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The evolution of the SCM has moved from disparate
functions of logistics, transportation, purchasing and
supplies and physical distribution to focus on integration,
visibility, cycle time reduction and streamlined channels.
The new integration has a variety of activities such as,
Integrated Purchasing Strategy, Supplier Integration,
Buyer-Supplier Partnerships, Supply Base Management, Strategic
Supplier Alliances, Supply Chain Synchronization, and
finally simply SUPPLY CHAIN MANAGEMENT. The success of
these activities lie in having a corporate vision that
drives change throughout a firm's internal and external
linkages or interfaces.
The activities of logistics are centuries old
as discussed earlier. In early 1900s, the farm products
distributors realized the importance for providing time
and place utility. The word logistics was first
associated with the military in 1905 as a branch of
war that pertains to the movement and the supply for
armies. During World War II, military forces made effective
use of logistics models and forms of systems analysis
to ensure that the required material was at the right
place on time every time. An indication of the increased
use of the term logistics during that time could be
noticed in the statement of the Chief of Naval Operations,
who reportedly said that he did not know what logistics
was, however, he certainly wanted it to be used. The
term logistics is widely used in military and military
type applications even today.
Until about mid 1950's, the field of supply chain
management was in a state of dormancy. The piecemeal and
isolated fragmented set of activities was rampant. Production
and manufacturing were given uppermost attention. The
inventory was the responsibility of the marketing, accounting
and/or production areas and order processing was an accounting
or sales responsibility. This fragmented way resulted
in a great deal of friction on account of the conflicting
objectives between production, marketing, accounting and
finance.
This led to the assertion in the early 1960's
that logistics was one of the real frontiers of opportunity
for enterprises to improve their corporate efficiency.
Initial focus and emphasis was on the internal front,
limited to productivity within the four walls of the
factory or manufacturing till the 1970's. During the
Ethiopian famine relief efforts of the 1980's, the term
logistics was applied to the food-supply activities.
World Vision International, one of the many relief organizations
at work there, produced a manual entitled Getting
It There- A Logistics Handbook for Relief and Development.
The 1980's stressed the need for quality, whereas the
1990's have seen the emergence of the supply chain management
and the millennium trends on e-business or IT enabled
supply chains.
SCM formerly known as logistics management now
includes more aspects apart from tthe logistics function.
SCM is one of the most powerful engines of business transformation
that basically means delivering the right product to the
right place at the right time and at the right price.
SCM is the one area wherein much operational efficiency
can be gained, thereby reducing organizations costs and
enhancing customer service. The evolution is towards internet-based
application for SCM.
Gradually, the marketing people started giving
greater emphasis to distribution, giving rise to physical
distribution management or in today's parlance 'outbound
transportation'. This was different from the demand creation
side of marketing.
In 1991, the international Council of Logistics
Management (CLM), defined logistics as "the process
of planning, implementing, and controlling the efficient,
effective flow and storage of goods, services, and related
information from the point of origin to the point of consumption
for the purpose of conforming to customer requirements".
Some of the terms like logistics, inbound logistics,
materials management, physical distribution, supply
chain management seem to be used interchangeably. Very
briefly, inbound logistics covers the movement of material,
components and products received from the suppliers.
Materials management describes the material handling
part of the movement of the material and components
within the factory or firm. Physical distribution, refers
to the movement of the finished goods outward from the
end of the assembly line from the shipping or dispatch
department. Logistics describes the entire process of
material and products moving into, through, and out
of a firm. Finally as of today, it is the Supply Chain
Management that is conceptualized as something even
larger than logistics, that links logistics more directly
with the user's total communications network and with
the firm's engineering staff. It is sufficient to know
this much at the present juncture on supply chain management,
as in the chapter Process
View of SCM where we will explore different
views on supply chain management.
A supply chain is, in fact, a network of facilities
and distribution options that necessarily performs the
functions of procurement and acquisition of material,
processing and transformation of the material into intermediate
and finished tangible products and finally the physical
distribution of the finished tangible products to the
customers, whether intermediate or final ones. As already
indicated, supply chains exist in both manufacturing
as well as in service organizations.
Supply Chain Management is a set of approaches
utilized to efficiently integrate suppliers, manufacturers,
warehouses, and stores, so that merchandise is produced
and distributed at the right quantities, to the right
locations, and at the right time, in order to minimize
system wide cost while satisfying service level requirements.
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