Jul 15 2014

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The Relentless Pressure for Supply Chain Agility

agile_supply_chainAs most of you are probably well aware, Gartner publishes a Supply Chain Top 25 list every year, representing those companies that have best mastered the skill, precision and art of managing their supply chains. This list is a big deal, and is revealed each year at a special conference held in the spring, usually at a nice resort in Scottsdale, Arizona.

According to Gartner, in order to make this list, a manufacturer must typically have achieved:

  • Harmonized foundational processes, data structures and solutions across their global supply chain while driving next-level, tailored performance through advanced capabilities, such as end-to-end segmentation, cost-to-serve analytics, multitier supply chain visibility and supply network optimization
  • A cross-functional team composed of sales, marketing, supply chain and IT to design a holistic new market strategy, and enable local operations supporting new geographies and products for your business groups, and
  • Set aspirational goals and connect the dots between the work people do every day in the supply chain and its contribution to the societies within which they live, building engaged supply chain talent that can lead business growth

These are no small feats! A minimum requirement to achieve this level of enterprise agility is a set of IT systems that work seamlessly across operations – crossing functional boundaries as well as the typical silos of plant-based operations.

Apple’s Remarkable Performance

In order to even earn a ranking on this list, one might view you as a “rock star.” To achieve the #1 spot consistently, on a year-over-year basis is truly magical. Apple has achieved that level of supply chain performance, with 2013 metrics combined with a vote by Gartner analysts and their peers that placed them at the top of the heap:

  • A three-year weighted ROA of 22.3%
  • An average of 82.7 inventory turns
  • A three-year weighted revenue growth of 52.5%

Trouble with Apple’s Core?

According to a recent article in the Telegraph (“Apple’s supply chain in trouble?”), challenges may now be getting much harder for Apple to retain its lead. The article stated that that the ‘iPad Pro’ – a larger version of the iPad, equipped with a 12.9-inch screen – may now be shelved (it was), and that the sapphire-screened iPhone 6 may now be in trouble due to a challenge within their production or supply chain operations (another accurate prediction).

Alas, this is not the first time Apple has had challenges to overcome – their gorilla glass story is well documented. As the story goes, Jobs flew to Corning, New York to meet with Corning CEO Wendell Weeks and explained that he wanted the iPhone’s screen to be made of glass, but that it had to be durable and he needed enough of it within six months to be produced for all the iPhones he was planning to sell. Corning delivered with a production break-through, in time to deliver the new iPhone that was unveiled in early January of 2007.

No Easy Path

Manufacturing leaders must continually re-evaluate their production processes, challenge their suppliers to do the impossible, and then adapt their business processes on an enterprise wide scale so to keep up with all this change. Couple these obstacles with a continual need for new product introduction that is stunning, innovative and ground breaking, and then you too can be an Apple.

Given this deeper dive into what it takes to top the Gartner Supply Chain Top 25, it is even more remarkable that Apple once again retained the top spot in 2014. This year, their metrics included:

  • A three-year weighted ROA of 20.5%
  • An average of 69.2 inventory turns
  • A three-year weighted revenue growth of 31.2%

Clearly these figures are less than the score from last year, further indication of the continuing challenge to manage the supply chain. Yet, these figures were better than all the rest – so Apple continues to shine.

The only question now is who can de-throne the king?


Gordon can be found on Google+ .

Permanent link to this article: http://www.apriso.com/blog/2014/07/the-relentless-pressure-for-supply-chain-agility/

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