2022 marked the 18th year of creating and publishing the Supply Chain Top 25 ranking. Since its inception, the top 25 has combined business outcomes with community opinion to create a ranking. And then shared the traits that distinguish the top ranked supply chains such as:
- Companies focused on creating integrated, purpose-driven supply chains
- Organizations adept at business model transformation
- Companies engaging in the digital evolution of their supply chain
How We Derived the 2022 Ranking
Here is a quick review of the methodology used for the 2022 rankings. As shown in Table 1, the Top 25 ranking continues to be based on a combination of business data and opinion data. The business data gives us an objective basis on top of which we place the community peer and Gartner analyst vote components.
Table 1: 2022 Gartner Supply Chain Top 25 Measures
|Category||2022 Measure||2022 Weighting|
|Business Data (50%)||Return on Physical Assets (ROPA)||15%|
|Environment, Social, Governance (ESG)||20%|
|Community Opinion (50%)||Gartner Expert Vote||25%|
Source: Gartner 2022
A more detailed explanation of the 2022 methodology can be found in The Gartner Supply Chain Top 25 for 2022: Methodology
Methodology Changes for 2023
Each year we take feedback from the supply chain community and make changes to the methodology to keep the Top 25 relevant and current. The coming year will see updates in the ESG and ROPA areas:
The ESG component continues to be an important part of the Top 25 methodology. The ESG score is divided into three categories: Commitment, Transparency, Performance with the ability to receive up to 10 points. In 2023 the minimum ESG score to receive a ranking will be in increased. Currently, companies must have an ESG score of one or higher to receive a ranking. In 2023, that minimum will be raised to two. Any company with and ESG score below two will not be ranked. There will be two additional ESG changes effecting the Transparency category in 2023:
- Reward commitment to and setting of Science Based Targets. Currently as part of the ESG commitment category companies receive one point for either the commitment to set science based targets or having set targets (if they are not already receiving a point for being a UN Global Compact signatory). This will remain in place for 2023. Additionally, companies can receive 2 points within the Transparency category for having set Science Based Targets. Credit for setting of targets will be based on the setting of “Near Term” or “Long Term” targets as provided by sciencebasedtargets.org.
- Providing transparency via published sustainability reporting. Companies who provide corporate sustainability, or the equivalent, via their website within the past two years, will receive two points as part of the Transparency
As supply chains evolve their ESG capabilities, the Top 25 methodology must evolve as well. As we move towards 2024, the Performance category will become a more prominent component within the methodology. Measures around outcomes, performance, achievement, and actions become the focus. Simple reporting activities will be less important. To that end, beginning in 2024 GRI and IIRC will no longer be part of the methodology.
Since the transition from Return on Assets (ROA) to Return on Physical Assets (ROPA) in 2020 we’ve continued to review and refine the ROPA component. While moving from ROA to ROPA provided better alignment with assets the SC influences, it can “reward” non-supply chain balance sheet decisions. For 2023, the ROPA calculation will balance “absolute ROPA performance against the entire Top 25 company list with an individual company’s performance changes over time. The overall weighting of ROPA will remain 15%, but in 2023 ROPA will consist of two components:
- Three-year weighted average of ROPA performance. This is currently in place and will comprise 5 percentage points of the 15% ROPA weighting.
- 3yr weighted avg change in ROPA (mirrors the revenue growth calculation). This is a new component and will comprise 10 percentage points of the 15% ROPA weighting.
Finally, as a reminder companies can proactively participate in the Gartner analyst education process in two ways:
- Companies on the Top 25 company list can submit a Supply Chain Research Information Packet (SCRIP). The SCRIP is completed online and allows companies to provide more specific insights into their supply chain strategies, organizational span and influence, key initiatives, and impacts supply chain has had on the success of the business. SCRIPs can be submitted from 14 November 2022 through 6 March 2023. Questions may be directed to Supplychaintop25@gartner.com.
- In addition to completing a SCRIP, companies on the Top 25 company list may also conduct a virtual company briefing. This provides companies the opportunity for an interactive session with the Gartner voting experts to discuss their supply chain initiatives in more detail. Briefings are 60 minutes in length and can be conducted from 1 December 2022 through 6 March 2023. Companies must have submitted their completed SCRIP at least two weeks prior to the company briefing.
We want to thank the supply chain community for engaging with us to refine our 2023 methodology. We will continue to partner with you to improve it over time and, as always, welcome your feedback.
VP, Team Manager
Gartner Supply Chain
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