Learning from Leaders: Gartner’s Top
25 Global Supply Chains
Kevin Sterneckert
Janet Suleski
January 15, 2013
0
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How Today's Shoppers Shape
Demand-Driven Requirements
Economic Uncertainty
Empowered Consumers
Volatility
Evolving Supply Chains
Key Issues for Becoming a
Demand-Driven Retailer
1. How do you create a demand-driven foundation?
2. What types of initiatives enable demand-driven
retailing?
3. What's the business value of creating a demanddriven retail supply chain?
Demand-Driven Value Network (DDVN)
and Demand-Driven Retailing Strategies
Fulfill CrossChannel Demand
Demand
Supply
Understand and
Build Value
Respond to
Networks
Demand
Deliver
Signals Consumer-Centric
Retailing
Product
Use the Supply
Chain to Support
Products and
Services Innovation
Tomorrow's Profitability and Innovation
Are Built On the Right Foundation
Cost to Serve
End-to-End
Visibility
Predictive
Analysis
Talent
Management
Resiliency
Integrated PLM
Align to
Customer Value
Sustainability
Services
Risk
Management
Demand
Management
Global Network
Management
Outside-In
View
End-to-End
SC Process
Technology
Segmentation
Downstream Data
Management
Profitable
Trade-Offs
Cost
Optimized
Aligned
X-Functional
Objectives
Supply Chain Excellence: Value Through
Operations and Innovation Balance
Leader
Demand
Supply
Product
Operational
Excellence
1. How does the
supply chain
enable my
business
strategy?
2. What role does
the supply
chain play in
creating
differentiation?
(On-Shelf Availability,
Total Supply Chain Cost)
D
S
Laggard
Higher Cash Flow,
Profits and P/E
P
Innovation Excellence
(Time to Value, Return on R&D)
3. What is my
technology
adoption
preference?
Leader
Span of Control for Retail Supply Chains
Maturity
High
Low
DC
Transportation
DC
Transportation
DC
Transportation
DC
Transportation
Procurement
Procurement
Procurement
Forecasting/Replenishment
NPDI
Sourcing
Forecasting/Replenishment
NPDI
Sourcing
Store Operations
Forecasting/Replenishment
Procurement
Medium
Span of Control
High
Hierarchy of Retail Supply Chain Metrics
What It Tells You
Forecast
Accuracy
Customer Fulfillment
Effectiveness
Product
Availability
Customer Performance
Trade-Offs
SCM
Cost
Inventory
Financial Effectiveness
Revenue
WriteOffs
DOS
DC Perfect Order
Supplier Perfect Order
Operational
Effectiveness
Supplier
On Time
Supplier Quality
Customer vs. Supplier Balance
Accounts
Payable
On-Time to
Store
DC Service
Level
Store Effectiveness
Product
Availability
Detail
Backroom/Sales Floor Efficiency
SCM Cost
Detail
Stability of
Processes Driving
Value
Think of the Different Layers Your
Organization Needs …
New
Ideas
Better
Ideas
Systems of Innovation
Systems of Differentiation
Systems of Record
Common
Ideas
Retail Supply Chain Top 15
10
Key Issues for Becoming a
Demand-Driven Retailer
1. How do you create a demand-driven foundation?
2. What types of initiatives enable demand-driven
retailing?
3. What's the business value of creating a demanddriven retail supply chain?
Demand-Driven Retailing Strategies
Strategy
Description
Understanding and responding to the
demand signals
Sensing, shaping and responding to the consumer demand signal
across sales channels
Delivering a consumer-centric supply
chain
Creating a supply chain that supports and responds to the key
merchandising planning and execution activities
Fulfilling cross-channel demand
Creating effective and efficient fulfillment strategies that support
cross-channel and multichannel demands of the shopper
Building value networks
Aligning the people, processes and technology that drive pullbased replenishment models and joint value creation
Using the supply chain to support
products and services innovation
Creating an agile and responsive supply chain that enables and
supports innovation across an organization
Demand-Driven Retailing Initiatives
Strategy
Description
Understanding and responding to • Demand forecasting
the demand signals
• Demand signal repository
• Shopper segmentation
Delivering consumer-centric
retailing
• Merchandising
• Space management
• Life cycle pricing
• Insights and segmentation (shopper/channel)
Fulfilling cross-channel demand
• Customer, order, inventory management and visibility
• Execution enablement
Building value networks
• Demand management
• Merchandising, inventory and operations execution (MIOE)
• Supply chain segmentation
• Network design
• Inventory optimization
Using the supply chain to
support products and services
innovation
• PLM
• Cycle time reduction
• Item management
• Innovation/inspiration capture and evaluation
Demand-Driven Retailing Priorities
Strategy
Grocery
Specialty
Retailers
Understand and
respond to
demand signal
H
L/M
H
H
H
M
L/M
H
M
L
M
H
Deliver
consumercentric retailing
H
H
M
M
H
H
Drive innovation
into products
and services
M/H
H
M
L
H
H
M
H
M
L/M
M/H
H
Fulfill crosschannel
demand
Build value
networks
Note: Priorities — Low, Medium, High
Mass
Merchant
Convenience
Store
Chain
Drug
Department
Stores
Demand-Driven Initiatives Priorities
Strategy
Initiatives
North
America
U.K./
Europe
Understanding and responding to
the demand signals
• Demand forecasting
• Demand signal repository
• Shopper segmentation
H
M
Delivering a consumer-centric
supply chain
• Merchandising
• Space management
• Life cycle pricing
• Insights and segmentation
(shopper/channel)
