Origin of Supply Chain Management - a journey into the future of scm

A business entity ,in the earlier 1950s revolved more around its own self . Merger and acquisitions though prevalent ,a firm used to engage its resources for all the activities needed from buying raw materials to manufacturing and then distributing the products to stockists,  dealers and retailers. The aim was to produce more, reduce cost ,sell more and increase profit ,all by oneself. Creating partnerships with upstream or

downstream players was not considered. As a result, keeping large inventories on the shop floor to sustain mass production was considered necessary.
However, as the competition grew in 1970s the need for cost reduction got greatly emphasized and soon there were efforts to reduce inventory.

Material requirement planning (MRP) and Manufacturing Resource planning (MRP II) systems were introduced to reduce inventory holding.

Need for effective Materials management was duly recognized. The advancement in Information Technology , witnessing application of complicated softwares for tracking and managing inventories through LAN and WAN became competitive factors. Concepts such as JIT and TQM helped the processing on the shop floor. The origin of supply chain management can be traced to 80s.


The 80s, saw a dramatic change in the business scenario all over the world due to globalization and liberalization.

Low cost ,high quality product and customer delight became the buzz words for the industry. Increased dependence on JIT and TQM methodologies created the vision for strategic partnerships.

Development in IT further reduced the national boundary concepts. The first mention of the term supply chain management was found in a paper published in 1982 in the US.

Market globalization also presented a great opportunity to reach out to high potential global markets.

This needed relook of the way inventory and logistics were being done.

The challenges associated with enhancement in quality, manufacturing efficiency, customer service and new product design and development also increased.

To deal with these challenges, manufacturers began buying from a select number of certified, high quality suppliers with excellent service reputations and involved these suppliers in their new product design and development activities as well as in cost, quality and service improvement initiatives.

Obviously, supplier management and customer


management became focused activities for a firm and Supply Chain Management became popular as a source of competitive advantage for the firms.

Today, Supply Chain Management has concretized for itself into :the purchasing and supply management emphasis from industrial buyers and

the transportation and logistics emphasis from the wholesalers and the retailers

The new well talked about concepts are supply chain spanning from the supplier's supplier on the one hand to the customer's customer on the other hand.

In the future, it is expected that supply chain management emphasis will concentrate on supply chain expansion, increasing supply chain responsiveness and further reducing supply chain costs. 

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