When was the birth of Supply Chain Management?
As we approach the festive season it seems like the perfect opportunity to look to the past and explore the history of supply chain management – where did it all begin?
It really depends on how far back you want to go – you could look at the Roman Empire, it imported a whole variety of materials including: beef, corn, olive oil, spices, wine, perfumes, glassware, iron, lead, leather, marble, silk, timber and tin.
Furthermore, you could look at The East India Company (IEC) founded in 1600 to pursue trading with the East Indies. If you were to delve even further back into history, you can find stories that claim there is evidence from 400,000 years ago that show cavemen created and exchanged tools for hunting and cooking as well as the art of lacing skins and furs together to produce clothing. The creation of these tools and services would have involved some sort of supply chain management in order to produce and trade/ barter one good or service for another.
The term ‘Supply Chain’ today is widely known as the journey a product goes through from its raw material state, through to manufacturing, distribution and final delivery to customer. In today’s global market, supply chains have grown more complex and more sophisticated as a result of increased competition, regulation and innovations in technology.
Research shows that the origins of the term ‘Supply Chain Management’ or ‘SCM’ became known when Keith Oliver, a consultant at Booz Allen Hamilton, used it in an interview for the Financial Times in 1982 and the term was slow to catch on. It only gained momentum in the mid 1990’s when a flurry of articles and books came out on the subject. In the late 1990’s it rose to prominence as a management buzzword and operations managers began to use it in their titles with increasing regularity.
Today, the supply chain management profession continues to evolve to fit the, often extended and global, needs of supply chains. Due to the supply chain now covering a broad range of disciplines, the definition of what a supply chain is can become blurred. It is not uncommon for supply chain management to be confused with the term ‘logistics management’.
Below are some of the commonly accepted definitions of supply chain management:
- The management of upstream and downstream value-added flows of materials, final goods and related information among a company and its’ suppliers, partners, resellers and final consumers.
- The management of material and information flow in a supply chain to provide the highest degree of customer satisfaction at the lowest possible cost.
- The integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders.
According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion and logistics management. It also includes the coordination and collaboration with channel partners which may be suppliers, intermediaries, third-party service providers or customers. Supply chain management integrates supply and demand management within and across companies.
Supply chain management is an integrating function with primary responsibility for linking major business functions and processes within and across companies into a cohesive and high performing business model. It includes all of the logistics management activities in addition to manufacturing operations. It drives the coordination of processes and activities across marketing, sales, product design, finance and information technology.
How is ‘logistics management’ different?
As mentioned previously logistics management is often confused with supply chain management, even though it makes up parts of the whole supply chain puzzle. Logistics management is the part of the supply chain that plans, implements and controls the forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet end customers’ requirements.
Logistics activities typically include:
- Transportation management
- Fleet management
- Materials handling
- Order fulfilment
- Logistics network design
- Inventory management
- Supply/demand planning
- Management of third-party logistics providers
Some logistics functions do go beyond these activities and also get involved during sourcing, procurement, production planning, scheduling, packing and assembly. There are also instances where they will provide customer service updates to the end consumer. The logistics function gets involved in all levels of planning and execution including strategic, operational and tactical. It’s an integrated function which coordinates and optimises all logistics activities and can integrate directly with other functions such as marketing, sales manufacturing, finance and information technology.
So how you do manage a modern day supply chain?
It’s clear that being a supply chain manager is no easy feat from the numerous functions, activities and parties involved in a modern, often global, supply chain. We’ve touched upon when and how the term ‘supply chain management’ was born, but what ingredients do you need to produce a great supply chain manager?
Our experience in delivering supply chain software to leading retailers and insurers tells us super powers like x-ray vision and an ability to predict the future would be helpful. In the absence of these powers ediTRACK have been working with supply chain managers for over 20 years to refine and deliver our web-based supply chain technology to help them to transform their supply chains.
We’re committed to simplifying our clients’ supply chains and we do this by providing process integration and visibility of business intelligence on a platform that enables real-time collaboration. Supply chain managers come to us when they’ve identified a lack of visibility in their supply chains that is leading to inefficiencies.
Our software provides retailers, insurers and their partners with complete visibility of all supply chain processes, from claims management for insurance companies and sourcing, product development, order management and logistics for retailers. It can provide ‘one version of the truth’ for everyone involved in every stage of a supply chain, minimising delays, errors and ethical trading issues.
If you have a supply chain challenge and you need improved visibility, integration and automation of the processes in your supply chain please get in touch. We would be happy to discuss your challenges and how our software could help you manage your business.