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The birth of Supply Chain Management
Global supply chain blogs
Vivek Sood: Sydney based managing director of Global Supply Chain Group, a strategy consultancy specializing in supply chains. More information on Vivek is available on www.linkedin.com/in/vivek and more information on Global Supply Chain Group is available www.globalscgroup.com
Vivek is the Managing Director of Global Supply Chain Group, a boutique strategy consulting firm specialising in Supply Chain Strategies, and headquartered in Sydney, Australia . He has over 24 years of experience in strategic transformations and operational excellence within global supply chains. Prior to co-founding Global Supply Chain Group in January 2000, Vivek was a management consultant with top-tier strategy consulting firm Booz Allen & Hamilton.
Vivek provides strategic operations and supply chain advice to boards and senior management of global corporations, private equity groups and other stakeholders in a range of industries including FMCG, food, shipping, logistics, manufacturing, chemicals, mining, agribusiness, construction materials, explosives, airlines and electricity utilities.
Vivek has served world-wide corporations in nearly 500 small and large projects on all continents with a variety of clients in many different industries. Most of projects have involved diagnostic, conceptualisation and transformation of supply chains – releasing significant amount of value for the business. His project work in supply chain management has added cumulative value in excess of $500M incorporating projects in major supply chain infrastructure investment decisions, profitable growth driven by global supply chain realignment, supply chain systems, negotiations and all other aspects of global supply chains.
Vivek has written a number of path breaking articles and commentaries that are published in several respected journals and magazines. Vivek has spoken at several supply chain conference, forums and workshops in various parts of the world. He has also conducted several strategic workshops on various aspects of supply chain management. He received his MBA with Distinction from the Australian Graduate School of Management in 1996 and prior to these studies spent 11 years in the Merchant Navy, rising from a Cadet to Master Mariner.
Supply Chain Management (SCM) has been a crucial part of successful businesses for decades, with origins that can be traced back to the early days of industry. This article will explore the history and development of SCM from its roots in manufacturing and logistics, to its current role as an integral part of modern business operations.
In the early days of industrial commerce, businesses were often plagued by inefficiencies due to fragmented and siloed departments. Each department would work independently from each other , optimizing their own processes, without consideration for the impact on the other departments. This resulted in a lack of coordination , communication and a teamwork among the department, which lead to a less than optimal overall performance of the company. There was a drastic need for an overarching concept that could govern and integrate all the operational units of a company, leading to the birth of Supply Chain Management (SCM).
The birth of supply chain management (SCM) as we know it today can be traced back to a group of four individuals in the early 1980s. Among them was Dr. Partsch, a scientist with a natural science background and a German accent whcih exuded confidence. Dr. Partsch’s scientific background and his knowledge on Industrial Dynamics led him to view business processes as interconnected systems, much like the human body’s organs. He believed that the impact of an event in one area of a company would ripple throughout the entire organization.
However, it was during a fateful trip to a Swiss client’s office, stuck in a snowstorm and needing to put on snow chains to plough through the snow, that the term “supply chain” came to their minds. One of the team members suggested that they use “chain” as the missing link to connect all the different operational units of a company, and thus, “supply chain management” was born. The group’s idea of SCM was ground-breaking at the time, as it went against the then-dominant management paradigm of dividing labour into separate departments, with each one optimizing its own processes. SCM, on the other hand, looked at the entire supply chain as a holistic system, where each department’s actions had consequences that affected the entire organization’s performance.
The concept of SCM soon gained traction in the business world, with companies realizing the benefits of coordinating their supply chains and optimizing their processes for maximum efficiency. Today, SCM is an integral part of many companies’ operations, and its impact can be felt across a wide range of industries.
Dr. Partsch and his team’s innovative thinking and problem-solving skills remind us that sometimes the best ideas come from unexpected places and situations. Their ability to look at business processes as interconnected systems paved the way for the development of SCM and changed the face of modern industrial commerce.
Since 1980, Dr. Partsch has been focused on advancing the field of Supply Chain Management (SCM) and has completed more than 500 successful projects. Many of these projects have had significant impact and have exemplified SCM as a progressive development. Given the impact of SCM, one might expect to see trademark symbols such as ® or TM associated with the term. However, this is not currently the case.
In essence, Dr. Partsch and his team decided against patenting the term SCM, choosing instead to share their knowledge freely. Their goal was not to profit from the name, but rather to enable businesses to leverage the benefits of its implementation. Dr. Partsch humorously remarked, “If we received a penny for every time SCM was mentioned, I might be the second wealthiest person on the planet.”
The global supply chain of products is an immense and complex system. It involves the movement of goods from the point of origin to the point of consumption, with intermediate steps that involve resources, materials and services to transport them. A supply chain encompasses activities such as purchasing, production, distribution and marketing in order to satisfy customer demands. Companies rely on a well-managed supply chain to meet their business goals by providing quality products and services at competitive prices.
Efficiently managing a global supply chain requires considerable effort, particularly when dealing with multiple suppliers located around the world. Complex logistics tracking systems are needed to monitor product movements from one place to another. Technologies such as artificial intelligence (AI) can help companies keep track of shipments across different locations for greater visibility into their processes.
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