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Apple Again Leads Gartner Supply Chain Ranking

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Gartner announced its top 25-ranked organizations for supply chain in 2014, which includes four in the top-5 that also topped last year’s list. They are: Apple, McDonald’s, Amazon and Unilever, with P&G at fifth place. Gartner analysts announced the findings from this year’s research at its Supply Chain Executive Conference last week.

Apple took the No. 1 spot for the seventh year, continuing to outpace the others by a wide margin on the composite of financial and opinion measures used. McDonald’s placed in second spot for the second year in a row, followed by Amazon.com.

Two new companies joined the Top 25 this year—Seagate Technology (No. 20) appeared for the first time and Kimberly-Clark (No. 21) re-emerged after a year’s hiatus.

A primary goal of the Supply Chain Top 25 research initiative is to raise awareness of the supply chain discipline and how it impacts business, Gartner said. The supply chain rankings comprise two main components: financial and opinion. Public financial data gives a view into how companies have performed in the past, while the opinion component provides an eye to potential and reflects future expected leadership. These two components are combined into a total composite score.

Gartner analysts develop a master list of companies from the Fortune Global 500 and the Forbes Global 2000, with a revenue cutoff of $10 billion. The company then breaks the combined list down to the manufacturing, retail and distribution sectors, eliminating certain industries, such as financial services and insurance.

Analysts highlighted three standout trends for supply chain leaders in 2014:

Supporting the “Fully Contextualized” Customer

A trait of leading companies is that customer needs and behaviors serve as the starting point for go-to-market and operational support strategies. Their cultures enable consistently high-quality customer experiences that are tailored, where important, to local tastes. Supply chain leaders are expanding this demand-driven concept in terms of how they relate to their customers. They are more deeply understanding customers and striving to blend seamlessly into their daily routines. Ultimately, this understanding of customers in their local environments is helping supply chain leaders capture more revenue for their businesses, improving operational effectiveness, Gartner said.

Converging Digital and Physical Supply Chains

Leading companies have moved past selling only discrete products or services to their customers and are focused on delivering solutions. Regardless of industry, these companies want their customers to be loyal subscribers to their solutions. Several of the leading consumer product companies on this year’s list offer e-commerce subscriptions for their products, in partnership with retailers. This approach offers convenience and privacy to those customers who would typically purchase products in a physical store—and might switch to another consumer brand at any time.

Progressive industrial companies have suggested order replenishment systems with their dealer networks, based on the manufacturer’s ability to forecast demand for their dealer. Some have gone further, acting as virtual consultants to their customers’ planning organizations. They recognize that helping improve customers’ internal capabilities is part of a total solution, which makes them more competitive suppliers.

“Another significant aspect of the total customer solutions we see deployed by leaders relates to the remote management of aftermarket services, leveraging Internet connectivity,” said Debra Hofman, research vice president at Gartner. “The Internet of Things allows for monitoring of performance across the value chain; in the field at customer sites, but also to collect and analyze the big data generated as part of upstream manufacturing and logistics flows. This additional connectivity has also elevated the importance of supply chain security to prevent theft, counterfeiting and other forms of fraud. One thing is clear — future supply chains must seamlessly integrate the digital and physical worlds of customers to be competitive.”

Supply Chain as Integrated Partner

Growth is a top priority for the C-suite in 2014, with 63% of senior executives picking growth as a top imperative in Gartner’s 2014 CEO Survey. Leading supply chains are enabling this growth both organically and through successful M&A integration. Supply chain leaders also are emerging as trusted and integrated partners to business groups. Their focus on profitable growth often leads to smarter, more conscious decision making, saving business groups from spiraling out of control in the drive to maximize revenue.

In their quest for growth, however, many companies are finding the business models they were famous for dominating are now under attack from competition. Supply chain has a large part to play in enabling the business to compete for the future, concurrent with protecting existing business. The most advanced companies in the ranking said they are not afraid to rethink the design of their global supply networks to be successful. In some cases, this has led to increased vertical integration where leaders become involved in their customers and their suppliers’ businesses in an attempt to dominate value chains, redrawing the lines of competition in the process.

More detailed analysis is available in the report “The Gartner Supply Chain Top 25 for 2014.”

NOAA Releases 2014 Hurricane Season Outlook

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hurricane season

In a press conference this morning, the Climate Prediction Center of the National Oceanic and Atmospheric Administration (NOAA) released its official 2014 outlook for the Atlantic and Eastern Pacific hurricane seasons.

The East Coast may see below-average activity this year, thanks, in part, to the anticipated development of El Nino this summer. According to NOAA, “El Niño causes stronger wind shear, which reduces the number and intensity of tropical storms and hurricanes. El Niño can also strengthen the trade winds and increase the atmospheric stability across the tropical Atlantic, making it more difficult for cloud systems coming off of Africa to intensify into tropical storms.”

There is a 50% chance for a below-average season, a 40% chance of a near-normal season, and only a 10% chance of an above-average season, the center predicts. “For the six-month hurricane season, which begins June 1, NOAA predicts a 70 percent likelihood of 8 to 13 named storms (winds of 39 mph or higher), of which three to six could become hurricanes (winds of 74 mph or higher), including one to two major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher),” they announced.

