Overview of the Methodology
Gartner Supply Chain Top 25 rankings are derived from financial and corporate social responsibility metrics and community opinion (defined below). Scores across these dimensions are aggregated and weighted into a total composite score. The composite scores are then sorted in descending order to arrive at the final ranking.
Financial metrics: Return on physical assets (ROPA), inventory turns and revenue growth. ROPA comprises 15% of a company’s composite score; inventory turns 5%; and revenue growth 10%. Financial metrics are normalized onto a 10-point scale. More detail about financial metrics follows in this article.
Corporate social responsibility metrics: An index of trusted third-party environmental, social and governance (ESG) measures. ESG comprises 20% of a company’s composite score. Unlike financial metrics, ESG is not normalized. More detail about ESG follows in this article.
Community opinion: Two independent panels — a Gartner analyst/expert panel and a global peer panel. The analyst/expert panel opinion comprises 25% of a company’s composite score; the peer panel opinion 25%. Like financial metrics, community opinion is normalized. More detail about community opinion follows in this article.
The minimum inclusion criteria are as follows:
Manufacturers, distributors and retailers included on either Fortune Global 500 or Forbes Global 2000 lists.
Publicly available financials.
Greater than $12 billion in revenue.
Greater than 50% of revenue from physical products.
Greater than $1 billion in inventory for Asset-Heavy-Service Companies (AHSC).
15% ROPA; 5% three-year weighted average of ROPA performance; 10% three-year weighted average change in ROPA.
Minimum ESG score of 2. (Provide 2 ESG points for companies that have set science-based emission reduction targets. Provide 2 ESG points for companies that have published corporate sustainability reports.)
Must meet a minimum threshold of community opinion votes over the past five years.
The industries excluded are as follows: Airlines, Banks, Crude Oil Production, Diversified Financials, Electronic Manufacturing Services, Energy, Engineering/Construction, Entertainment, Healthcare Insurance/Managed Care/Services/Providers, Information Technology/Computer Services, Insurance, Mail/Package/Freight Delivery, Media, Metals, Mining, Petroleum Refining, Pipelines, Railroads, Real Estate, Shipping/Transportation/Logistics, Services, Shipbuilding, Software Development, Temporary Help, Textiles, Trading, Travel & Leisure, Utilities.
Provided below is further explanation of the financial and corporate social responsibility metrics and community opinion from which the rankings are derived.
Three-year weighted ROPA. ((2022 operating income (net of extraordinary accounting adjustments) / 2022 total physical assets (property, plant, equipment and inventory))*50%) + ((2021 operating income (net of extraordinary accounting adjustments) / 2021 total physical assets (property, plant, equipment and inventory))*30%) + ((2020 operating income (net of extraordinary accounting adjustments) / 2020 total physical assets (property, plant, equipment and inventory))*20%).
Three-year weighted ROPA change. ((change in ROPA 2022-2021)*50%) + ((change in ROPA 2021-2020)*30%) + ((change in ROPA 2020-2019)*20%).
Inventory turns. 2022 cost of goods sold / 2022 quarterly average inventory.
Revenue growth. ((change in revenue 2022-2021)*50%) + ((change in revenue 2021-2020)*30%) + ((change in revenue 2020-2019)*20%).
ESG commitment (baseline). Looking for: “signatory” of UN Global Compact; commitment to or setting of science-based targets. Data tells us: the company has made a public commitment to UN principles for ethical and responsible business operations; the company has made a public commitment to set science-based targets. Points are assigned if: yes, the company is a signatory as of 31 December 2022; yes, if the company has a status of Committed or Targets Set via sciencebasedtargets.org. Number of points awarded: 1 if signatory, or 1 for making the list. Maximum 1 point for commitment.
ESG transparency (midlevel). Looking for: reporter of CSR performance. Data tells us: the company demonstrates its transparency by producing annual, publicly available ESG/sustainability report(s) using widely recognized standards, and the reports include data about supply chain operations and supplier networks. Points are assigned if: yes, 2022 survey response graded by CDP; yes, the company has a status of Targets Set via sciencebasedtargets.org; yes, the company has published (made available) ESG/sustainability report(s) via its corporate website. Number of points awarded: 1 for CDP reporting; 2 for setting science-based targets; 2 for having publicly available ESG/sustainability report(s). Maximum 3 points for transparency.
There is a maximum 4 points for ESG commitment and ESG transparency. Points are assigned if: yes, ESG/sustainability report(s) filed in either 2020, 2021 or 2022. Number of points awarded: 2 for reporting with either GRI or IIRC standards.
