Evolution of Supply Chain Management

Logistics and Supply Chain Management is a recent concept which was originated from the area of military operations. At present the concept got much importance and acceptability as a separate field of management study. Like any area of management the development of Logistics and Supply Chain Management has also passes through the different historical phases.

Before the 1950s

Before the 1950s, logistics was thought of in military terms. In these periods the scope of this concept has limited to procurement, maintenance, and transportation of military facilities, materials, and personnel.

  • Logistics concept was not much initiated during this period.
  • Scope of the concept was only limited to military operations.
  • Logistics during this period means procurement and transportation of military equipments and personnel.

1950-1970

Around 1950s changes occurred that could be classified as a first ‚Transformation.‛ The importance of logistics increased considerably, when physical distribution management in manufacturing firms was recognised as a separate organisational function.

  • Logistics concept was initiated during this period.
  • This period is considered as the first transformation phase in logistics.
  • Physical Distribution and Logistics has been considered as a separate organisational function.

1970-1980

The concept of Supply Chain Management (SCM )has initiated during this period and become one of the most popular concepts within management in general. A number of journals in manufacturing, distribution, marketing, customer management, transportation, integration, etc. published articles on SCM or SCM-related topics.

  • The concept of SCM has been initiated.
  • SCM wider acceptability in the management realm.
  • Number of SCM related writing s and journals has been published during this period.

1980-1990

The year 1985 will be considered as the milestone in the concept of Supply Chain Management. The importance of the concept has been better acknowledged during this period and SCM identified as an integral part of manufacturing industry.

  • Considered as the milestone in the concept of SCM
  • CM identified as the integral part of manufacturing industry.
  • Global competition increases and the companies all over the world identified the importance of SCM in maintaining customer relations.

1990 to present day

In 1995 SCM comes in to service industry. In 1996 SCM was proposed as a tool for strategic planning in tertiary education. In 2004 SCM has been explored to several service industries including automobile, grocery, computers, book publishing etc. In 2007 the concept of educational Supply Chain Management were initiated and conducted many surveys were conducted in the same concept and validated all over the world in 2010.

  • Initiated SCM in service industry
  • The concept of educational SCM were initiated.
  • worldwide surveys and research on the concept of educational SCM.
  • SCM as a separate field of management study

Development Chain

The Development Chain is a set of activities and processes associated with new product introduction. It includes the product design phase, the associated capabilities and knowledge that need to be developed internally, sourcing decisions, and production plans.

Supply chain optimization

Supply chain optimization is the application of processes and tools to ensure the optimal operation of a manufacturing and distribution supply chain. This includes;

  • Optimal placement of inventory within the supply chain.
  • minimizing operating costs including manufacturing, Transportation and distribution.

Global Optimization

Optimizing the Supply Chain in the global market or finding the best possible alternative for the global operation is not an easy task. What make this so difficult? We can discuss a variety of factors make this a challenging problem.

  • Complex Network
  • Conflicting Objectives
  • Dynamic Nature of Supply Chain.
  • System variations

Problems in Global optimization

Complex Network

The supply chain is a complex network of facilities dispersed over a large geography, and, in many cases, all over the globe. The following example illustrates a network that is fairly typical of today’s global companies.

Conflicting Objectives

Different facilities in the supply chain frequently have different, conflicting objectives. For instance, suppliers typically want manufacturers to commit themselves to purchasing large quantities in stable volumes with flexible delivery dates. Unfortunately, although most manufacturers would like to implement long production runs, they need to be flexible to their customers’ needs and changing demands. Thus, the suppliers’ goals are in direct conflict with the manufacturers’ desire for flexibility.

Dynamic Nature of Supply Chain.

The supply chain is a dynamic system that evolves over time. Indeed, not only do customer demand and supplier capabilities change over time, but supply chain relationships also evolve over time. For example, as customers’ power increases, there is increased pressure placed on manufacturers and suppliers to produce an enormous variety of high-quality products and, ultimately, to produce customized products.

System variations

System variations over time are also an important consideration. Even when demand is known precisely (e.g., because of contractual agreements), the planning process needs to account for demand and cost parameters varying over time due to the impact of seasonal fluctuations, trends, advertising and promotions, competitors’ pricing strategies, and so forth. These time-varying demand and cost parameters make it difficult to determine the most effective supply chain strategy.

How to handle global supply chain management challenges?

Today’s complex and dynamic global business environment presents increased operating challenges for companies striving to achieve sustainability while working with an array of global trading partners, regulations, business requirements, risk management concerns, and the related issues. How we can manage these issues?

Tips…

  • Ensure partner collaboration
  • Invest wisely in IT
  • Provide clear, concise communications
  • Evaluate legacy IT infrastructures
  • Keep your staff’s skills up to date
  • Set targets.
  • Provide sufficient time to implement
  • Keep an open mind
  • Get to know your software vendor
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