Here’s a quick overview of supply chain best practices from 10 leading companies from the 2018 Drucker Institute Ranking.

Key Supply Chain Best Practice Highlights:

  • Innovation is King – leading companies use modern technology including, automation, AI, machine learning, and augmented reality to improve supply chain processes
  • Commitment to Reduction in Non-Value-Added Tasks – automation through predictive analytics, artificial intelligence and self-service which reduce non-value-added tasks
  • Invest Only in Needed Inventory – companies like Amazon, reduce inventory investments by using an as needed inventory system to reduce overstocking
  • End-to-End Visibility Access – leading companies have integrated systems and processes that enable end-to-end visibility across the supply chain for quick decision-making

The Drucker Institute, a unit of Claremont Graduate University, has developed a holistic company ranking.

The Drucker Institute ranking is based on 5 key performance parameters (ranked on a scale of 1 to 5 stars (5 being the maximum possible rating):

  1. Customer Satisfaction
  2. Employee Engagement & Development
  3. Innovation
  4. Social Responsibility
  5. Financial Strength

These scores are cumulated to give an overall “Effectiveness” score with 100 being the highest.

Supply Chain Best Practices from the 2018 Drucker Institute Ranking

In this article, we will list the noteworthy companies in alphabetical order and will try to understand the Supply Chain Best Practices of each company. Each of these companies have their unique Supply Chain Management Processes based on their business model. Study of their best practices will help you in benchmarking your current processes and provide you an opportunity to further explore new processes for implementation.

A responsive and flexible Supply Chain is the back-bone of successful business operation and often the differentiating factor between two similar companies. All these noteworthy companies are leaders in their respective businesses and they started from humble beginnings to reach their current global scale through successful implementation of Supply Chain Management processes.

1. Alphabet Inc., California – Internet Conglomerate

Alphabet is an internet conglomerate company created through the corporate re-structuring of Google in 2015. Alphabet is the parent company of Google and other subsidiaries like Calico, Chronicle, GV, CapitalG, Verily, Waymo, X, Loon and Google Fiber. Alphabet has a wide product portfolio which spans across different geographical locations and industries – online advertising technologies, search, cloud computing, software and hardware.

What Makes Alphabet’s Supply Chain Unique:

Being a highly innovative technological company, Alphabet relies on a highly responsive and flexible Supply Chain which can seamlessly collaborate across different geographical regions. Alphabet’s Supply Chain also strives to be automated with robotics, machine learning and artificial intelligence driven systems. Augmented reality is also the way forward for Alphabet with the use of smart glasses in warehouses for on-screen information and navigation.

2. Amazon.com, Inc., Seattle – Ecommerce

Amazon is an ecommerce and cloud computing company and the largest online retailer in the world. Apart from the core businesses, Amazon also provides products and services like – Video streaming, Audio streaming, Audiobook streaming/download, Kindle e-readers, Fire tablets, Fire TV and Echo devices.

What Makes Amazon’s Supply Chain Unique:

Amazon is one of the best and highly respected Supply Chain leaders due to highly innovative and technologically advanced systems like automated warehousing and drone delivery. Being an online marketplace, Amazon invests heavily in software systems, warehousing, transportation and invests minimally in raw material and finished products, which is primarily owned by the direct Sellers. Amazon’s Supply Chain has direct control over the key performance areas like order processing, packaging, delivery, replacements, reverse logistics and customer service.

3. Apple Inc., California – Consumer Electronics

Apple is a technology company that designs, develops, and sells consumer electronics, computer software and online services. Its product portfolio includes the iPhone smartphone, iPad tablet computer, Mac personal computer, iPod portable media player, Apple smart watch, Apple TV, etc. Apple’s highly advanced Supply Chain supports design of highly innovative products in an extremely secretive environment. 

What Makes Apple’s Supply Chain Unique:

Even though Apple’s Supply Chain is highly complex, they manage it successfully through advanced software systems and tight inventory control. Apple has managed the fine balance of complexity and required simplicity through contract manufacturing, inventory rationalization, supplier base consolidation and distribution network integration. Technological obsolescence risk at Apple is mitigated through tight inventory control of raw material and finished goods.

4. Intel Corporation, Santa Clara – Semiconductor Manufacturing

Intel is a technology company and the world’s second largest semiconductor chip maker. Intel is the inventor of the x86 series of microprocessors which is found in most personal computers. Intel designs and manufactures processors for computers like Apple, Lenovo, HP and Dell. Intel also manufactures motherboard chipsets, network interface controllers, integrated circuits, flash memory, graphic chips and embedded processors.

What Makes Intel’s Supply Chain Unique:

Intel’s Supply Chain is highly integrated and data-driven which provides a quick reporting and decision support system for order management, procurement, manufacturing, testing and delivery. Intel’s Supply Chain is fully equipped for end-to-end visibility across the value chain, responsiveness to user requirements for quick decision-making and simplification of complex supply chain processes.

5. International Business Machines Corporation, Armonk – Computers

International Business Machines is more than 100 years old company with operations in over 170 countries across the globe. IBM manufactures and markets computer hardware, middleware and software. IBM also provides hosting and consulting services. IBM is a research driven organization with highest numbers of patents in US and has significant inventions like – ATM, floppy disk, hard disk drive, magnetic stripe card, SQL programming and UPC barcode to name a few.