M
H
Fulfilling cross-channel demand
• Customer, order, inventory
management and visibility
• Execution enablement
H
H
Building value networks
• Demand management
• MIOE
• Supply chain segmentation
• Network design
• Inventory optimization
M
M
Using the supply chain to support
product and service innovation
• PLM
• Cycle time reduction
• Item management
L
L
Geographic Demand-Driven Maturity
Comparison
Retail Segment and Geography
Maturity Comparison
Key Issues for Becoming a
Demand-Driven Retailer
1. How do you create a demand-driven foundation?
2. What types of initiatives enable demand-driven
retailing?
3. What's the business value of creating a demanddriven retail supply chain?
Why Becoming Demand-Driven Matters
Based on Supply Chain Top 25 Metrics:
• Return on Assets (ROA)
• Inventory Turns
• Revenue Growth
Demand-Driven Leaders Compared With Peers
Difference
(2009)
Difference
(2010)
Difference
(2011)
Difference
(2012)
ROA
73.8%
2X
27.3%
~3X
Inventory Turns
19.1%
4%
23.7%
54%
Revenue Growth
55.0%
3X
26.7%
~2X
Metric
Demand-Driven Maturity Value Proposition
Reacting
Anticipating
Collaborating
Orchestrating
TBD
7.5%
TBD
TBD
-1.1%
6.9%
10.2
Inventory
Turns
8
9.1
7.7%
Revenue
Growth
.8%
ROA
3.9%
698%
Stage 1 to Stage 2
14%
9%
389%
12%
Stage 2 to Stage 3
97%
TBD
TBD
Source: Gartner Supply Chain Top 25 retail candidates (n=43)
Stage 3 to Stage 4
TBD
Demand-Driven Business Value
End-toEnd
Oriented
Metrics
Growth
Service
Demand
Management
Gross Margin
Improvement
3%-5%
Reduction in
Out-of-Stocks
20%-30%
Inventory ▼15%-30%
Obsolescence
10%-15% less
Productivity
Increase
5%-10%
MIOE
Revenue
Improvement
2%-5%
Better
Customer Choice
Inventory ▼15%
Cash-2-Cash ▼35%
Working Capital ▲15%
Time-to-Market
Lead Time
Reduction
Growth
Potential
Identification
Value to Customers
Cost/Service
Choices
Cost of Complexity
Unneeded
Variability
Unique Value
and Agility per
Segment
Gross Margin
Improvement
3%-5%
Better
Service
Asset Utilization
▲5%-10%
Improved
Productivity
3%-5%
No Negative
Service Impact
Asset Utilization
3x
Faster Runs
2x
Supply Chain
Segmentation
Network
Design
Inventory
Optimization
Profit Growth
2x
Proactive supply chain
talent strategy
Cost
Agility
Supply chain organization
design (span of control)
Demand-Driven Supply Chain Action Plan
Monday Morning
- Take the DDR self-assessment to gauge current maturity
levels.
Next 90 Days
- Determine the role of your supply chain and how it should
enable your business strategy.
- Create and administer a supply chain skill set assessment.
Next 12 Months
- Compare your DDR initiatives to the recommended list.
- Create your DDR process and technology road map.
Recommended Gartner Research
 The 2012 Retail Handbook for Becoming Demand-Driven
Mike Griswold, and others (G00229233)
 Toolkit: Assess Your Retail Value Chain Maturity Against
the Five Demand-Driven Strategies
Kevin Sterneckert, and others (G00211566)
 Key Issues for Retail Supply Chain Leaders, 2011: Aligning
Planning and Execution
Mike Griswold, Janet Suleski (G00210875)
 Demand-Driven Retailers Align Planning and Execution
Across Their Supply Chains by Answering Three Key
Questions
Mike Griswold (G00209003)
 Demand-Driven Retail Supply Chains Use Three Critical
Skill Sets to Balance Operational and Innovation Excellence
Mike Griswold, Allen Johnson (G00207240)
For more information, stop by Gartner Solution Central or email us at solutioncentral@gartner.com.
Questions?
Kevin Sterneckert – kevin.sterneckert@gartner.com
Janet Suleski – janet.suleski@gartner.com