Every day, our editorial staff comes to work facing the same challenge: What's the most compelling story we can tell that affects logistics and supply chain professionals? In 2005, as the year developed, it became clear that many of the stories we were covering weren't just "supply chain" stories, and yet the very elements that made the stories so memorable was the success — or failure — of an organization to promptly and properly address the needs of its supply chain.

That's why, in naming the Top Ten Supply Chains of 2005, we ended up with a split decision for the number one slot: FEMA, which managed to do just about everything wrong in its response to Hurricane Katrina, and Wal-Mart Stores Inc., which showed how a private company can out-supply chain Uncle Sam when it comes to getting supplies and products to the people who need them.

The rest of the companies that made our Top Ten share a similar quality — like FEMA and Wal-Mart, they made for great stories that illustrate the influence of global supply chain management, whether in a positive or a negative light. Some of these companies are truly bestin-class at what they do; others made the list because of what they didn't do, but should have.

In any event, our Top Ten list was selected by our editorial staff, so let us know what you think of our choices by sending your comments to editor@logisticstoday.com.

1. Federal Emergency Management Agency (www.fema.gov)
Many companies have been brought to their knees financially when their supply chain forecasts were grossly inaccurate, and this past summer we saw what happened when a government's emergency response plans are woefully inadequate. Hurricane Katrina was the first big test for the Federal Emergency Management Agency since it was absorbed into the U.S. Department of Homeland Security back in March 2003, and by all indications, FEMA flunked the test. Created specifically to "manage federal response and recovery efforts following any national incident," FEMA was late getting started, was ineffective in coordinating relief efforts and was stymied by a culture of "it'll never happen here" wishful thinkers throughout the New Orleans area. Although FEMA had the chance to redeem its reputation somewhat by a better orchestrated response to Hurricanes Rita and Wilma, its fumbles in New Orleans will live long in supply chain infamy.

1. Wal-Mart Stores Inc. (www.walmartstores.com)
While plenty of blame got spread around for the disastrous levee breaks in New Orleans, one of the real heroes of the recovery has been retail giant Wal-Mart Stores Inc., whose response time to the devastated city was much faster than FEMA's. Long celebrated for its ability to turn point-of-sale data into tightening its relationship with suppliers, Wal-Mart demonstrated that it could use historical sales patterns from previous hurricanes to determine exactly what products customers would need to recover from the storm. The retailer also relied on its own meteorologists to route trucks and supplies to the area with an efficiency that put the federal, state and local governments to shame. Hardly one to rest on its laurels, though, Wal-Mart plans an ambitious replenishment program called Remix to realign its distribution network, with the aim of getting the fastest moving products on the shelves as quickly as possible. And its radio frequency identification (RFID) implementation program continues to roll along. More than 500 Wal-Mart and Sam's Club stores, as well as five Dallasarea distribution centers, are live with RFID, and beginning in January 2006, 200 more suppliers will go live with the technology, joining the top 100 who began shipping RFID-tagged cases and pallets in 2005.

3. Exxon Mobil Corp. (www.exxonmobil.com)
If timing really is everything, then oil company Exxon Mobil Corp. picked exactly the wrong moment to announce it had earned the largest quarterly profit — nearly $10 billion — in U.S. history. With the Gulf Coast region still reeling from the one-two-three punch of Hurricanes Katrina, Rita and Wilma, accusations of gouging have been aimed at all of the oil companies, and particularly at Exxon, the biggest of them all. With motorists and motor carriers alike frustrated by gasoline prices that reached nationwide averages over $3.00, politicians on Capitol Hill are closely scrutinizing any possible connections between oil company executives, including Exxon's chairman Lee Raymond, and high-ranking government officials. The question that remains largely unanswered is: Does the price of gasoline truly reflect basic supply-and-demand economics, or is there something else going on to account for the price hikes? While some politicians are suggesting a windfall profit tax on the oil companies, Exxon's Raymond says such a tax would hinder the oil industry's investment in exploration, production and refining, resulting in a reduction of supply and even higher fuel prices.

4. Roche (www.roche.com)
Roche may not be a household name quite yet, but the entire global pharmaceutical supply chain is very much aware of the drug maker's unique position. As the maker of Tamiflu, Roche is currently the only company capable of mass producing the only over-the-counter antiviral medication believed to be effective against the avian influenza. The World Health Organization has recommended that governments stockpile Tamiflu to be prepared should the bird flu reach pandemic proportions, and President Bush has proposed the U.S. spend nearly $5 billion on producing a flu vaccine. Roche will be challenged, as will its suppliers, to create enough product to meet global demand, which is spurring fast-tracked research into producing generic or similar medications.

