The Making of Supply Chain Masters: What Separates them from the Competition

What do Amazon, Apple, McDonald’s, Procter & Gamble, and Unilever have in common?

Here’s the answer.

They all have world class supply chains that stand out far and above the competition. Gartner classifies them as Supply Chain Masters (SCMs).

In this blog post, we’ll pop the hood to see what makes these companies Supply Chain Masters. In looking under the hood, we’ll identify the components that place SCMs ahead of the pack.

Without further ado, let’s look under the hood.

The Rise of Innovation–Constructive Disruption

Supply chains have always challenged shippers, 3PLs, and customers. Unpredictability was the order of the day. Yet, with all the advancements in best business practices, new technologies, and a better trained workforce, unpredictability persists.

So why does unpredictability persist, despite our best efforts?

Well, there are many reasons.

  • First, matching supply and demand is not simple.
  • Second, supply chains have many points of failure.
  • Third, they rely on data and information that may be inaccurate, skewing results.
  • Fourth, lots of variables come into play, which are difficult to control. We have geopolitics, the economy, pandemics, weather… and the list goes on.

But one that stands out today, more so than the others, is persistent disruption.

This year, the pandemic and cyberattacks disrupted supply chains. You could also include sourcing issues, increased governmental regulation, and rising sustainability (ESG) mandates.

Still, these five SCMs seem insulated from disruptions. You could say they’ve neutralized disruptions through innovation or constructive disruption.

They do that in three distinct ways. First, they set aggressive goals. Next, they apply and adhere to customer-driven strategies. Finally, they tackle problems with partnerships.

Let’s look at each one.

Constructive Disruption Leads the Way to Supply Chain Excellence

Here’s how each company is leveraging constructive disruption.

Setting Aggressive and Innovative Yet Achievable Goals

  • Amazon set 2040 for attaining net zero carbon
  • Apple set 2030 for achieving a 75% reduction in carbon emissions
  • McDonald’s set 2025 for converting 125,000 acres of crop land to grassland
  • Procter & Gamble set 2025 as the date to make 95% of all packaging material recyclable
  • Unilever set 2030 for raising wages for all employees to a living wage

Each of these goals is not only aggressive. Their goals also reflect issues not considered clear-cut supply chain issues in the past. These SCMs are extending their supply chain boundaries.

They go beyond what makes supply chains effective. These goals reinforce and strengthen their supply chains. They make these companies more competitive than their peers.

Customer-Driven Strategies Improve Competitive Advantage

Here’s another difference. Each SCM develops its strategy with the customer in mind. The customer comes first–always. It’s not about cost cutting or profit maximization. It’s about serving the customer.

  • Amazon is well known for being a customer service leader. Amazon’s customer-centric principles guide its strategy. Its seven principles address customers’ needs and desires. Amazon also takes a long-term focus to serve customers better. For example, Bezos does not want his product development teams to think about product improvement. Instead, he wants them to focus on how to make the customers more successful.
  • McDonald’s also places the customer at the center of its strategy. In fact, it is one of their keys to success. Ray Kroc, McDonald’s founder, expressed that sentiment this way: “If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.” In keeping up with the trend of healthier eating, McDonald’s strategy focuses on fresh foods. It now includes fresh, rather than frozen burgers. The same goes for fruits and vegetables.
  • Apple realizes its well-known customer-first strategy with its “CX Experience.” Apple develops all its products with the user experience in mind. Furthermore, Apple focuses on reducing inventory turns. This benefits the bottom line and customers. It benefits customers by always having supply on-hand to meet customer demand.
  • Procter & Gamble addressed customer needs as the pandemic spread. It did so by satisfying customer demand in a responsive manner. Hence, P&G changed its company strategy to increase its e-Commerce capabilities.
  • Unilever, likewise, puts the customer first. It has a broad-based, purpose-driven strategy. Its strategy embraces suppliers, communities, and consumers. That’s clear in its branding statement: “Brands with purpose grow, companies with purpose grow, and people with purpose thrive.”

Long-term Partnerships: A Prerequisite for Success

All five SCMs promote constructive disruption. And they’re doing so by partnering with other companies and non-profits. That means these companies aren’t going it alone. They’re entering strategic partnerships to carry out their innovative goals.

  • Amazon recently partnered with Rivian, an innovative electric truck manufacturer to build delivery trucks. Bezos partnered with Rivian to help Amazon achieve its net zero carbon goal by 2040. Amazon has a financial stake in Rivian but does not own it.
  • Apple, too, is relying on partnerships to achieve its aggressive goal of net zero carbon by 2030. Accordingly, it has partnered with 110 of its manufacturers.
  • McDonald’s has two partnerships. The first one is with the agricultural giant, Cargill. In particular, McDonald’s and Cargill have partnered on an innovative sustainability project. Their goal is to convert 125,000 acres of cropland to grassland by 2025. In another project, McDonald’s has partnered with Beyond Meat to make a Mc Plant. Beyond Meat makes plant-based burgers, sausages, and other plant-based products.
  • Procter & Gamble, like McDonald’s, focuses on achieving sustainability goals with partners. In P&G’s case, it partners with global non-profits like The Nature Conservancy, Teracycle, and Plant a Billion Trees Program. These partnerships focus on packaging redesign and recycling.
  • Unilever, a consumer goods company like P&G, also partnered with non-profits to achieve its sustainability goals. It is pursuing a purpose-driven strategy with strategic partners to develop plant-based foods within the next six years. It is also a Principal Partner of COP26. That’s the U.N.’s Conference of Parties dedicated to reducing carbon emissions.

Supply Chains of the Future

Gartner’s Supply Chain Masters are setting the example for future supply chains. They set aggressive goals, they embrace constructive disruption, and they rely on partnerships. They recognize the imperative of a customer-driven strategy. And that’s the foundation for everything they do.

In an increasingly volatile market, their strategy has proven to work. Competitors should take notice. It doesn’t mean that constructive disruption and a customer-centric strategy is a cure-all. It does mean, however, that your business can survive and profit in today’s volatile markets.

At American Global Logistics, we put the customer first in everything we do. We put customer service into practice daily.

We also seek long-term partnerships. Yesterday’s transactional business model doesn’t work. We embrace constructive disruption by partnering with like-minded shippers.

Contact us to find out how your business can survive and profit in today’s volatile markets.