First thoughts from the Gartner Supply Chain Executive Conference.

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I always feel like a kid in a candy store at the Gartner Supply Chain Executive Conference. First of all as a vendor it is great to get so much practitioner talent in one location. There really is a lot of good thought leadership coming out of the leading companies and it is great to see some of these showcased at the conference as keynotes. This year there was a big emphasis on talent management, with Raytheon leading the way in terms of a structured education and work experience program. I just happened to go to a session discussing Starbucks’ transformation. What I found interesting in this case study was how Howard Schultz, CEO of Starbucks, recognized the need to get operational effectiveness (customer service) and efficiency (supply chain cost) under control when he came back to rescue Starbucks. He recognized that a different approach to operations was required now that Starbucks was no longer a startup. According to the presenter, Kevin Sterneckert, Schultz sent out a company-wide email announcing that Starbucks had gotten into the Gartner Top 25. I wonder how many other CEO’s did this or were even aware of their position? I have heard that one of the principle reasons Tim Cook was hired by Steve Jobs was that Jobs recognized the need for operational excellence to secure the value of Apple’s design supremacy. To get back to Starbucks, they are working with local business schools to develop both external and internal training programs for their operations people, and because the business schools students are aware of the transformation because of case study materials they are managing to attract some of the top graduating talent. On the Gartner analyst side there appears to be a changing of the guard taking place with a lot of fresh new talent coming in. This could be one of the greatest benefits to the industry of the Gartner takeover of AMR Research. The quality of the AMR analysts was always high, but fresh perspective is always welcomed and a broader reach was necessary, though nearly all of the recruits are still in the US. Hopefully this will change over time.  Many of the new analysts were given very prominent roles in the conference, which was great, these include Ray Barger, Mike Uskert, Matt Davis, and Kevin Sterneckert. Three sessions I found particularly interesting were:

  • Matt Davis – Segmenting Your Supply Chain to Enable Innovation and Profitability I wrote a blog recently about Matt’s recent article on supply chain segmentation so I was keen to attend his session. He did not disappoint and I was pleased to see that the room was full. Segmentation is a very important step in the overall development of a company’s operational capabilities. It is the realization that to get to higher levels of supply chain effectiveness and efficiency not all demand and supply can be treated in the same manner. What I am hoping Matt is going to explore over the next few months is what this means from an asset perspective. It is easy to say that the supply chain has to be segmented, but how?  Is inventory of the same stored in physically different locations in the warehouses? Or is the segmentation managed through systems, that is a virtual segmentation rather than a physical segmentation?
  • Mike Burkett – Maximize Product Life Cycle Value by Aligning Demand and Supply With Product Design It always surprises me when analysts and industry experts exclude explicit mention of product life cycle management, especially new product introduction, from S&OP. There is some much demand uncertainty and the need for supply chain agility so high that it must be considered as part of the S&OP process. Especially in light of some of the data published by Mike as part of his presentation showing the abysmal record of successful product launches. Mike also presented a hierarchy of metrics for product life cycle management, especially product launch, separating out timeliness of launch from time to value.
  • Prof Clayton Christensen - Manage Supply Chains to Create Disruptive Innovation Prof Christensen gave a truly inspirational presentation on disruptive innovation that largely debunked the notion of measuring supply chain and operations effectiveness by increase in RONA. I have often made the comment that I considered outsourcing to be a purely financial instrument that no operations person would chose to adopt. Prof Christensen showed how outsourcing essentially saps the company of operational competitiveness over the long term. Equally important was his illustration of how unnecessary cost can be designed into both processes and products, often through the over design of products with capabilities that exceed user requirements. In this context, I find the transformation being forced on western companies by selling into the BRIC countries a very healthy shock to the system. Some of the medical diagnostics companies need a special mention in this regard, and Prof Christensen called them out too, as did Jane Barratt, with product redesign for BRIC countries leading to simplification and huge reductions in size and weight. This ties into Prof Christensen’s description of technology evolution being first centralization and then dispersion where many of the medical diagnostics machines designed for BRIC countries being used in smaller clinics in the West.

