Logistics and supply chains have come a long way from the stone roads built by the Roman Empire to the global industry involving all kinds of transport, including airplanes. Today we invite you for a short and exciting lesson in history of logistics and supply chain management. Give us five minutes of your time and you’ll learn all you need to know about the emergence and evolution of supply chains.
Get to know the term
So, what is logistics and supply chain management all about? It’s about the full life cycle of a product, starting from the raw materials or components it’s made of and ending in the hands of consumers.
Logistics is itself a component of supply chains and needs no introduction. As for supply chain management, it’s an intricate process that includes procurement, operations management, logistics, distribution, and marketing coordination.
Well, at least this is how it is at the current point in the history of supply chains. Now let’s have a look at where it started and how supply chains evolved throughout the centuries.
From the Romans to Henri Ford
Ancient empires were the first to create a system that most closely resembled the supply chains we know today. In order to support a huge army scattered across its territory, an empire had to establish a continuous supply of food and weapons. Organized labor was used to build good roads, and cargo transport was running regularly, bringing provision to the remotest regions.
During the history of supply chain and logistics people got more and more used to trading and shipping goods by sea, but there hadn’t been a truly global supply chain network until production of rum began in North America in the 17th century.
The Rum supply chain started in Africa where slaves were captured and then moved to the Caribbean to work on sugarcane plantations. The sugarcane was shipped to distilleries in the US, and then American rum was distributed throughout the colonies and Europe.
But the real seismic shift in logistics and supply chain history happened in the 1920s when Henry Ford introduced his assembly lines and mass production of goods began. The idea that one could effectively produce quality goods on a large scale changed trade and supply chains forever.
The assembly line production and distribution of an unprecedented volume of products required careful planning, continuous workflow and faster ways of shipping. Here enters container.
Groundbreaking metal box
The introduction of containerized shipping in 1956 had an explosive effect on the industry. Big batches of goods shipped in standard-sized boxes, loaded and discharged in no time, allowed for better planning, safer and faster delivery and overall mobility never seen in the history of the supply chain industry.
Containers have made it possible to move production to countries with cheap labor and increase spending on distribution and marketing instead. Malcolm McLean and his brilliant invention made a revolution in logistics and let supply chains stretch across the world while giving a start to globalization.
Gradually there came a need for experts who could manage all these complicated processes. This is how the history of supply chain management began.
From just a term to a full-fledged industry
The concept of a unified network of producers, suppliers and consumers existed and functioned well before the 20th century, but the term “supply chain” appeared in a newspaper “The Independent” only in 1905.
It didn’t get much attention until 1982, when Keith Oliver, a consultant for an American government and military contractor, introduced the term “supply chain management” to the general public in an interview for the Financial Times.
In the mid-1990s numerous articles and books came out on the subject. They defined supply chain management as a strategic coordination of business activities that would lead to improved performance of supply chains and competitive advantage on the market.
Since its creation, supply chain management has gone through several stages of development. The era of integration was marked by the introduction of enterprise resource planning systems (ERP) and Internet-based software. The current era of globalization is focused on global processes and the expansion of supply chains worldwide.
What the future holds for supply chain business
The industry is already changing dramatically thanks to machine learning algorithms and the Internet of Things, allowing for better planning, transport monitoring and distribution.
Blockchain technology is expected to take supply chain processes to a whole new level as it gives more transparency and provides secure transactions. There already exist blockchain platforms that can be used for signing smart contracts, paying in cryptocurrency, and tracking the cargo on every step of its way.
However, the logistics part of the business will remain quite unpredictable and there is still no machine in sight that can solve logistics problems as well as an experienced supply manager can.
When was the supply chain invented?
There’s no exact date, but the general consensus is that ancient empires were the first to build more or less consistent supply chains to connect their regions to capital cities.
Who is credited with inventing supply chain management?
Keith Oliver, a consultant for an American government and military contractor, introduced this term to the general public in 1982.
How supply chains have evolved over the years?
Supply chains came a long way from a process of just a few steps to a complex activity that involves organizing production, delivery, distribution, and marketing across the globe.