Evolution of supply chain management

Evolution of supply chain management is a gradual process. In the field of chain management, there are three major revolutions occurred. Now, we are going to examine these revolutions. Primarily, we will consider the economic and technological environment.

The chief executive of an automobile firm says that their aim is to arrange the material and machinery of the firms.  They do it to simplify their operations. Besides, they want to store raw material .however, their production cycles need 81 hours to produce finished goods.

So, it proved that the firm had a well-integrated supply chain. Besides, it allows minimum cost and maximizes asset productivity.

For better learning, we have to learn supply chain over the past century. Besides, we also need to find out key dimensions over which supply chain have evolved over the past century.

There are three major revolutions of supply chain management. Now, we will examine this in the economic environment.

  1. The first revolution (1910-1920): Vertically integrated firm offering and low variety of products

In the first revolution of supply chain management, there was very little product Variety. Besides, the firms were integrated vertically. In that time, market sensing was not properly done by the marketers.  The first revolution was found by the Ford Motor Company. They were managed tightly integrated chain. Besides, they were owned every part of the chain. However, they were offered only black color and as long as the model of car was T.

So, they had a highly efficient supply chain. But it was not flexible at all. Besides, they can’t provide different varieties of products. That’s why; they were not sustained in the market place long run.

On the other hand, General Motors Company understood the demand of market place. Besides, they offered different varieties of products. However, they also offer a wider variety of color and size. The General Motors Company was properly followed the market sense to satisfy the customer.

  1. The second revolution (1960- 1970): Tightly integrated supply chains offerings a wide variety of products

At the end of the first revolution, the manufacturing companies faced many changes.  Especially it was in product variety. So, to deal with this change, the company needs to restructure its supply chain. Then the supply chain will be flexible and efficient. In that time, they need to deal with a wider variety of products. But in that case, they were trying to do it without holding too much inventory.

In that time, Toyota Motor Company comes with success to all these tasks. They were many deals with their key components. They offered a low price of their products. Besides, they don’t own the supplier chain but maintain an integrated relationship with each other. However, they were keeping more information about their suppliers under the keiretsu system.

Keiretsu system is an interlocking business relationship with each other. It refers that Toyota had a long run relationship with its suppliers. Besides, its suppliers also located near Toyota production plants. In that case, Toyota needs a low set up times. This is the key feature of the second revolution. Besides, Toyota is popularly known as lean production systems.

Moreover, Toyota didn’t face any problem in the future. They also established their plant in many countries. Initially, they thought to bring their suppliers with them. Further, they found that the suppliers in keiretsu had become complacent. Besides, it was no longer cost competitive. Moreover, they were able to use EDI (electronic data interchange). It helped to facilitated information between firms. However, it was possible for a firm to integrate with the suppliers without enforcing them to locate close to their manufacturing plants.

  1. The third revolution (1995- 2020): Virtually integrated global supply networks offering customized products and services.

The third revolution of supply chain occurred because of technological development. At present. We have much more excess to gather information. It is possible because of technology. In this period, the firms are offering customized products and services for individuals. Because customers taste and preference are not the same at all. See some key characteristics of third revolutions.

For example, Dell is Product Company, Apple Inc. is a product and service company and Bharti Airtel is a pure service organization.

Dell computers offer a customer to purchase their laptops. Apple offers personal digital services to its customers. Whereas Bharti Airtel allows customer can have a unique personalized experience.

Now, the theme of every organization is to satisfy the consumer. It is the age of virtual integration. Here, customers have the power to get every information regarding products quality and services. There are three key characteristics of global networks.


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