In 1982 Keith Oliver is credited with coining the phrase “Supply Chain Management”. As I began my career in 1982 I can attest to the fact that the term Supply Chain was not in general use at that time. In fact it would be many years before anyone started to hear that phrase being widely used.
So it is appropriate that in 2022 we look back at the last 40 years. But in reality all of the functions and responsibilities that constitute Supply Chain Management have been around for thousands of years.
Let’s take some time to celebrate the 40th anniversary of Supply Chain Management!
A Personal Retrospective
My view of what constitutes Supply Chain Management is very broad. I believe it is all encompassing, inclusive of virtually every function in an organization. It is not just Procurement, Warehouse Management and Shipping.
It includes strategy, planning, end to end operational management from suppliers through to internal operations through to end customers. It defines and shapes the direction and agenda for any company including Sales, Development, Marketing and Finance.
Supply Chain Management is the bedrock and the leadership of progressive organizations. But this is my view of Supply Chain. There are still far too many people who have a very narrow, uninformed, and dated view of Supply Chain.
Having spent my entire career touching Supply Chain in one form or other it is interesting that I only began to hear the phrase “Supply Chain” in the early to mid 1990s. It started to show up in job titles, functional names, metrics, and processes.
I worked in Materials Handling, Warehouse Management, Resource Planning, Industrial Engineering, I/T, Procurement, Manufacturing, Operations, Executive Leadership, Distribution, Freight Management, Reverse Logistics, Customer Experience and Order Management, and much more.
Over time many of these functions started being captured under the “Supply Chain” organization. Gradually you would start to see the term appear more frequently in other companies and organizations, in the media, and in educational institutions.
But this took decades. For most of the last 40 years the term Supply Chain was largely only know to those who worked in the field, or those who worked in a company that had this group on their organization chart.
It was only in 2020, 38 years after the origin of the term, that “Supply Chain” became known in virtually every household in the world. Politicians who never heard of it were now confronted with it. CEOs who never gave Supply Chain the respect it deserved were now reliant on it for survival.
The global Covid-19 Coronavirus pandemic. Within a short time the world was shut down. That meant that companies could not manufacture and distribute and sell goods. That meant that consumers were realized what Supply Chain was all about. Supply Chain was in the news every day from 2020 on.
For most of us this was the time in which the importance of Supply Chain came to the fore. For most of us the promise was that we would never look back.
A Larger History
Oliver defined in 1982 the Supply Chain concept as follows: “Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption”.
Despite this the reality is that all of the functions that constitute Supply Chain go back thousands of years.
Think about the construction of the pyramids. The scheduling, logistics, workforce management, materials management, and processes involved are all quintessential “Supply Chain” processes.
Wars fought throughout history have relied on the provision of materials, arms, personnel management, and significant logistics challenges in order for armies to wage battle.
Trade between countries has been driven by exploration and the need for economic development for millennia. The movement of goods from one country to the other has been a foundational driver of logistics and freight management in all forms of transportation.
And the Industrial Revolution brought about the advent of machinery, assembly lines, complex mass production, shipping and distribution, and the development of transportation equipment and networks, all on a scale never before seen. This shifted the global focus and location of mankind to become more urbanized driving more consumerism and more capitalism.
The construction of vast railway networks and road systems opened up countries in ways never before conceived. The actual construction of these railways, such as the National Dream that created Canada, was completely based on precision management of materials and skilled labourers unlike anything that had ever been built.
At the beginning of the 1980’s, when Oliver coined the phrase, personal computers were just coming onto the market. When I started using spreadsheets it was completely foreign technology to management and many of my predecessors.
So much work was done with paper to that point, including the management of purchase orders, memos, bills of material, and plans of every sort, and mainframe computers were typically used for larger computational tasks.
Phone calls were the predominant form of communication with people in other locations and geographies as the internet in its modern form and email did not yet exist.
Materials Resource Planning (MRP) predated Enterprise Resource Planning (ERP), meant to cast a wider net on what was captured in this planning process and the associated systems.
Most manufacturing was localized for companies, even if they were national or international. They tended to manufacture in their home country. It was only in the 1990s that contract manufacturing started to take hold. From their outsourcing evolved and with that the broader relocation of manufacturing from high cost geographies to low cost geographies.
This globalization drove the need for greater movement of goods and services, and the need for more advanced technologies to connect these increasingly complex Supply Chains.
The advent of E-Commerce drove another evolution in Supply Chain. Last mile delivery of goods ordered online and held in distribution centres requiring rapid order fulfillment created a need for speed, efficiency, and reliability that directly informed consumer buying behaviour. Further this drove a requirement for delivery logistics, tracking and visibility that was unprecedented.
The push for sustainability and environmental responsibility clearly requires actions in Supply Chain. Circular and Sustainable Supply Chains are essential to reverse the effects of climate change and to treat our planet with greater respect.
On top of that the global pandemic underscored the need for more robust and resilient Supply Chains. There will always be disruptive events and disasters whether they be local or global, man made or natural. The drive for resilience is shaping how Supply Chains will be constructed and optimized for the future.
And finally, the last few years has seen the creation and deployment of incredible technologies that will define Supply Chain for decades to come. It is what we call the Digital Supply Chain.
This is what we have seen looking back from this 40th anniversary of Supply Chain.
An Exciting Future
The Digital Supply Chain has as its backbone end-to-end electronic connectivity. With that connectivity we have a number of technologies that will build on that electronic connectivity to enable the real time, intelligent and dynamic management of every aspect of the Supply Chain anywhere in the network and in the world.
Big Data, Predictive Analytics, Control Towers, Artificial Intelligence, Autonomous vehicles, Drone Delivery, Virtual and Augment Reality, Cloud Computing, Robotics, Blockchain, Machine Learning, 3D Printing and more are all technologies that will build on the Digital Supply Chain.
Creating the vision and strategy for the use of every single one of these technologies will come from Supply Chain. I/T and Engineering will create these technologies but the application and use and oversight will come from Supply Chain.
What this means is that it is going to be a very exciting few decades for anyone involved in the profession. The deployment of these technologies will take a long time meaning that this will be a core aspect of careers for generations.
It also means that Supply Chain will evolve to be a leading part of every organization, and not just remain a back office function. People will be providing the leadership that will result in employee development beyond just performing menial tasks and rather performing much more intellectually demanding jobs. There will be a quantum leap in the Supply Chain skills need in the future.
Supply Chain professionals are busy people. Every day brings ups and downs, surprises and shocks, progress and setbacks.
With all the visibility and disruption that the global pandemic brought, and continues to bring, to Supply Chain you would think that was enough of a catalyst for executives to give Supply Chain its due respect and invest in it for the future.
Our fear is that as the effects of the global pandemic dissipate too many companies will revert to their old, vulnerable ways of doing things. On the other hand those companies and leaders who became enlightened and now appreciated the Supply Chain will make the changes and investments required for the future.
40 years after the phrase “Supply Chain Management” was coined we believe we are now at what we call “Supply Chain’s Moment of Truth“. Will companies move forward toward the Digital Supply Chain or will they go back to tucking Supply Chain in the back office?
Time will tell what direction people take. But I am 100 percent confident that change and progress will prevail, and while it will take time we will see our vision of the Digital Supply Chain of the future realized, even if it does take decades.
So let’s take a moment to celebrate 40 years of Supply Chain Management. And let’s look forward with excitement towards the next 40 years and the Supply Chain Renaissance that has begun!