Behind the Scenes of the World’s Five Best Supply Chains
Now that 2013 is just about over, we decided to take a look at some interesting supply chain moves made by the five top supply chains in the world in 2013, as ranked by Gartner. In their annual top 50 analysis, Gartner ranks supply chains based on their inventory turns, revenue growth and return on assets. The methodology, which you can read about here, is a little complicated. The list is topped by five predictable leaders:
Everyone knows about Apple’s foray into robotic supply chains and Amazon’s drones. In this post, we’ll try to dig up some of the more interesting moves made by these companies that you may have missed.
Apple: Resolving a Bad Supply Chain Reputation
The meteoric release of the iPhone5 in 2013 led to the highest phone release sales in history. Over 2 million phones were sold in the first 24 hours and within two short months, nearly 90 million phones were sold. The supply chain required to cope with such massive demand stuttered but ultimately recovered. But what will be remembered about Apple’s supply chain in 2013 is not the sales but the scrutiny of the supply chain by the mainstream media due to worker’s conditions (which even led to a riot at Foxconn in September).
Tim Cook, a supply chain guru who replaced the legendary Steve Jobs as Apple CEO in August 2012, didn’t flinch away from the challenges. Cook visited a Foxconn iPhone plant in Zhenghzhou, China, to personally observe conditions for himself. He has been hard at work trying to “transform Apple into a force for good“, going more green (70% of it’s new headquarter’s power will be green), donating money to fight diseases and rewriting the Apple Supplier Code of Conduct.
McDonalds: Peering through the Golden Arches
Apple’s advantage is that when you leave an iPhone in a container for too long, it doesn’t spoil. MickeyD’s decided to shed some light onto its complicated supply chain by letting some supply chain experts, together with grandmothers, teachers and others, take a peak behind the scenes at what makes it’s burgers so tasty. Led by a MasterChef winner, the group checked out a variety of stops along the way…and even made a video about it.
The group checked out the supply chains involved in making the Big Mac, the Happy Meal Burger, the McDonald’s Sausages and Eggs, and the vaunted french fries. The focus on the tour was on the domestic production with the United Kingdom, showing how even global empires (68 million people around the world munch on a McDonald’s product every day) can source locally. Now let’s see how long it takes them to dump 10 million wings that no one really wants to eat.
You have to appreciate the fast food giant’s desire to pull back the curtain and let the public take a glimpse into one of the world’s most impressive supply chains. As McDonald’s supply chain vice president Warren Anderson said, “People have never been more interested in what goes into their food and where it comes from.” That exact interest may have led to Supply Chain Management being crowned by the WSJ as the most popular MBA program.
Amazon: Upping sales with drop locationing
Amazon has had a busy year in the headlines, from tiffs with Johnson and Johnson about gray market sales to drones delivery services. What may be the most significant for supply chains though hasn’t made as many waves. It comes down to a simple numbers game: Walmart can ship about 500,000 products at any given moment but Amazon has access to a whopping 10 million. It’s not just because Amazon has enormous warehouses (it does) or because it uses robots on the warehouse floor (it does). It’s because it co-locates its inventory, meaning that what you order from Amazon might be getting shipped directly from Eddie Bauer or Target. A professor of operations and information management at Wharton credits real-time links to manufactures as allowing Amazon to “keep the most popular products in inventory, but use a mix of techniques to deliver goods“. Of course, some believe that shipping from multiple locations will escalate shipping costs to the point where it may make co-locating unfeasible. 2014 should shed some light on how this develops.
Unilever: Choo-Choo-Choosing Green
Unilever is in the middle of a epic transformation to become as green as possible. Part of an overarching project launched in 2013, Unilever is intent on dropping its CO2 emissions from its logistic operations around the world to under 2010 levels. One example of this effort is the Green Express, a railroad infrastructure in Italy that transfers ice cream by rail to a logistics hub 700km away. Net result – 3,500 fewer trucks and, perhaps more importantly, reducing costs by 6%.
It goes farther than railroads though, at a Unilever’s research center in Port Sunlight is so fascinating, “800 researchers are going to extraordinary lengths to figure out how to make products that deliver consumer satisfaction and environmental brownie points.” They are measuring how long clothing needs to be washed for, making shampoo that rinses out faster, fitting trackers into soap and more, all to reduce environmental damage…and maybe to increase the bottom line. As Paul Polman, CEO of Unilever says, “we are in the business of maximising returns, but we can maximise social and environmental returns too.“. On and off the supply chain, the world’s famous blue logo is slowly turning more green.
Intel: Popping up at the end of the supply chain
Intel works with over 16,000 suppliers in 100 countries, all to make sure that it can get the right product into the right hands. This year, Intel went one step forward in its efforts to find the right hands. It joined dozens of other, more traditional, retailers who rely on pop-up stores during the holiday season. Pop–up stores are small store locations set up in specific location, usually in order to leverage anticipated heightened demand. A Worth Retail consultant told Essential Retail that it’s not about the profit and that companies should “major on brand awareness, data capture and getting your brand out to as many as possible.” Intel obviously knows the importance of brand awareness and creating a foothold in the market. This year they gave away one billion dollars worth of processors in order to incentivize tablet manufacturers to include Intel chips in their products.