History of Supply Chain Management

What Is Supply Chain Management (SCM)?

Supply chain management is the process of managing the flow of goods & services from the procurement of raw materials to the delivery of the product at the destination.

 

History of Supply Chain Management

Early stage:

In 1800s, for the movement of goods Rail system started. Hand trucks were invented which made the loading & unloading easier. 

1920s: Rise of mass production witnessed in this decade.

Pallets were invented and use of palates made it easier to pack the goods together and ship.

Trucks and trains are commonly used to transport goods over long distances.

1930s: The longest economic recession which is also know as 'Great depression' was arrived in this decade (1929-1941). Due to the economic slowdown, businesses began prioritizing cost-cutting strategies to improve the efficiency of warehousing and transportation management processes.

Concept of supermarket and self-stocking came into the picture which helped to shape the future of retail industry.

1940s: During World War II the movement of supplies to the soldiers started (logistics) in USA, which helped their soldiers a lot and made their life somewhat easier. This was the first-time supply chain strategies implemented and it influenced the future or shipping.

Post World War II, the demand of consumer goods increased which required supply chain expansion and rise of national distribution network.

1950s: During this period, labor-intensive process of material handling started. The industry also found the way of space optimization using racks and changing warehouse design and layout.

In 1950s, intermodal container transportation started.

Computer came into the picture, and it revolutionized the Supply chain management by adding value to inventory tracking and faster processing of data.

1960s: As the use of multiple mode of transportation such as sea, air, truck & rail came into the picture, the efficiency of Supply chain logistics enhanced.

The quality of production planning enhanced as Material Requirement Planning (MRP) introduced.

1970s: Global supply chain impacted because of the oil crisis. Because of the oil crisis companies felt the need of risk management strategies and sourcing diversification.

The concept of ERP - Enterprise Resource Planning emerged on 1970s which helped businesses to integrate different modules such as finance, operation, procurement, sales, HR etc. under the same umbrella.

1980s: The concept of JIT - Just In Time adopted by the manufacturers in order to minimize inventory cost another waste.

1990s: In this decade Globalization took place. Organizations started to source material and machineries from other side of the world.

The real time visibility of data and other information became accessible because of the advancement of technology such as internet and EDI - Electronic Data Interchange.

2000s: Rise of E-commerce platforms changed the future of retail business and created lots of opportunities in supply chain management such as last mile delivery, shop from home, fulfillment speed etc.

Digital technologies such as automation, cloud computing, predictive analysis helped to transform the supply chain.

2010s: The need of sustainability in supply chain arise because of environmental concern such as global warming. Few initiatives were taken by the organizations in order to contribute towards sustainability such as green logistics, carbon footprint reduction etc.

Supply chain resilience strategies came into action so that the rusks such as natural disaster and geopolitical crisis could be mitigated.

2020s: Covid 19 pandemic leads to the disruption in sourcing, production, storage, distribution and other parts of supply chain management. The organizations focused on building and strengthening their resilience strategies.

The rise of AI - Artificial Intelligence helped to enhance supply chain management. The AI can be helpful for demand forecasting, demand planning, warehouse automation, quality control, inventory optimization etc.