Chain Reaction

By now, many of you have seen our Top 25, but what about the next 25? One of the benefits of the methodology we use is that the list itself doesn’t stop at 25, it actually goes much deeper. So here is recognition of the next 25, the companies that landed in slots 26-50 in the ranking. Among these, several interesting themes emerge, as we note on the jump.Demand-driven excellence is about the visibility, communication, and reliable processes that link supply management, demand management and product management together. The goal: demand that is managed rather than simply responded to, global supply that is networked rather than linear, and innovation that is embedded in operations rather than isolated in a lab. Achieving that goal is an ongoing journey, one in which the leaders are actively engaged.

Since its inception, interest in the ranking has grown substantially. Indeed, landing in one of the first 25 slots on the list is impressive: Because the methodology we use contains financial and opinion components, achieving one of the top slots requires not only financial excellence but also a strong perception of leadership by the voting community. (For a detailed discussion of the methodology, please see the Top 25 homepage).

But what about those who just missed the first 25 slots? Many are highly respected names in the world of supply chain management. So here we honor them and look at some of the trends this next set of 25 show.

On the Move

These are the companies to watch, those that moved up substantially since last year’s ranking, including LG, Cardinal Health, Honda, Novartis, and Northrop Grumman. LG, for example, jumped to No. 31 in 2008 from No. 64 in 2007, with substantial improvements in ROA and inventory turns, and revenue growth that went from negative to positive.

Honda’s rise to No. 44 this year from No. 57 in 2007, on the other hand, had more to do with an increase in the opinion component than its financials, reflected in the fact that they came in at No. 25 in the peer vote alone.

Cardinal Health rose to No. 48, this year, from No. 81 in 2007, with strong improvements across the board, in financials and opinion factors. And Novartis and Northrop Grumman both moved into the 30s, this year, from the 40s last year, with steady improvements in their numbers.

Emerging Onto the Scene

A few of our companies had previously flown under the radar due to one specific requirement of the methodology: a company must get at least 1 point in the peer and AMR Research voting blocs in order to be ranked.

This year, the following companies got those votes:

·     Groupe Danone, with its work in manufacturing excellence and food safety

·     Seven & I Holdings, better known in the US under its 7-Eleven banner

·     Illinois Tool Works, a stellar large industrial against which other industrials seek to benchmark

·     Medco Health Solutions, which grew large enough in 2007 to make the Fortune Global 500 list and therefore be considered for the ranking.

Previous 1-25 Winners

GlaxoSmithKline, Intel, Lowe’s, Motorola, and Paccar are all great companies that were in the Top 25 previously and continue to innovate in their supply chain practices but were hit hard by macro-economic factors this year.

We expect them to rise again, a sentiment echoed by our peer voters, who ranked Motorola No. 18 and Lowe’s No. 19.

Less Visible Industries

One of the comments we’ve heard a few times about the Top 25 methodology is that the opinion component tends to favor those industries that are closer to and more visible by the consumer, such as retail and consumer electronics. We are actively looking for ways in which to address any imbalance, and are open to all suggestions.

Falling into this category are Dow Chemical and Sysco, which labor diligently, far from the spotlight. As will be seen in our upcoming Chemical industry cut, Dow excels in its field, winning the AMR Research award, this year, for its aggressive sustainability initiatives.

More to Come

We plan a continued calendar of publications that will offer a variety of lenses into the full list. Please share with us your thoughts, ideas, comments and feedback here.

If you want to take part in the voting for the 2009 Top 25, register now.