Zara owner Inditex is well known for its supply chain capabilities

Zara owner Inditex is well known for its supply chain capabilities

Do the biggest companies also have the best supply chains - or should it be instead that the best supply chains help grow the most successful companies? It's quite a question, but there's no doubt that there's a connection between the two.

One new survey marks out three of the world's biggest apparel companies - Zara-owner Inditex, H&M and Nike - among the world's top 25 supply chain leaders. While another reinforces the link by listing the three among the world's fastest-growing brands.

This year the middle rankings of the annual Supply Chain Top 25 compiled by technology research firm Gartner are dominated by Inditex, Nike and H&M at numbers 11, 12 and 13 respectively.

The list, which aims to raise awareness of the supply chain and how it impacts business, is as usual dominated by the likes of Apple, McDonald's, Amazon, Unilever and P&G, with Wal-Mart Stores in 14th place. And it is calculated using a number of measures including votes from peers, return on assets, year-on-year growth and inventory turnover.

A separate survey suggests the world's top 10 apparel brands have grown in value by 29% and are now worth close to US$100bn. Significantly, the 2014 Brandz Top 100 Most Valuable Global Brand rankings picks out apparel as the fastest-growing category - with a double-digit increase in the valuation of Nike propelling it up the charts to 34th position, overtaking Zara at 37, and H&M at 63.

So what are they doing right?

In the case of Inditex, its approach to design and its integration with supply chain capabilities are legendary.

A non-stop flow of point of sale (POS) information conveys shopper desires and demands straight from the stores to the creative team. The retailer buys fabrics and other raw materials in high volumes in advance to get the best price. It is also in tune with its customers to sense and shape ideas, trends and tastes that are developing around the world.

To this end, Inditex has made conscious trade-offs between higher production costs and speed to market with manufacturing capabilities in Spain for some products.

In comparison, Swedish apparel company H&M taps into a supply network that includes more than 2,400 stores, 800 suppliers/factories in Europe and Asia, and 20 production hubs.

H&M has highly centralised design, merchandise planning, trend forecasting and purchasing functions, coordinating these and fully outsourcing production from Sweden. Gartner also says the retailer has created an "innovative approach for designer events that pools consumer interest," as well as experimenting with augmented reality that links the growth of social media and sales to determine how consumers will use virtual technologies in the future.

So what are likely to mark out the supply chain leaders of the future? Looking ahead, Gartner analysts highlight three standout trends for supply chain leaders in the year ahead.

1: Deeper contextual understanding of customers
Leading companies have traditionally taken customer needs and behaviour as the starting point for go-to-market strategies. The next logical step is to expand this demand-driven concept by understanding customers in a deeper way and blending seamlessly into their daily routines and their local environments.

2: A convergence of digital and physical supply chains
Leading companies have also moved beyond selling discrete products or services to their customers and are now focused on delivering total customer solutions to create a seamless multichannel experience. "One thing is clear - future supply chains must seamlessly integrate the digital and physical worlds of customers to be competitive," explains Debra Hofman, research vice president at Gartner.

3: Supply chain leading balanced growth
Leading supply chains enable growth, both organically and through successful M&A integration. At the same time, supply chain leaders are emerging as trusted and integrated partners to business groups. Their focus on profitable growth often leads to smarter, more conscious decision-making.

Many companies are also finding the business models they were famous for dominating are now under attack from competition. Rethinking the design of a global supply network may be required for future success.

In some cases, Gartner says, this has led to increased vertical integration into their customers and their suppliers businesses in an attempt to dominate value chains, redrawing the lines of competition in the process.