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Gartner Announces Ranking of Top European Supply Chain Organizations for 2016

Three New Companies Joined the Top 15 European Ranking, H&M Moved Up to No. 2 and Schneider Electric Made the Top 5 Ranking for the First Time

Regional Supply Chain Leaders Were Revealed at Gartner’s Supply Chain Executive Conference 2016, September 19-20 in London

Gartner, Inc., has revealed its 2016 ranking of the top 15 supply chain organisations based in Europe at its annual Supply Chain Executive Conference, which is being held through today in London.

“In this year’s edition, four of the top five European supply chain organisations from 2015 (see Table 1) remained in the top five. H&M and Inditex switched places at No. 2 and No. 3, respectively and Schneider Electric made its debut in the European top five,” said Stan Aronow, research vice president at Gartner. “Three new companies also made the supply chain top 15 ranking in Europe this year, with Bayer joining the list for the first time and Nokia and Ahold Delhaize rejoining after several years.”

This year, Unilever not only maintained the No. 1 spot in the European supply chain ranking, but also ranked No. 1 globally. Unilever has made supply chain a true partner to the business in delivering its broader Unilever Sustainable Living Plan, with the aim of doubling revenue and halving its environmental impact by 2020. H&M climbed one place to gain the No. 2 European ranking this year, reflecting a strong record in sustainability and workers’ rights, as it quickly grows its business.

Uncertainty in Europe exists and has increased since the UK’s decision to leave the European Union. “More than ever, leading organisations in Europe will need to optimise their supply chain functions and embrace bi-modal capabilities* in order to drive growth and remain competitive in new markets,” said Mr. Aronow. “They will also need to deliver strategies that add real value to consumers, be mindful of new competitors capitalizing on this period of uncertainty, and incorporate corporate social responsibility (CSR) goals into their supply chain strategy and operations.”

Table 1. Gartner Supply Chain Top 15 in Europe for 2016

Rank

Company

Return on Assets (ROA)1

Inventory Turns2

Revenue Growth3

CSR Component Score4

Composite Score5

1

Unilever

10.8%

6.9

3.6%

10.00

5.84

2

H&M

25.3%

3.5

16.3%

9.00

4.50

3

Inditex

16.7%

3.9

11.2%

9.00

4.42

4

Nestlé

8.9%

5.2

-1.1%

10.00

3.68

5

Schneider Electric

4.3%

5.1

4.9%

10.00

2.80

6

L’Oréal

11.4%

3.0

7.0%

4.00

2.70

7

BASF

6.5%

5.0

-2.0%

10.00

2.70

8

BMW

3.8%

6.0

8.8%

10.00

2.61

9

GlaxoSmithKline

12.6%

1.9

-1.9%

9.00

2.51

10

Nokia

10.3%

5.7

-0.5%

10.00

2.25

11

Reckitt Benckiser

14.3%

5.2

-1.8%

9.00

2.22

12

Diageo

9.7%

1.0

1.2%

5.00

2.18

13

British American Tobacco

14.2%

0.8

-5.5%

8.00

2.10

14

Ahold Delhaize

7.3%

17.0

8.4%

8.00

1.95

15

Bayer

5.5%

2.4

7.1%

10.00

1.92

Notes:

• 1 ROA:  ((2015 net income / 2015 total assets)*50%) + ((2014 net income / 2014 total assets)*30%) + (2013 net income / 2013 total assets)*20%)
• 2 Inventory Turns:  2015 cost of goods sold / 2015 quarterly average inventory
• 3 Revenue Growth:  ((change in revenue 2015-2014) *50%) + ((change in revenue 2014-2013) *30%) + ((change in revenue 2013-2012) *20%)
• 4 CSR Component Score: Index of third-party corporate social responsibility measures of commitment, transparency and performance.
• 5 Composite Score:  (Peer Opinion*25%) + (Gartner Research Opinion*25%) + (ROA*20%) + (Inventory Turns*10%) + (Revenue Growth*10%) + (CSR Component Score*10%)
Source: Gartner (September 2016)

Gartner has outlined below some of the common challenges and key supply chain capabilities of this year’s leading European supply chain organizations:

A Growing Emphasis on Corporate Social Responsibility

This year, for the first time, Gartner included a CSR score in order to highlight CSR excellence within Europe’s top supply chains, with seven of the top 15 European companies scoring a maximum of 10 and four more scoring nine of out of 10.

“The emphasis on CSR is not only driven by investors, but also by consumers, employees and the general public, all of whom expect businesses to run socially responsible supply chains and for their methods and results to be made public,” said Mr. Aronow.

Increased Adoption of Advanced Analytics

The use of predictive and prescriptive analytics is becoming more prevalent within leading European organizations across all sectors. For example, Nestlé uses predictive analytic algorithms to support its global engineering process flows and expand its supply chain. BASF is developing a single platform supply chain control tower, applying advanced prescriptive analytics to remove silos in its supply chain and create a value-based supply chain ecosystem.

Digital Business and Innovation Increasingly Featured

Digital business is increasingly featured as part of the capabilities of leading supply chains. Companies such as Unilever are spending a substantial proportion of their marketing activities on digital, and the supply chain is being reconfigured to leverage digital opportunities. Schneider Electric receives more than 70 percent of its orders digitally, which substantially reduces order processing time.

Supply chain innovation is no longer used just to make supply chain more efficient, but also to drive a new level of competitive advantage for leading organizations. For example, L’Oréal uses its supply chain technology and analytics to monitor the safety of its ingredients, thereby reducing the need for product testing on animals; also, H&M has a supply chain designed to move a garment from design to the hanger within 20 days.

More information is available to clients in the research note “2016 Gartner Supply Chain Top 25: Europe Top 15.”

*Notes for Editors:

Mode 1 is a linear approach to change, emphasizing predictability, accuracy, reliability and stability.

Mode 2 is a nonlinear approach that involves learning through iteration, emphasizing agility and speed and, above all, the ability to manage uncertainty.

Gartner Supply Chain Executive Conferences

The European Supply Chain Top 15 results were presented at the Gartner Supply Chain Executive Conference 2016, taking place September 19-20 in London, U.K. You can follow news and updates from the events on Twitter using #GartnerSCC.

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Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 8,100 associates, including more than 1,700 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.

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