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Expanding What It Means to Be a Supply Chain Leader

What do companies like Amazon.com, Costco, and Kraft have in common with Avnet? According to Gartner, these companies are among the world's supply chain leaders.

Gartner's ninth annual Supply Chain Top 25 Ranking and its Next 25 (registration required) recognized 50 companies across industry sectors for their supply chain best-practices. The market research firm evaluated more than 250 companies using a combination of financial metrics and voting by industry supply chain experts and Gartner analysts.

The Next 25, where Avnet can be found at No. 40, continued to feature a varied group of companies with broad industry and geographic representation. That list is topped by Kimberly-Clark (No. 26), BASF (27), John Deere (28), BMW (29), and DuPont (30).

Interestingly, high-tech was among the down sectors this year in the Next 25 ranking. The only other tech company to make that list was Texas Instruments, and Avnet was the sole traditional distributor. The tech sector did take seven of the spots in the Top 25 list, with Apple (No. 1) and Intel (5) featured prominently.

This is the first year Avnet has been recognized in Gartner's supply chain rankings. The company said in a press release that it also manages large elements of the technology supply chains of several of the other names on the lists.

The fact that Avnet is the only traditional distributor in this year's Gartner rankings forces a broadening of the view of what it means to be a supply chain leader. Amazon, for example, is at its core a logistics company. Its success is based on its speedy shipping and delivery of its mass of goods.

Debra Hofman, managing vice president at Gartner, wrote in the report:

At leading companies in diverse industries, the supply chain organization is no longer narrowly focused on driving efficiencies and cost cutting; it sees itself — and is seen by its CEO — as a growth enabler. Whether it's through reducing commercialization time, flexing the supply chain on packaging or service dimensions, or providing the engine with which new acquisitions can be quickly and easily absorbed, the conversation at these companies has changed from supply chain being about “blocking and tackling” to it being an enabler of company success.

So, yes, as the report stands, Avnet is the only company listed that would traditionally be named a distributor or supply chain expert. But it may be time to broaden the view of what it means to be in the supply chain. It's now less about blocking and tackling, as Hofman put it, and more about utilizing skills seen at these traditional supply chain expert companies for maximized growth. Avnet, for example, is a global distribution leader with more than 90 years of supply management experience. That's something even powerhouse companies like Amazon can't claim.

Gerry Fay, global president of Avnet Electronics Marketing and former chief global logistics and operations officer for Avnet, said in its release:

Our supply chain experts work with customers and suppliers to assess their cost-to-serve models and develop strategies for reducing costs and improving end customer satisfaction. We can quickly identify supply network problems and disconnects, and develop supply chain solutions that leverage Avnet’s physical logistic assets and virtual systems.

Don't get me wrong. Amazon (ranked No. 3 by Gartner) is a solid company and one that I, as a consumer, utilize heavily, especially during the holiday season. It's clear to see how it landed so high in Gartner's rankings. However, as we broaden our view of what it means to be a supply chain leader, the Amazons, Costcos, and Krafts of the world should be taking notes on how old-school distributors run their business.

When you have been playing (and winning) in a world as complicated as the electronics supply chain, dodging obstacles like environmental compliance and rising to the challenges of global positioning and consumer electronics supply and demand trends, you have got some experience under your belt and some knowledge from which others could gain.

Share your thoughts below on the Gartner rankings or an expansive view of what it means to be a supply chain leader.

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14 comments on “Expanding What It Means to Be a Supply Chain Leader

  1. Daniel
    November 13, 2013

    “What do companies like Amazon.com, Costco, and Kraft have in common with Avnet? According to Gartner, these companies are among the world's supply chain leaders.”

    Suzanna, I don't know whether Amazon can come under the category of supply Chain Company. Amazon is a leading service portal company, where any supplier can list their products for selling. In that respect it's a business portal.

  2. t.alex
    November 14, 2013

    Amazon did spend lots and lots of effort such as building inventory warehouses so it can bring suppliers/goods closer to the customers. Everything seems to be happening through website portals but at the backend is a big supply chain machine running.

  3. Daniel
    November 14, 2013

    “Amazon did spend lots and lots of effort such as building inventory warehouses so it can bring suppliers/goods closer to the customers. Everything seems to be happening through website portals but at the backend is a big supply chain machine running.”

    Alex, still I feel that Amazon is only as a facilitator for such business activities.

  4. Hailey Lynne McKeefry
    November 16, 2013

    @Jacob, i have to disagree. Amazon has been at the forfront of getting products to end users quickly. The new supply chain extends from the component right to the end user–and by looking at experts at the far end, it will certain provide best practices throughout the entire chain.  Who would you point to as the inspirational examples of supply chain greatness?

  5. t.alex
    November 16, 2013

    Jacob, yes, the facilitator is revolutionizing the supply chain 🙂

  6. Daniel
    November 18, 2013

    “yes, the facilitator is revolutionizing the supply chain :-)”

    Alex, No comment. But they have changed the way of traditional business.

  7. Daniel
    November 18, 2013

    “i have to disagree. Amazon has been at the forfront of getting products to end users quickly. The new supply chain extends from the component right to the end user–and by looking at experts at the far end, it will certain provide best practices throughout the entire chain.”

    Hailey, as per my knowledge, more than 80% of the items listed or selling through Amazon are directly from independent vendors. For them it's like an online interface (GUI Portal) to customer and for providing such facility they gain a small commission. So Amazon's role is limited as a service provider.

  8. Ariella
    December 7, 2013

    @Jacob yes, I don't know the proportions, but quite a few products featured on Amazon are sold by other retailers. They just latch on Amazon's interface. Oftne they have their own terms for shipping. Also I notice that while Amazon always adds on my state sales tax for orders from its own products, the other  sellers usually do not. 

  9. Daniel
    December 9, 2013

    “I don't know the proportions, but quite a few products featured on Amazon are sold by other retailers. They just latch on Amazon's interface. Oftne they have their own terms for shipping. Also I notice that while Amazon always adds on my state sales tax for orders from its own products, the other  sellers usually do not. “

    Ariella, Kindle is sthe only product from Amazon. All other products are from third party vendors either they are listing directly on Amazon website or by  Amazon on behalf of them.

  10. Daniel
    December 9, 2013

    “few products featured on Amazon are sold by other retailers. They just latch on Amazon's interface. Oftne they have their own terms for shipping. Also I notice that while Amazon always adds on my state sales tax for orders from its own products, the other  sellers usually do not. “

    Ariella, Amazon have a plan to start similar online retail website for most of the countries. As a part of expansion, recently they have opened one for India. This will help them to serve the customers in those geographical areas in a better cost effective way.

  11. Ariella
    December 10, 2013

    @Jacob well, that makes sense. If the model proves successful in one region, it pays to try it out in other areas. There may be a trend of expanding abroad now.

  12. Daniel
    December 10, 2013

    “If the model proves successful in one region, it pays to try it out in other areas. There may be a trend of expanding abroad now.”

    Ariella, the best advantage is they can locally source the items and can deliver at a low cost.

  13. Ariella
    December 11, 2013

    @Jacob there is that, but I think that what having a platform like that really does is making you see where you can get the item you need at various price points. Sometimes the local option is not the cheapest, for whatever reason. 

  14. Daniel
    December 11, 2013

    “I think that what having a platform like that really does is making you see where you can get the item you need at various price points. Sometimes the local option is not the cheapest, for whatever reason. “

    Ariella, you may be right in the sense for online sales, incurred expenditures are very less when compared with the traditional way of business through shops.

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