Supply chain management is crucial for maintaining the success of economies and multinational companies. It is also essential for modern business operations, ensuring that goods flow efficiently from one place to another. Supply chain management has been revolutionized from initial container handling methods to ocean-going containers and from containerization to computerization.

The history of supply chain strategies involves enhancing basic methods from labor-intensive to complex technical methods and international networks. In this blog, we will discover the history of supply chain management, its importance, and why it is needed for a company’s success. 

Initial Supply Chain Management 

The concept of supply chain management is not modern but derived from ancient times, as there are proofs of creation and dissemination networks in the old kingdoms of Rome and Peru. The label “supply chain” was first discovered in 1905 in a newspaper called The Independent. Supply chain management was not even discovered until the 1980s. The rum industry is the first-ever example of supply chain management consisting of slaves from Africa, distilleries in the US, and sugarcane from India.

Supply chain management has a rich past that has established its importance in global trade. From ancient times to the 18th century, all portions of a supply chain were kept primarily local due to a lack of larger transportation options and the high expense of transferring commodities worldwide. As shipping capacities improved, the number of commodities that could be delivered along any supply chain segment increased rapidly, connecting us all in a global trade network.

History of supply chain management

Supply chain management is a dynamic and coordinated system. It requires frequent movement, leading to persistent alterations and enhancements. Supply chain histories motivate shippers to cope with change and execute technological development to achieve optimum demands and supplies. There are some key points to understanding the early stage of supply chain management: 

• Pallets and elevating mechanization were developed in 1940 and 1950 for better storage space and stacking.
• The term unit load became famous in 1950 when the utilization of intermodal containers for trucks, trains, and ships extended to transportation management.
• Freight transportation through trucks trended during the 1960s. Storage places, cargo handling, and freight transfer have become more critical.
• The National Council of Physical Distribution Management Organisation started leading in 1963 and increased research and training because of the emergence of computing in the 1960s and 1970s. 
• Before 1960, transactions and supply chain analytics were recorded manually until technological advancements created ways to collect them with computers. 
• Operation research technologies were only theoretically present, leading to the establishment of Georgia Tech as the Production and Distribution Research Center, the Material Handling Research Center.

Modern supply chain management

• Flexible spreadsheets and location-based interfaces improved the logistic strategies after the arrival of computers. 
• Production and distribution research centers have evolved the earliest, using location interfaces with optimization structures for supply chain designs. Computational optimization centers produce scheduled flexibility for massive algorithms. 
• By 1985, the National Council of Physical Distribution Management became the Council of Logistics Management (CLM) to reflect the changing discipline that included the integration of inbound, outbound, and reverse flows of products, services, and related information.
• Reverse logistics, which focuses on extracting profit from the full life span of the business, is a crucial element in the emergence of a circular supply chain.
• Artificial intelligence addition decreases the supply chain ineffectiveness. 
• Better control over journeys and different types of containers was established with the development of the Internet of Things. 
• Cloud-based software helps to collect and store big data; with this, you can analyze the data and create a good transportation strategy, more efficient supply chain, and stock management.
• EDI in supply chain management is its first great disruptive technology that accelerates business and enhances customer experience. 

Components of supply chain management

In this complex business world, arranging the processes from creation to the end is necessary. This includes various components that are very important in maintaining the supply chain. Let’s have a brief overview of the components of supply chain management. 

1. Planning: Supply chain planning is the foundation of the complete supply chain management process. This component arranges the movement of goods with a detailed and progressive approach to ensure the supply chain is implemented effectively. Some key points are:

• Supply chain management involves predicting future demands, evaluating data, and evaluating prevalent market trends to approximate the amount of products and services needed. This reduces the chances of overstock or understock. 
• After analyzing the demands, it is time to align production timings and quantities accordingly. What, when, and how much to produce should be decided while planning; it would prevent any good scarcity or surplus. 
• Collaborative planning with suppliers is important to arrange the whole supply chain network. Open communication with suppliers strengthens the partnership, decreases lead times, and improves supply chain flexibility. 
• To avoid delays and disruptions, planning must include risk management measures for unexpected accidents, natural disasters, and market fluctuations. 

