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By John Goff
Few companies get as much ink as Apple Computers. Media types just love to fawn over the company's latest gadgets, and bloggers write entire novellas about the most mundane utterances coming from CEO Steve Jobs . But one of Apple's true strengths—a core competency, if you will—often gets overlooked. That advantage? The company's supply chain.
Indeed, Apple once again topped researcher AMR's annual ranking of corporate supply chains. Actually, topped does Apple a disservice. The company's composite score—7.9—is miles ahead of any other business on the list. Dell, which gets plenty of press of its own for its inventory innovating, came in second with a 5.86 composite score.
The reason for Apple's lofty rating is pretty simple. The company is tops at delivering digital products to its own line of hardware (iPod, iPhone, etc). As AMR puts it, Apple "is changing the rules for software and consumer information services." The App Store is a perfect example. The wildly popular iPhone feature, in which customers can purchase and download software directly onto their phones, has helped Apple ratchet up sales while maintaining extremely low levels of inventory.
Of course, other companies are in the business of delivering digital products too. But with the App Store, Apple has created an entire army of programmers doing R&D for free. That's hard to beat.
Other technology companies on the list—and there's a lot of them (ten)—displayed their own brand of innovation. IBM, ranked #4, received high marks for its commitment to greening its supply chain. Number 8 Samsung Electronics won praise for its awareness of channel demand. In contrast, Nokia, which topped the list in 2007, fell to the sixth spot. An inventory turns score under 12 didn't help the Finnish manufacturer. By comparison, Apple and Dell both scored over 45 in the category.
Also of note: Texas Instruments, which came in at #18, generated a whopping three-year return on assets of 20.5%. That was far and away the best ROA performance of any company on the list. AMR cited TI's focus on supply-chain collaboration in explaining the company's sky-high ROA. Essentially, TI is getting its suppliers to share costs, and therefore, the chipmaker doesn't need to deploy as many assets in its supply chain. For example, the Dallas-based company has contracted with suppliers to set up inventory hubs close to TI factories in Asia and Mexico.
Meanwhile, consumer goods specialists-once vaunted for their supply-chain innovation-didn't fare all that well in the ranking. Part of that has to do with the business they're in: it's a whole lot easier to push digital content through a supply pipeline than toothpaste. Only four consumer goods companies made the list, with perennial supply-chain powerhouse Procter & Gamble leading the way at #4.
Not surprisingly, Wal-Mart, which has made huge strides in electronically tracking goods, was tops among retailers, coming in seventh. The company's emphasis on sustainability in its supply chain could push Wal-Mart even higher in next year's list.
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