Impact of Manufacturing Changes in the Early 1990s
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Running Header: HISTORY AND DEVELOPMENT OF SUPPLY CHAIN MANAGEMENT History and Development of Supply Chain ManagementDr. James A. BryantAugust 05, 2013
2History and Development of Supply Chain Management.Supply Chain Management is a business buzzword that gained popularity in the 1990s. It describes organization management of processes with a company from production to delivery of goods or services. The term gained prominence as companiessought to control costs and improve performance. In order to better understand the concept behind supply chain management, it will be important to discuss its history and how it fits in the continued evolution of business management. The term "supply chain management", used during an interview with the Financial Times, was developed by Keith Oliver, a consultant at the Booz Allen Hamilton, in 1982 (Laseter and Oliver, 2003). Oliver attempted to describe a process based on his vision of breaking down silos within an organization. Such silos include manufacturing, marketing, distribution, sales and finance. Since the 1980’s the interest in the supply chain management has steadily increased. Because of the increase in interest, companies realize they needed to have collaborative relationships with their own employees and employees outside of their own organization to grow. Companies have come to realize that they will not be able to compete effectively without the help of their suppliers or other components within the supply chain. Given the diverse nature of any business, several types of definitions of supply chain management evolved.Success in today’s modern business relies on how well the firm’s supply chain strategy will be linked to its overall business strategy. Understanding how management
3of the supply chain will improve competitiveness can be seen in how the term “supply chain” is defined. The idea behind supply chain in management occurred around the 20th century with the creation of the assembly line for production. The assembly line was a new concept in manufacturing which revolutionized production at the time. Further attention to supply chain management and production occurred with the advent of Japanese management practices in the 1980’s around the time that Oliver coined the term (Laseter and Oliver, 2003). Supply Chain Management ConceptThe Supply Chain Management concept is focused on two basic principles. The first is for every product that reaches a consumer will involve the efforts of the organizations that are linked together within the supply chain. The second principle is that the supply chain exists beyond and cannot be confined to just one single organization. It needs to exist outside the four walls of the organization to maximum its effort. Success in a business can only be achieved when the entire chain is understoodand managed effectively to deliver the product to the customer (Jacoby, 2009). The management must have an active role in the supply chain activities for the company to achieve competitive advantage over the competitors’ and at maximum value. By the organization making a conscious effort in developing and managing the supply chain this will enhance the use of them in the most effective and efficient way that will be best overall (Blanchard, 2010). Activities within the supply chain that management should be focusing on would include product development/production, logistics and sourcing as
4well as information systems for communication for components throughout the supply chain. Organizations making up the supply chain usually are linked to work together by having physical and/or information flows. Physical flows, being the visible piece of the chain, will allow for movement, development and storage of the products (Hammel and Kupczak, 1993). Information flows allows communication between the supply chain partners allowing them to have the coordination for long-term plans and for control of the flow of goods throughout the supply chain (Hammel and Kupczak, 1993).Supply Chain DefinedSupply chain definitions have varied over the past years but the concept of the supply chain has grown and gained popularity within organizations. Cox defines a supply chain as “the processes from the initial of raw materials to the ultimate consumption of the finished product linking across supplier-user companies; however, enabling the value of a chain through the products and services to the consumer by using functions provided from within and outside of the organization” (Cox et al., 1995). A different view will define the supply chain as which materials flows through a network of entities which includes the suppliers, manufacturing sites, distribution centers, retailers, and customers (Lummus and Alber, 1997). Quinn (1997) gives a different definition of the supply chain in which any activities that will be associated with the movement of the goods from beginning of the raw-material stage to the consumer. All movement of the goods would entail how the items were sourced, process of ordering, the production line, how it is stored, transportation, and the customer service
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