Just two grocery retailers — Whole Foods and Wal-Mart Food Stores — made it to the winner’s circle this year in Supply Chain Insight’s list of Supply Chains to Admire. In its review of supply chain performance of literally hundreds of public companies, Supply Chain Insights grouped grocery retailers with apparel, mass merchants, restaurants, fast food and retail apparel. The six winners, including Whole Foods and Wal-Mart, and seven finalists represented just 17 percent of all the companies reviewed in the category.
The low percentage of honorees illustrates what many in grocery retail already know — mastering supply chain optimization and creating meaningful innovation just isn’t easy. In its report on the results of 2016’s study, Supply Chain Insights sums up the challenges succinctly:
“Supply chain excellence is easier to say than define. To make progress, companies need to clearly define the journey and the goals. For many this is problematic. The goals are unclear and the financial metrics are not well-understood.”
What it takes
What does it take to create an award-winning-level supply chain for your grocery retail operation? Supply Chain Insights’ evaluation of winners and finalists offers a window on to what makes an outstanding supply chain operation.
Winners/competitors were evaluated on the basis of growth, operating margins, inventory turns, return on invested capital and price to tangible book value. Fostering business practices that followed their business strategies, rather than allowing the realities of current business practices to dictate supply chain strategies, was a defining feature of top performers.
Based on their study of hundreds of supply chain processes, Supply Chain Insights arrived at recommendations for action. Some are particularly valuable for grocery retail operations:
Be aware that your supply chain can be an engine to drive growth, and take steps to ensure it becomes one.
Evaluate your supply chain efficiencies and develop strategies based on not only your own benchmarks, but what others are doing in your industry.
Use advanced analytics to actively design your supply chain.
Create a center of excellence that will monitor all the factors and data that influence your supply chain from end to end.
Clearly define what supply chain excellence means for your organization, and develop disciplined processes aimed at achieving those standards of excellence.
Manage complexity to better align production and processes with customer needs and expectations.
This is the third year Supply Chain Insights has presented its awards and, according to the company, just 12 percent of the companies it reviewed for this year’s analysis were “creating value while improving and outperforming.” The other 88 percent were not.
“Supply chain excellence does not just ‘happen,’ ” the organization reports. “It is the result of hard work by organizational teams with a clear definition of supply chain strategy.”
What will your grocery retail operation do to create a more efficient supply chain?