5. Delphi Corp. (www.delphi.com)
Adhering to the philosophy, "If you're going to do something, do it in a big way," Delphi Corp., a Tier One automotive supplier, filed for Chapter 11 protection in the largest bankruptcy in the history of the U.S. automotive industry. Delphi filed just in time to avoid changes made to the federal bankruptcy code that now make it much more difficult to elude creditor obligations. Delphi is also using its bankruptcy protection to insist that its own suppliers must maintain regular shipments, even though Delphi's ability to pay them is very much in doubt. The auto part maker's survival strategy seems to be based on the hope that former parent — and biggest customer — General Motors will step back in and bail out its spinoff supplier. However, GM has more than enough problems of its own, with rumors mounting that the world's biggest automaker could end up filing for bankruptcy protection itself. GM has already announced plans to eliminate 25,000 jobs within the next three years to save costs.

6. IBM Corp. (www.ibm.com)
In May 2005, a little-known Chinese computer company named Lenovo Group purchased the Personal Computing Division from one-time PC champ IBM Corp. for $1.75 billion. The deal was emblematic of a number of trends that came to the forefront in 2005, most pointedly the movement of Chinese manufacturers to partner with and in some cases acquire U.S. companies. It also illustrates IBM's continuing evolution from selling hardware to selling software and services, as well as the reliance of the high-tech industry on outsourcers to do most if not all of the manufacturing. The biggest supply chain trend IBM represents, though, is the continued validation of its on-demand Integrated Supply Chain group, which has reduced overall costs to the company of nearly $20 billion over the past three years. The company is turning orders 32% faster, and as a result inventory is at its lowest level in 30 years.

7. Ford Motor Corp. (www.ford.com)
With the entire U.S. automotive industry in serious decline, Ford Motor Co. is borrowing a little-used strategy from one of its rivals to breathe new life back into its supply chain. Like Chrysler did when it was run by Thomas Stallkamp, back in the pre-Daimler 1990s, Ford is embarking on an extended enterprise initiative wherein it will partner with a group of key suppliers on long-term collaborative programs. Ford's new Aligned Business Framework agreements offer a significant increase in business to these select suppliers, as well as up-front payment of engineering and development costs, extended sourcing and data transparency. The automaker seeks to reduce by half the number of suppliers it uses for certain parts and commodities.

8. Procter & Gamble Co. (www.pg.com)
While Wall Street reacted to Procter & Gamble Co.'s acquisition of Gillette Co. as merely a merger of two consumer packaged goods (CPG) giants, the supply chain cognoscenti saw much more than that: The marriage of P&G and Gillette collects the two leading radio frequency identification (RFID) pioneers in the CPG industry. The new P&G is pushing well beyond the basic "slap-and-ship" RFID strategy that characterizes many Wal-Mart suppliers by applying analytics to the mountains of point-of-sale data it receives from retailers. As a result, the company is using RFID to improve its promotions management by tracking exactly when products sell in relation to advertised sales. On a larger scale, RFID represents just one of many ways P&G focuses on the customer's "moment of truth" — that decision to buy (or not buy) a product. To that end, P&G's Consumer-Driven Supply Network strategy has reduced by 17% the percent of product categories that have outofstocks higher than 5%.

9. Toyota Motor Corp. (www.toyota.com)
In terms of sales, Japanese automaker Toyota Motor Corp. has already shouldered its way into what's now considered a Big Four ranking of the top car companies in the U.S. In 2005, Toyota's sales were bolstered by its pioneering development and marketing of the Prius, a gas/electric hybrid vehicle. The company's influence is equally strong with corporate strategists, thanks to its championing of lean supply chains. Toyota is also causing logistics planners to rethink their global networks as the company is looking to bypass the Port of Long Beach in favor of importing their U.S.-bound freight through a Mexican port and then into the U.S. by rail.

10. Apple Computer Inc.
Computer industry pundits keep trying to write off Apple Computer Inc., but the onetime personal computer pioneer has reimagined itself once again, thanks to the ubiquitous iPod digital jukebox device. While Apple clearly has figured out how to develop and market youth-oriented products that generate a lot of buzz in the marketplace, the real secret to Apple's success is its supply chain. The company caught a lot of heat recently when it was alleged that Samsung, a producer of flash memory chips, was supplying them to Apple at half-price. Not only was Apple able to corner the market on available chips — the guts to the iPod devices — but it effectively shut out its competitors from trying to get into the market. The good news for Apple's competitors is that their complaints led to the scrapping of a potential joint venture between Apple and Samsung; the bad news is that Apple's iPods are still selling like nobody's business.

Top Ten Supply Chains of 2005

  1. FEMA
  2. Wal-Mart Stores Inc.
  3. Exxon Mobil Corp.
  4. Roche
  5. Delphi Corp.
  6. IBM Corp.
  7. Ford Motor Corp.
  8. Procter & Gamble Co.
  9. Toyota Motor Corp.
  10. Apple Computer Inc.