What Makes IBM’s Supply Chain Unique:

Being a highly innovation-oriented company, IBM’s Supply Chain focuses on data security, privacy, value creation, creating a competitive advantage through latest technology and communication. IBM has fully integrated Supply Chain with linkages to Suppliers, Vendor Managed Inventory and Direct Customer Orders. One of the IBM’s Supply Chain philosophy is automation through predictive analytics, artificial intelligence and self-service which reduces non-value-added tasks and frees up time for key personnel in the Supply Chain to concentrate more on their core activities.

6. Johnson & Johnson, New Brunswick – Pharmaceuticals, Medical

Johnson & Johnson is a 130+ years old company manufacturing various consumer products like medical devices, pharmaceutical and consumer packaged goods. Johnson & Johnson is a giant scale company operating in 175 countries and with 250 subsidiaries.

What Makes Johnson & Johnson’s Supply Chain Unique:

Johnson & Johnson’s Supply Chain has been successfully able to connect the broad product portfolio across the globe in an end-to-end fashion. This highly integrated Supply Chain provides J&J the ability to predict the major trends over the medium to long term. J&J’s Supply Chain is focused on three core areas which are most important for their business – Quality, Cost and Customer Satisfaction. Raw Material and Finished Goods storage conditions requirements and shelf life are of paramount importance in J&J’s Supply Chain. This is ensured by technological driven end-to-end visibility of product flow across the value chain.

7. Microsoft Corporation, Redmond – Technology

Microsoft is a technology company which develops, manufactures, licenses, supports and sells – Computer Software, Consumer Electronics, Personal Computers and related services. Its major products include Microsoft Windows operating system and Microsoft Office applications suite.

What Makes Microsoft’s Supply Chain Unique:

Microsoft’s own signature Supply Chain System relies heavily on business intelligence and predictive insights driven partly by machine learning. Microsoft’s huge product portfolio itself generates huge amount of data which needs to be integrated centrally for predictive analysis for driving operational efficiencies. Seamless integration of Supply Chain has enabled Microsoft to capture data on a real-time basis and simultaneously analyze the data points and trends. Proactive and early warning systems are the hallmarks of Microsoft Supply Chain. These alerts assist in quick resolution and risk mitigation.

8. Nvidia Corporation, Santa Clara – Computer Gaming

Nvidia is a technology company which designs graphics processing units (GPUs) for the computer gaming and professional markets. Nvidia also designs system on a chip units (SoCs) for mobile computing and automotive market. Nvidia’s major product portfolio includes GeForce GPU and handheld gaming devices – Shield Portable, Shield Tablet and Shield Android TV.

What Makes Nvidia’s Supply Chain Unique:

Nvidia’s Supply Chain is based on its business model of in-house designing and out-sourced production of processors and hardware. Nvidia has highly effective Product Life Cycle Oriented Supply Chain Management processes which increases transparency and reduces technological risks. Nvidia has adopted the Electronic Industry Citizenship Coalition (EICC) Code of Conduct. This Code of Conduct governs and drives Nvidia’s Supply Chain Management which includes auditing critical suppliers and conducting regular internal assessments of Supply Chain processes.

9. PepsiCo Inc., New York – Snacks & Beverages

PepsiCo is a 53+ years old company formed in 1965 with the merger of Beverages company Pepsi-Cola and Food manufacturing company Frito-Lay, Inc. With annual net revenues of $43bn+, PepsiCo is the second largest food and snacks company in the world, only behind Nestle. PepsiCo is a household name with successful brand products like – Pepsi, Diet Pepsi, Mountain Dew, Lay’s potato chips, Gatorade, Tropicana beverages, 7 Up, Doritos tortilla chips, Quaker foods and snacks, Cheetos, etc.

What Makes PepsiCo’s Supply Chain Unique:

PepsiCo’s Supply Chain relies heavily on high quality raw material and packaging material sourced directly from farmers and suppliers across the world. PepsiCo’s Global Procurement has its own internal code of conduct for suppliers. This Supplier Code of Conduct (SCoC) is the foundational document for supplier relations and is strictly adhered to ensure accountability. Since product expiry is one of the major challenges for PepsiCo, its Supply Chain relies heavily on digitization and automation of processes.

10. Procter & Gamble, Cincinnati – Consumer Goods

Procter & Gamble is a 181 years old company which hardly requires any introduction. P&G manufactures a wide range of products which include – personal health, personal care, hygiene products – further divided into segments like Beauty, Grooming, Health Care, Fabric & Home Care, Baby & Feminine Care, etc.

What Makes P&G’s Supply Chain Unique:

P&G has one of the most complex Supply Chains with a huge product portfolio. For the scale of P&G, it takes hundreds of manufacturing sites spread across hundreds of countries and corresponding suppliers. P&G has leveraged the application of data management, advanced analytics and digital technology for end-to-end product flow management. Shelf life, promotions and discounting are regular features of P&G distribution and all distribution centers and stores need to be integrated for smooth execution of FIFO methodology and promotional events.

Note:

  1. The complete list of 2018 Drucker Institute Company Ranking can be found on their website – https://www.drucker.institute/
  2. The name “Peter F. Drucker” is a registered trademark of The Drucker 1996 Literary Works Trust.

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