There were many other session I wish I could have attended, hence my reference to being a kid in a candy store. Special mention must go to Tim Payne’s session on technology evolution and the relevance of pace layering in this context. In another session, of which I captured the last 10 minutes, Tim emphasized the growing need for response management and rapid planning. I am going to spend time over the next few days going through the recording of the sessions I missed, particularly those of Tim Payne, and providing additional commentary. Stay tuned.

Check out my second and third posts on the Gartner Supply Chain Executive Conference here and here

Discussions

Max Henry
- 6月 07, 2011 at 8:47午後
How objective and accurate is the Gartner AMR Supply Chain Top 25?

Every year, the industry awaits the results of the much heralded AMR Supply Chain Top 25 ranking. The list is intended “to raise awareness of the supply chain discipline and how it impacts business”. To view it, click on http://cha.in/iQEcIu

For professionals based in Asia who deal with supply chain and manufacturing on an operational level, AMR ranking is surprising to say the least, with companies like Apple and Wal-Mart making the top 10 despite their overall practices with suppliers and poor CSR efforts in Asia.

How relevant is this ranking given that most of these companies outsource their manufacturing to suppliers and contract manufacturers plagued with CSR issues in Asia?

Why is Apple #1 when its supply chain and product launch have been constantly affected by parts and labor shortages, not mentioning the lack of transparency on its CSR efforts. AMR praised in his report Apple’s “embedded innovation, networked supply and demand shaping”. Interesting comment when most of its innovation is now driven by its contract manufacturers (e.g. Foxconn) and when its demand forecast has been quite poor with the iPad.

How much do the researchers at Gartner or AMR know on how these companies really operate in Asia? Do they have people on the ground to check the extent of the companies' value chain network which the "integration" is praised so much in the report?

Last but not least, how biased is the ranking given many of the Supply Chain Top 25 companies are Gartner’s clients? Recently, other Gartner rankings like the IT Magic Quadrant has been under heavy fire for being everything from merely subjective to rewarding companies that have paid Gartner the most money for its services. Gartner is well known in the industry for rewarding those who pay for it.

What’s your take on AMR’s Top 25 Supply Chain? Accurate or way off? Do you agree or disagree with that ranking?

Please post your comments below or send them to Kevin Foehner, Chief Editor of CHaINA Magazine at editor@supplychain.cn. The best comments will be used in the upcoming issue of CHaINA Magazine (With full credits to the commenter).
Trevor Miles
- 6月 08, 2011 at 12:32午後
Hi Max

I will be posting some comments on the Top 25 later this week.

There is no doubt that the center of gravity has shifted since AMR (now Gartner) first started the rankings 7 years ago. At that time AMR had hardly any presence outside of the US. Although Gartner has a wider reach, it is still very Western economy focused and also the supply chain practice was much smaller. The senior people at Gartner are aware of these short comings.

Kevin O'Marah, who started the ranking, will be the first to admit that there is a lot of subjectivity to the rankings. Also companies have to apply to be included and there is a lot of work, on the part of the company, that goes into the being evaluated. So if a company does not apply (and yes, it is far more likely that a Garner customer will apply than a non-Gartner customer) it won't even be considered. In otherwords if Apple didn't apply it wouldn't be #1. I have a bit of a problem with this approach.

As importantly 50% of the overall score is based on financial metrics, 25% on "peer" opinion, and 25% on Gartner anayst opinion. When many of the companies in China and India are private and reporting is less rigourous this poses a bit of a problem. In addition, when few people in the West have heard of Haier and Hauwei it is unlikely that they will get many peer votes. And as you state, do the Gartner analysts really know the companies in Asia? Especially if they are not customers.

So there are issues and there is bias.

But I cannot go from agreeing that it is a flawed process to stated that it is deliberately biased as you suggest.

Regards
Trevor
Kinaxis

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