The Evolution and History of Supply Chain Management (And What That Means For You)
During the past 30 years, the supply chain has experienced a vast modernization that was once unimaginable. Technology — including transportation management systems and e-commerce platforms — has provided innovative solutions that have helped shippers thrive in ever-expanding global supply chains.
Regardless, many shippers are still hesitant to invest in supply chain solutions and technology, mainly because of the perceived expense and resources necessary to implement them. History tells us, however, that early adopters of supply chain optimization solutions often come out ahead of the competition and position themselves for profitability and sustainability. 1,2,3
History of Supply Chain Management Solutions
The supply chain is an ever-changing, interconnected system. It moves quickly, and improvements and innovations occur quite frequently. So, when looking at how supply chain solutions have changed during the past 200 years, it’s important to seek lessons in this history.
In fact, supply chain history is proof that today’s shippers must embrace change and implement technologies to meet growing demand and expectations. Because, after all, can you imagine what happened to companies in the early 1900s who refused to use pallets (more on this below) as part of their shipping strategy? It sounds funny to consider that, but those shippers were simply left behind. Below, we highlight just a few of the key advancements in the supply chain since the 1800s.
Freight Transportation Advancements in Shipping Tools
1800s — To accommodate rising populations and westward expansion, newly built rail systems made the movement of goods more efficient. Additionally, simple tools such as hand trucks (aka dollies) were invented and made loading and unloading much easier. International shipping was difficult and cumbersome, but the 19th century still provided a launching pad for shipping innovations to come.
Early 1900s — In today’s shipping world they may seem rudimentary, but the invention and widely incorporated use of pallets allowed shippers to integrate products together in one shipment. This made shipping easier and radically changed the ways in which companies planned and moved products.
1940s — Due to the outbreak of World War II, the United States had to develop sophisticated ways of manufacturing supplies and munitions stateside and ship them overseas to support troops in combat roles. In fact, supply chains became strategic targets during the conflict as they were the main pipeline of supplies and resources. From a purely innovation standpoint, supply chain learnings of this time influenced the future of shipping.
Adopting Automation, Mechanization, and Physical Distribution
1940s-50s — The shipping industry saw an increased focus on mechanized solutions such as pallet lifts to improve the labor-intensive processes of material handling. Additionally, the industry sought ways to optimize space using racks, warehouse design and layout. In the mid-1950s, this concept was extended to transportation management with the development of intermodal containers together with ships, trains and trucks to handle these containers. This was a prerequisite for global supply chains of the future.
1960s — A clear trend had developed in shifting more time-dependent freight transportation to truck rather than rail. This led to the need for joint consideration of warehousing, material handling and freight transportation, which emerged under the label of “physical distribution.”
1960s-70s — Prior to the 1960s, virtually all transactions and record keeping were done manually. However, during this time, the computerization of this data opened the door to a huge opportunity for innovations in logistics planning, from randomized storage in warehouses to optimization of inventory and truck routing.
The Rise of Logistics Services
1980s — This decade marked the beginning of a sea-change in the history of supply chain solutions. The emergence of personal computers in the early 1980s provided tremendously better computer access to planners and a new graphical environment for planning. This spawned a flood of new technology including flexible spreadsheets and map-based interfaces which enabled huge improvements in logistics planning and execution technology. But perhaps the most important trend for logistics in the 1980s was its tremendous recognition in the industry as being very expensive, very important and very complex. Company executives became aware of logistics as an area where they had the opportunity to significantly improve the bottom line if they were willing to invest in trained professionals and new technology.
1990s — The logistics solutions boom was fueled further in the 1990s by the emergence of Enterprise Resource Planning (ERP) systems. These helped integrate the multiple databases that existed in almost all companies but which seldom talked to each other. The result of this change to ERP systems was a tremendous improvement in data availability and accuracy. Additionally, the globalization of manufacturing during this decade created a need for enhanced logistics strategies across countries (aka e-commerce).
2000s — As the supply chain became more complex, a distinction occurred between two important concepts. “Logistics” was defined as a supply chain process and “supply chain management” was defined as the strategic coordination of business functions within the company and with outside entities.
Modern-Day Supply Chain Management Solutions
For the past decade, the supply chain has continued to rapidly evolve, offering many solutions to shippers. Some of the most impactful developments have been:
- Focus on real-time visibility and risk management, which helps customer satisfaction and loss prevention.
- Development of circular supply chain, including reverse logistics. This emphasis helps businesses profit from the full lifecycle of their products.
- Creation of cloud-based software to enable gathering and storage of big data. Businesses can use this information to create better inventory management, a leaner supply chain and smarter transportation strategies.
- Innovation of artificial intelligence (AI) to reduce supply chain inefficiencies.
- Introduction to internet of things (IoTs) devices to enable greater flexibility and better control of inventory, warehouse management and overall logistics.
- Improvements in robotics and automation to free up time spent on low-value tasks and allow focus on high-priority challenges.
What Supply Management Solutions To Incorporate
As history tells us, supply chain innovation and resiliency will continue in the future and it’s imperative to equip yourself with solutions that will protect your bottom line and keep you competitive in an increasingly global economy. Areas that shippers should look to improve in include:
- Supply chain optimization
- Single-source technology platform
- Inventory management
- Comprehensive carrier network
- Improved transit time and on-time delivery
- Customized data reporting
- Claims reduction
- Speed, precision and cost savings
- Improved product visibility
- E-commerce platform solutions
GlobalTranz Is an Industry-Leader in Supply Chain Management Services
As a shipper, you have access to an enormous number of supply chain solutions to help you face today’s supply chain challenges. And you don’t have to do it alone. GlobalTranz offers a quality carrier network, a leading transportation management system delivering data-driven insights, and a team of industry experts available around the clock for support. We also provide key supply chain trends to help you prepare for tomorrow. Connect with one of our shipping experts to learn how we can help you stay competitive and profitable in the face of an ever-changing supply chain.
1 Supply Chain Technology Trends: Investments and Adoption
2 Key to Supply Chain Innovation? Early Adopters of Technology Do Well, Study Says
3 Will the Logistics Industry Finally Fully Embrace Supply Chain Technology?