and supply of new product lines. Studies find that there are several apparel companies manufacturing personal protective equipment (PPE), adult beverage companies making hand sanitizer, industrial companies shifting to producing ventilators and airlines converting dormant warehouses into food bank processing centres.

  Moreover, the research outlines three key trends supply chain leaders are embracing to accelerate their capabilities. 

1. Purpose-driven organisations

Organizations that are purpose-driven inspire customers, employees and partners to act ethically and sustainably in support of the global community.

To achieve their lofty goals the top-rated companies have to show both agility and resilience. The study finds that “it has been a marvel to witness the strength and creativity of the supply chain community rallying around a  purpose (pandemic response), and demonstrating this aspiration by keeping our society fed, supplied and healthy”. They also pointed out that this period has exposed organizations that prioritized cost over agility and resiliency.

To achieve its ranking of 5th, “Nestlé shows a strong focus on customer centricity to drive growth and profitability with an emphasis on improving product availability on-shelf and online, and being the ‘partner of choice’ with key customers. To improve product availability, Nestlé is investing in additional capacity and performance in select manufacturing facilities to increase agility, transforming its planning capabilities with demand-sensing technologies and integrating strategic collaboration with key customers.”

Unilever, one of the companies in Gartner’s Masters category that has consistently shown leadership in supply chain over the last ten years, is tackling the problem of palm oil which is a key input to its personal care products.   Palm oil is typically sourced from places where deforestation and disenfranchisement of smallholders is an issue. Its sourcing organization is leveraging advanced tools, such as geospatial mapping combined with mobile device signal tracking, to certify “deforestation-free” palm oil supply.

Both Colgate-Palmolive and P & G, with similar product ranges, are also driving sustainability initiatives. Along with Unilever, these companies have ambitious plans for recycling of waste and have set ambitious conservation goals for water, forests and other natural resources.

2. Business model transformers

Companies have to embrace changes in consumer habits and expectations, especially right now. The take-up of e-commerce, for example, is putting pressure on supply chains to adapt quickly and re-invent their ways of doing business. Disruptive events are happening every day which are creating new market opportunities.  These top companies are awake to the possibility of new acquisitions, especially micro-enterprises or start-ups. 

Artificial Intelligence Within Retail Supply Chain

We have seen clearly that Amazon Inc. is a serial disruptor.  In the retail apparel sector, Inditex, the owner of Zara, has been integrating store and physical operations and deploying product-level RFID systems. This has enabled a material shift in the organization’s sales channels, with online sales growth in 2019 reaching 23% year on year and now accounting for 14% of net sales.

L’Oréal, (No. 10), with its ability to personalize customer offerings, is a great example of a traditional consumer products company that is in mid-transition to operating as a retailer with both physical stores and direct-to-consumer capabilities. Studies found that L’Oréal also recognizes the power that data has in driving supply chain performance. Additionally, the company is working to accelerate product development through the use of 3D printing, digital simulation and connected assets.

3. Digital orchestrators

Many of the companies listed in the Top 25 are early and frequent adopters of digital technologies. They have the financial capacity to invest in the technologies that drive innovation, enable business capabilities and help organisations thrive in any economic conditions.

Gartner’s most recent ‘Supply Chain User Wants and Needs’ Study shows advanced analytics and big data applications voted as the most important and frequently adopted digital capabilities. Other important, and frequently, adopted technologies include robotic process automation (RPA), artificial intelligence (AI) and/or machine learning (ML), and the Internet of Things (IoT) applications.  

Johnson & Johnson (J&J) is integrating next-generation ERP systems that replace a patchwork of older versions and one-off systems that were developed by individual business units or inherited through mergers and acquisitions. This foundational platform enables them to simplify and standardize processes for greater capability now and to more easily upgrade and extend capabilities in the future.

Diageo, the U.K.-based leader in adult beverages, (No 14) has a commitment to standardization and simplification enabling functional excellence in supply chain and procurement to be embedded across all markets and centres of expertise. Deploying best-in-class digital capabilities is allowing data-driven analytics to enable business improvements and successful product launches.

BMW’s workforce investments include hiring in future-oriented fields, such as AI, and smart production and logistics. New training profiles at its German plant locations include IT application development, IT system integration and electronics for automation technology.

In past years, the Top 25 Supply Chain Leaders have demonstrated significant capabilities in agility and disruption management. Any mid-size company that follows the 3 key trends and emulates the traits exhibited the Top 25 will prosper.  

This article has been adapted from the Gartner Supply Chain Top 25 for 2020.

As experts in FMCG and retail, The Supply Chain Consulting Group is well-placed to help you. We have implemented our own Business Continuity Plan and are working at full capacity. 

Call us for an initial no-obligation discussion on 01926 430883 or email us at info@sccgltd.com

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