Unilever, H&M among most flexible firms

21 September 2012

LONDON: Unilever, Inditex and H&M are among the strongest companies in Europe when it comes to tracking and meeting changing consumer demand, a study has argued.

Gartner, the insights provider, assessed the supply chains of major firms in the region based on their revenue growth, inventory turnover and return on assets, as well as surveying leading executives and conducting in-house analysis.

Unilever, the FMCG giant, led the resulting charts with an index score of 4.21 points, not least because it has built a "virtual manufacturing network" which can quickly respond to shifts in shopper habits.

"It tailors product formulations and supply chain capabilities based on the relative maturity of different markets and the abilities of consumers to afford them," Gartner said. "A key component was its market segmentation initiative, focusing on differentiation capabilities along products, markets and channels."

Second place in the rankings went to Inditex, the retail group and parent of fast fashion chain Zara, on 3.37 points. It relies on a "nonstop flow" of point of sale data to inspire fresh designs among its creative team, and directly manufactures certain lines.

"Inditex has made conscious trade-offs between higher production costs and speed to market with manufacturing capabilities in Spain for some products," the analysis said. "It is also in tune with its customers to sense and shape ideas, trends and tastes that are developing around the world."

H&M, the Swedish fashion chain, was third on 3.1 points. While it has a centralised approach to design, trend forecasting, merchandising and planning, it has, unlike Inditex, fully outsourced production.

The organisation was lauded for making very effective use of events to engage consumers, and for being an early adopter of augmented reality tools, via which it has held "virtual fashion shows".

Nestlé, the Swiss food group, claimed fourth, and was praised for balancing its approach between owned-and-operated businesses like Nespresso coffee, recent acquisitions such as Pfizer Nutrition, and its Cereal Partners Worldwide joint venture with General Mills.

"Its corporate strategy, high levels of innovation and execution capability drive its network coordination efforts," Gartner suggested.

Astra Zeneca, the pharma expert, was fifth on 2.01 points. Tesco, the retailer, matched this total, aided by its adoption of new technology in areas from value mapping to in-store queue management.

"In addition, the company has built a well-defined operating model for common processes and metrics that it has used as a standard blueprint for international expansion that worked well in several Asian markets and Europe," Gartner argued.

BASF, the conglomerate, logged 1.98 points, ahead of Reckitt Benckiser, the household goods firm, on 1.93 points, and BMW, the carmaker, on 1.92 points, and Novartis, the healthcare specialist, on 1.8 points.

Data sourced from Gartner; additional content by Warc staff