THE EVOLUTION OF SUPPLY CHAIN MANAGEMENT

Abstract

The evoluon of supply chain management has been characterized by an increasing degree of integraon of separate tasks, a trend that was underlined in the 1960s as a key area for future producvity improvements since the system was highly fragmented. Although the tasks composing logiscs have remained relavely similar, they inially consolidated into two disnct funcons related to materials management and physical distribuon during the 1970s and 1980s. This process moved further in the 1990s as globalizaon incited a funconal integraon and the emergence of logiscs in a true sense; all the elements of the supply chain became part of a single management perspecve. However, only with the implementaon of modern informaon and communicaon technologies did a more complete integraon became possible with the emergence of supply chain management. It allows for the integrated management and control of informaon, finance and goods flows and made possible a new range of producon and distribuon systems. Supply chain management has become a complex sequence of acvies aiming at value capture and compeveness. More recently, the growing level of automaon of supply chains has been a dominant element of the evoluon of both physical distribuon and materials management. This is parcularly notable within distribuon centers that have experienced a remarkable push towards automaon such as storage, materials handling and packaging. Automaon may eventually lead to automated delivery vehicles. Stepwise and according to improvements in informaon and communicaon technologies, the two ends of the assembly line became integrated into the logiscs of the supply chain: the mely supply of raw materials and components from outside, and the effecve organizaon of distribuon and markeng. High rack storages, which later became automacally driven, or the internal movement of packages by flat robots were early expressions of logiscal engineering. Inially, logiscs was an acvity divided around the supplying, warehousing, producon and distribuon funcons, most of them being fairly independent from the other. With the new organizaon and management principles, firms were following a more integrated approach, thus responding to the upcoming demand for flexibility without raising costs. At the same me, many firms took advantage of new manufacturing opportunies in developing countries through outsourcing and offshoring. As producon became increasingly fragmented, acvies related to its management were consolidated. Spaal fragmentaon became a by-product of economies of scale in distribuon.