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The Past, Present, and Future of SCM: A Look at Three Decades of Evolution
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.
The supply chain is an integral part of any business, encompassing all the activities involved in the creation and delivery of products and services. The supply chain has evolved significantly over the last decade, and today, it is a complex network that spans multiple companies, countries, and continents. The first generation of supply chain management focused on optimizing internal processes, but with the invention of personal computers and the Apple IIe, SCM took a leap forward. The second wave started when ERP systems became too rigid and complex, leading companies to seek new ways to manage their supply chains. The third wave was enhanced by the internet boom, which allowed businesses to connect with suppliers and customers globally and sell products directly to consumers, creating new challenges and opportunities for supply chain management.
The first generation
The first generation of SCM was practise in the 1980s , focusing on improving internal processes within an organisation. The goal was to optimize every aspect of the supply chain, from purchasing to shipment of products to the customer. The primary focus was on reducing costs and improving efficiency, with little consideration for the impact on suppliers or for customers.
However, with the invention of personal computers and the Apple IIe in the mid-80s, is where SCM took a giant leap forward. The new technology made it possible to collect and process data in real-time, providing companies with a more comprehensive view of their supply chains. This enabled them to identify bottlenecks and opportunities for improvement, and to respond quickly to changing market conditions.
The Second generation
The second wave of SCM (SCM 2.0) started when the rigidities of ERP systems started hampering companies. ERP systems were designed to integrate all aspects of a business, from finance to manufacturing, into a single system. However, ERP systems were complex and expensive to implement, and they often failed to deliver the promised benefits. As a result, companies started looking for new ways to manage their supply chains.
The focus of SCM 2.0 was on collaboration and integration. Companies began to look beyond their own walls and started to work closely with suppliers, customers, and logistics providers. This led to the development of new technologies and practices, such as vendor-managed inventory (VMI), just-in-time (JIT) delivery, and collaborative planning, forecasting, and replenishment (CPFR).
The Third generation
The third wave of SCM was enhanced by the Internet boom, where the new medium started to have a revolutionary impact on trade and businesses. The Internet provided businesses with the ability to connect with suppliers and customers around the world in real time, creating new opportunities for collaboration and innovation. With the rise of e-commerce, businesses could sell their products directly to consumers, bypassing traditional retail channels. This new model of direct-to-consumer (D2C) sales created new challenges and opportunities for supply chain management.
The Internet also enabled companies to collect , process and make sense of vast amounts of data from across their supply chains, providing them with a more comprehensive view of their operations. This led to the development of new technologies, such as blockchain and artificial intelligence (AI), which are transforming the way supply chains are managed.
5 Star business network
One of the key drivers for this shift towards 5-star business networks is the rise of digital technologies, which have enabled businesses to connect with their customers in new and innovative ways. With the help of social media, mobile apps, and other digital platforms, companies can now engage and provide customer support for their customers on a more personal level, gather feedback and insights, and develop targeted marketing strategies.
In addition to this, the rise of e-commerce has also played a significant role in the evolution of 5-star business networks. With online marketplaces and D2C sales channels, companies can now bypass traditional retail channels and sell their products directly to their customers. This has created new opportunities for companies looking to build stronger relationships with their customers and gain valuable insights into their buying preference.
However, building a successful 5-star business network is not without its challenges. Companies must be willing to invest in the necessary technology and infrastructure to support collaboration and communication with their partners and customers. They must also be willing to embrace new business models and approaches, such as agile development and design thinking, that prioritize customer-centricity and flexibility.
Furthermore, in order to truly excel in a 5-star business network, companies must adopt a mindset of continuous improvement and innovation. This means constantly looking for ways to enhance the customer experience, develop new products and services, and improve supply chain efficiency.
Example of a company which adopted all generations of SCM
Walmart’s supply chain journey began in the 1980s when it focused on optimizing its internal processes to reduce costs and improve efficiency. This was the first generation of supply chain management, and Walmart was an early adopter of this approach.
In the 1990s, Walmart adopted the second generation of supply chain management, which was focused on collaboration and integration with different suppliers. Walmart began to work closely with its suppliers, developing partnerships that would allow for better coordination and communication. This led to the use of practices such as just-in-time (JIT) delivery and vendor-managed inventory (VMI), which helped to improve supply chain efficiency and reduce costs.
With the rise of the internet in the 2000s, Walmart began to embrace the third generation of supply chain management. Walmart utilized the internet to create a more comprehensive view of its supply chain, which led to gathering of data from across its operations and make more informed decisions. Walmart also embraced the concept of direct-to-consumer (D2C) sales, selling products through its own website and bypassing traditional retail channels.
Today, Walmart continues to innovate and improve its supply chain management practices. The company has invested heavily in technology, such as blockchain and artificial intelligence (AI), to improve supply chain transparency and efficiency. Walmart has also embraced sustainability, working with its suppliers to reduce waste and improve environmental practices.
In conclusion, the evolution of SCM has been a continuous process, with each wave building upon the last. From the focus on internal processes to collaboration with partners and customers to the rise of digital technologies and 5-star business networks, supply chain management has come a long way. Today, businesses are more customer-centric and focused on innovation than ever before. However, there are still challenges to be overcome, and companies must be willing to invest in the necessary infrastructure, adopt new approaches, and embrace a mindset of continuous improvement. As we move forward, it will be exciting to see what the next generation of supply chain management will bring.
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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