2014 Atlantic Hurricane OutlookBut the forecast is no reason to take preparations lightly. “Thanks to the environmental intelligence from NOAA’s network of earth observations, our scientists and meteorologists can provide life-saving products like our new storm surge threat map and our hurricane forecasts,” said Kathryn Sullivan, Ph.D., NOAA administrator. “And even though we expect El Niño to suppress the number of storms this season, it’s important to remember it takes only one land-falling storm to cause a disaster.”

On the West Coast, it may be a more tumultuous summer. The outlook calls for a 50% chance of an above-normal season, a 40% chance of a near-normal season, and a 10% chance of a below-normal season. The center predicts there is a 70% chance of 14 to 20 named storms, which includes 7 to 11 hurricanes, of which 3 to 6 are expected to become major hurricanes (Category 3, 4 or 5 on the Saffir-Simpson Hurricane Wind Scale).

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“The key climate factor behind the outlook is the likely development of El Niño this summer. El Niño decreases the vertical wind shear over the eastern tropical Pacific, favoring more and stronger tropical storms and hurricanes,” said Gerry Bell, Ph.

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D., lead seasonal hurricane forecaster with NOAA’s Climate Prediction Center. “The eastern Pacific has been in an era of low activity for hurricanes since 1995, but this pattern will be offset in 2014 by the impacts of El Niño.

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Next week (May 25-31) is National Hurricane Preparedness Week, and NOAA and FEMA will be offering additional tips and insight on their websites ahead of the official start of hurricane season on June 1.

Piracy Incidents Down

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Steps taken by the international maritime community have paid off, reducing the threat of piracy in the Arabian Sea’s Gulf of Aden, according to the Allianz Global Corporate & Specialty Safety and Shipping Review 2014. The number of ships seized and hostages taken was down significantly in 2013. According to the International Maritime Bureau (IMB), piracy at sea is at the lowest level in six years—264 attacks were recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. There were 15 incidents reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents—down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in the Gulf of Aden, Red Sea and Oman).

But while the number of incidents in this region has gone down, piracy attacks in other areas have increased in frequency, notably Indonesia and off the west coast of Africa. While most of these Indonesian attacks remain local, low level opportunistic thefts carried out by small bands of individuals, a third of the incidents in these waters were reported in the last quarter of 2013, meaning there is potential for such attacks to escalate into a more organized piracy model unless they are controlled.

The Gulf of Guinea region accounted for 48 of the 264 incidents in 2013. Of these, Nigerian pirates and armed robbers were responsible for 31 incidents, including two hijackings, 13 vessel boardings and 13 vessels fired upon. One crew member was killed and 36 kidnapped—the highest number of Nigerian kidnappings for five years, according to the IMB.

Preparing for Hurricane Season

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With less than two weeks weeks until the official start of the Atlantic hurricane season on June 1, organizations and homeowners alike are hoping that this year’s season mirrors that of 2013, which was one of the quietest in 30 years. So far, most experts are predicting another relatively calm year.

Philip Klotzbach and William Gray from Colorado State University’s Tropical Meteorology Project predicted below-average hurricane activity, with nine named stroms, three of which would be hurricance and only 1 would be a major hurricane (Category 3 or higher). According to their research, there is only a 35% chance of a major hurricane making landfall in the United States. the average for the last century has been 52%.

Accuweather.com predicted similar numbers with 10 named storms, 4 hurricanes and 2 major hurricanes. these number are all below normal levels as established by the National Oceanic and Atmospheric Administration (NOAA).

Of course, as Klotzbach and Gray point out, it only takes one hurricane making landfall to make it an active season for coastal residents.That means preparedness it vitally important. The Insurance Institute for Business & Home Safety (IBHS) recommends that property owners in at-risk regions focus on five areas to protect their property:

  1. Prepare your surroundings to reduce damage from wind-borne debris.
  2. Protect building openings.
  3. Strengthen roofs.
  4. Ensure the building is tied together (meaning that the roof is secured to the walls and the walls to the foundation).
  5. Properly elevate the building.

Business owners should also remember that sometimes risks can come from some unexpected places. In an article by Caroline McDonald in Risk Management, she spoke to Ron Hayes, who now works as a public entity commercial producer at Arthur J. Gallagher Risk Management Services. He was previously school board risk manager for the Calcasieu Parish, in Lake Charles, La., where he weathered Hurricane Katrina in August 2005 and, a month later, Rita:

When law enforcement returned to police the community and prevent looting after Hurricane Rita, for example, they had 500 flat tires in the first week from running over nails and debris. “You don’t think about things like that until it happens,” he said. “Until you have the tire store up and running, what are you going to do?” The department has since made arrangements to access tires whenever needed. “Pre-storm planning is so important for post-storm recovery,” Hayes said.

The lesson, as always, is that being prepared is always a good thing. As the saying goes, it’s better to have and not need, than to need and not have.