2. Sourcing: Sourcing, also called procurement, involves the planning and technical aspects of obtaining goods and services. This process involves recognizing, choosing, and extracting required inputs from raw materials and transferring them into finished goods. Some key points describing the role of this stage in global trade: 

• Strategic supplier selection aims to get a long-term, reliable supplier as per the quality, reliability band budget. 
• Substantial relationship management (SRM) includes regular communication, collaboration, and performance analysis. 
• Ethical, sustainable strategic sourcing is compliance with labor laws, social responsibility, and ethical standards. 

3. Manufacturing: The process of converting raw materials to finished goods is manufacturing. Both creative and technical points are included while manufacturing. Let’s understand some key points:

• The base starts with the comprehensive design and engineering of the products that must be made. Computer-aided designs and simulation tools are used to construct the framework to avoid any errors before practical construction. 
• It is important to procure high-quality raw materials for the finished goods.
• Product and industry complications will decide which production process to use, traditional or automated. 
• Controlling quality through inspection and monitoring at every step would ensure good results.

4. Delivery and logistics: Logistics involves the movement of finished goods from their original location to the assigned one. Let’s go through some key points of this component of global supply chain management :

• Managing logistics involves synchronizing all the activities involved in moving goods. Warehouse management systems (WMS) and enterprise resource planning (ERP) systems are important in optimizing logistics operations.
• Choosing the most suitable route with conveyance charges, fuel expense, and delivery time.
• Technological development has made it possible to get real-time information about the journey. RFID (Radio-frequency Identification) and GPS (Global Positioning System) technological tools enhance the real-time supply chain monitoring process.

5. Returns management: It refers to product returns from customers to businesses. It includes every process that deals with managing returns, be it reverse logistics, policy management, customer service, or inventory management of returned goods. This process aims to decrease the return rate. 

Importance of supply chain management

It is well-proven that supply management is a crucial part of businesses and helps them to grow and flourish. The impacts of supply chain disruption on business lead to financial loss and customer dissatisfaction, so it is essential to understand their importance and maintain accordingly. Now, we will explore the importance of supply chain management: 

1. Cost efficiency: Supply chain management helps reduce costs throughout the product’s journey. 

• It reduces the time retailers spend keeping products or their stock in the warehouses longer than the required time. This is because it initiates efficiency in the business’s workings. 
• The supply chain also decreases production costs by delivering raw materials to their designated place on time, avoiding delays, which can cost millions of dollars. 
• The manufacturers and retailers depend on the supply chain to create an efficient network for handling the journey. 

2. Customer satisfaction: Supply chain management also boosts customer satisfaction in the following ways. 

• Supply chain management ensures the correct quantity and quality to be delivered to customers on time. 
• It also guarantees the product is in the correct place to ensure customer satisfaction. 
• It ensures the product’s correct delivery time.
• It also guarantees proper customer service after the product is delivered to customers to gain their trust. 

3. Information transfer and communication: Supply chain management ensures that all the supply chain components are connected with tracking and communication techniques. It ensures that real-time data is available to both suppliers and consumers. Technological advancements such as GPS play an essential role here. 

4. Flexibility: Supply chain management makes companies flexible enough to handle unexpected situations like accidents or technical errors. Coordinating the supply chain processes with increased visibility will help analyze any defect or problem and find a solution before a major accident occurs. 

5. Balance supply with demand: Supply chain management ensures that your supply is proportional to the demand of the consumers to avoid overstocking or understocking products, which can increase the cost. Working by supply chain managers helps to balance supply and demand. 

Supply chain management involves managing all the components from production to selling in a way that will benefit suppliers, manufacturers, and consumers. It plays a crucial role in enhancing your business in the global market. Follow all the supply chain management techniques to ensure low cost, balance supply and demand, communication, and flexibility. 

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