ESG performance (high level). Looking for: high scores on CDP survey; named on Ethisphere list; named on Bloomberg Gender Equality Index; “component” of DJSI World Index, DJSI Region Index, or Hang Seng (Mainland and HK) Corporate Sustainability Index. Data tells us: based on a review of the company’s data, an expert party has recognized the company’s exceptional performance in corporate governance, risk management, branding, climate change mitigation, supply chain standards, labor practices or other material ESG issues. Points are assigned if: yes, achieved > threshold score; yes, 2023 Most Ethical Companies List; yes, 2023 Bloomberg Gender Equality Index; yes, included in 2023 index. Number of points awarded: 2 for achieving > threshold score on CDP Carbon Reporting and 2 for achieving > threshold score on CDP Water or Forest Reporting; 2 for making the 2023 Most Ethical Companies List; 2 for making the Bloomberg Gender Equality Index; 4 for inclusion in DJSI World Index or 2 for inclusion in DJSI Region Index or 2 for inclusion in Hang Seng (Mainland and HK) Corporate Sustainability Index. Maximum 6 points for performance.
Community opinion. Draw on the extensive knowledge of the professionals who, as customers and/or suppliers, interact and have direct experience with the companies being ranked. 55 cross-industry, cross-functional experts comprise the Gartner analyst/expert panel. 179 supply chain professionals comprise the global peer panel. Organizations must surpass a base threshold of votes from both panels to be assigned a numerical ranking; a company that only had a composite score that lands within the Supply Chain Top 25 based solely on its financial metrics would not be included in the ranking.
Following is a breakdown of the 2023 global peer panel.
Revenue breakdown: Less than $999 million 15%; $1 billion to $4.9 billion 18%; $5 billion to $9.9 billion 8%; $10 billion to $24.9 billion 25%; $25 billion to $49.9 billion 15%; More than $50 billion 19%.
Industry breakdown: A&D 1%; Academic 10%; Auto 3%; Chemical 7%; CPG 18%; Dist. 1%; Electrical 13%; Independent 2%; Industrial 13%; Life Science 15%; Misc. 3%; OFS 1%; Retail 12%.
Role breakdown: Academic 11%; Senior Director, Director or Manager 39%; SVP, EVP or CXO 32%; Vice President 17%.
Region breakdown: Americas 39%; APAC 20%; EMEA 41%
Frequently Asked Questions About the Community Peer Vote
Question: What is the community peer vote?
Answer: The Gartner Supply Chain Top 25 includes a community peer vote component in its ranking methodology. This component comprises 25% of the total score on which the final ranking is based. The goal of the community peer vote is to draw on the extensive knowledge of the professionals that, as customers and/or suppliers, interact and have direct experience with the companies being ranked. Additional knowledge of companies on the list is gained by exposure to periodicals, websites, white papers and conferences.
Question: Who is eligible to participate in the community peer vote?
Answer: Supply chain professionals and academia are eligible to be on the global peer opinion panel which contributes the community peer vote, however only one panelist per company is accepted. Excluded from the panel are consultants, technology vendors and people who don't work in supply chain roles (such as public relations, marketing or finance). Gartner monitors total representation, with an eye on reasonably balancing the panel across geographies, companies, industries and functions, and reserves the right to accept or reject any offer to be a panelist.
Question: How do those on the global peer opinion panel vote?
Answer: The polling procedure is administered as a simple, web-based survey form. Detailed instructions are provided. There are no other absolute responsibilities for participants in the community peer vote.
Question: When does the polling procedure take place?
Answer: Polling is typically held in late March/early April. Eligible panelists are notified of their acceptance and are emailed a link to the polling website on the day that it opens.
Question: How does the polling procedure work?
A. The polling website contains a master list of companies to consider compiled from the Fortune Global 500 and the Forbes Global 2000. Each panelist goes through a four-page system to get to a final selection of leaders.
The first page provides instructions on how panelists are asked to rank the top companies.
The second page asks for demographic information.
The third page provides the complete list of the companies to consider. Panelists are asked to choose 25 to 50 that, in their opinion, most closely fit the ideal of high supply chain maturity. This is done by checking off the boxes next to those companies.
The fourth page automatically brings up just the chosen companies. Panelists are asked to rank the companies from 1 through 25, with 1 being the company that, in their opinion, most closely fits the ideal. Panelists are then asked to submit their final ranking.
All individual votes are then tallied across the entire panel, with 25 points earned for a No. 1 ranking, 24 points for a No. 2 ranking, and so on. This procedure is identical to the polling procedure used for the Gartner analyst vote component.
Question: Are there any preparatory materials available?
Answer: Yes: Gartner has a number of published documents that provide background on definitions, terminology and reference models that panelists may find useful.
Question: How much time and preparation are required to vote?
Answer: Average time to complete the vote is 15 minutes, and no panelist should take more than 60 minutes. Panelists aren’t expected, nor are they encouraged, to conduct external research to place their votes. By definition, each person’s expertise is deep in some areas and limited in others. The panel, as a whole, draws on the extensive, collective knowledge of the professionals that, as customers and/or suppliers, interact and have direct experience with the companies being ranked. Additional knowledge of companies on the list is gained by exposure to periodicals, websites, white papers and conferences. The polling procedure is designed to accommodate differences in knowledge, relying on what author James Surowiecki calls the “wisdom of crowds” to provide the mechanism that taps into each person’s core kernel of knowledge and aggregates it into a larger whole.
Question: How many panelists are there?
Answer: Each year the panel includes 150-200 supply chain executives from a wide range of industries.
Question: How do I become a panelist?
Answer: Apply at email@example.com
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