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The History of Supply Chain Management

History of Supply ChainAlthough the term “supply chain management” is a recently new term used in the public domain, the history of supply chain management goes back more than 100 years to Fredrick Taylor in 1911. Taylor is the founder of industrial engineering and his publication The Principles of Scientific Management focuses on the importance of improving processes in manual loading. This way of operations research and analytic value became the method of logistics during World War II military operations in the 1940’s. Thus, the concepts of industrial engineering and operations research merged to become supply chain engineering. These concepts have seen many progressions in the last six decades.

The Beginnings of Supply Chain Management Creation Era

The focus of logistics in the 1940’s and 1950’s was on pallets and lift mechanization to make transporting pallets easy and efficient. The unit load concept was developed during this time and used in warehouses, but the transportation industry quickly took notice and adopted the idea as well. The shipping industries began using intermodal containers across the sea, train and truck transportation industries which laid the foundation for supply chain globalization.

By the 1960’s the National Council of Physical Distribution Management was conducting research and training in supply chain management as the need for physical distribution became more significant and trucking became a quicker mode of transport than the railway.

The 1960’s and 1970’s saw a shift in paradigm as computing was invested and digital files began to be used. The use of computerized data led to many innovations in logistics including randomized warehouse storage, inventory optimization, and truck routing. Researchers only had theoretical models to base their research off of as operations research technology went from theory to practice.

Within a few years, the Georgia Tech Production and Distribution Research Center, a Computational Optimization Center, and a Distribution Research Center and Material Handling Research Center, all through the University. These centers focused their research on what could be done with computing technologies within supply chain management which lead to a significant transformation in the 1980’s

Logistics and Computing in Supply Chain Management The Integration Era

The 1980’s brought a marked improvement in supply chain management through personal computing. With logistics companies now having access to computers with graphical interfaces, map interfaces, and brand-new technology for planning and execution the field of supply chain management was able to create huge time and money savings for business owners.

The Production and Distribution Research Center was the first to innovate with the introduction of supply chain optimization models being combined with a map interface. The Material Handling Research Center also saw improvements in technology for automation and the Computational Optimization Center created algorithms that allowed for flexibilities in airline schedules. During this supply chain management boom in technology, logistics departments were costly to run and still very new and complicated to the average business owner. Businesses saw that logistics was essential to their overall corporate profits however and the Council of Logistics Management was formed. The term logistics management was once only used for military purposes, but now included “the evolving discipline that included the integration of inbound, outbound, and reverse flows of products, services, and related information.”

When Enterprise Resource Planning Systems were introduced in the 1990’s, logistics boomed even further under the new technology that made it possible to integrate several different databases. By the year 2000, nearly all major corporations and companies had ERP Systems and the availability and accuracy of data improved tremendously. The software also made it all the more obvious how needed software was that could improve integrating logistics and planning. Soon, Advanced Planning and Scheduling (APS) software were developed.

The Supply Chain and the Globalization Era

The globalization of the supply chain in the 1990s caused the term to be widely accepted. The term became used even more with booming manufacturing and importing from China. From 1995 to 2006, imports from China went from being a $45 billion per year industry to nearly $300 billion. With global supply and demand more at play than ever, the need for logistics and supply chain management grew as networks became more complex and diverse.

Since 2005, the supply chain has referred to strategic issues while logistics has meant the operational and tactical components. This merger of strategy with operations was even reflected in the Council of Logistics Management’s name change in 2005 to the Council of Supply Chain Management Professionals. The council also determined that “Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”

The Future of Supply Chain Management

The future of supply chain management is companies such as LTX Solutions that can offer personalized transportation management software and services based on individual business needs no matter how diverse. Companies like LTX solutions which are at the forefront of supply chain management use the latest and most updated technologies for data consolidation to increase efficiency and profits from your supply chain.

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