The World’s Best Supply Chains

Every year, the well-known industry analyst firm Gartner publishes a list of the 25 companies with the best supply chains. This report gets a lot of attention. Some supply chain leaders admit that their performance on this list affects their performance evaluation.

But Lora Cecere’s methodology leads to a more objective list of companies with truly excellent supply chains. Lora Cecere is one of the most respected supply chain analysts. She founded a boutique analyst firm called Supply Chain Insights. Her report is called Supply Chains to Admire 2025.

Competing Methodologies

Gartner’s scoring is based on a composite score. A company is graded on what its supply chain peers think. This is 25% of the score. Another 25% is based on how Gartner’s supply chain analysts evaluate a company. This is also 25%. There is a significant element of subjectivity in these scores.

Another 20% of the score is based on a company’s ESG score. While I am all in favor of corporate environmentalism and good governance, ESG is not the same as supply chain management.

That leaves only 30% of the Gartner score which is arguably correlated with supply chain performance. Those measures include return on physical assets, the change in ROPA, revenue growth, and inventory turns.

Ms. Cecere’s methodology does not believe that one composite score should be used to rank all companies. Companies should be compared to their industry peer group. Some industries just have an easier time achieving high margins, inventory turns, and growth than others.

Supply Chain Insight’s core metrics, metrics correlated with market capitalization, include year-over-year progress in the areas of growth, operating margin, return on invested capital, and inventory turns. 530 companies across 28 industries were examined in these areas. Georgia Tech helped with the analysis.

Only four companies appear on both Gartner’s 2024 list and Supply Chain Insight’s 2025 list. Those are L’Oreal, Lenovo, Inditex, and Nike.

Findings

It takes four to five years to achieve supply chain excellence. So, what leads to supply chain excellence according to Supply Chain Insights?

“The most critical factor is leadership.” It is easier to drive improvement than sustain improvement.

Surprisingly, there is no correlation based on the technology employed or the consultant used by a company.

A balanced scorecard approach, not focusing solely on reducing costs, is critical. “Many misinformed business executives believe that the most effective supply chain is efficient, operating at the lowest cost per unit.” Such companies suboptimize market capitalization. “An efficient supply chain does not create the greatest value.”

There are factors that work against the achievement of excellence:

• A lack of organizational alignment and departmental politics works against excellence. In particular, the alignment with R&D Innovation is critical. The close coupling of the supply chain to the budget can be a barrier.
• Unchecked complexity, particularly regarding the size of the product portfolio. In supply chain jargon, this is referred to as stock keeping unit proliferation.
• Growth in the complexity of the distribution network and the slowing of transportation deliveries.
• The rise in supplier quality and delivery issues.
• An increase in governmental compliance legislation.

Positive factors, factors correlated with supply chain excellence include:

• Implementation of demand shaping programs.
• Increased reliability of corporate-run factories.
• Decreased data latency.
• Lower commodity prices.
• “Economies of scale is elusive.” Smaller, regional players consistently outperform global multinationals.
• Supply chains perform better in periods of growth than decline.

A shift in metrics is often necessary to drive improvement. In forecasting, the right path is to move away from measuring the size of the forecast error toward measuring forecast value added. Similarly, companies measuring inventory should move away from measures of safety stock toward inventory value added.

In manufacturing, companies should move from measures of operational equipment efficiency to schedule adherence and first pass yield.

In transportation, companies should move away from focusing on transportation costs to focusing more on on-time performance and the ability of carriers to quickly accept tenders. For supplier management, similarly, there should be less reliance on costs and more focus on the reliability and quality of supply.