A business entity
,in the earlier 1950s revolved more around its own self . Merger
and acquisitions though prevalent ,a firm used to engage its
resources for all the activities needed from buying raw
materials to manufacturing and then distributing the products to stockists, dealers and retailers. The aim was to produce
more, reduce cost ,sell more and increase profit ,all by
oneself. Creating partnerships with upstream or
players was not considered. As a result, keeping
large inventories on the shop floor to sustain
mass production was considered necessary.
However, as the competition grew in 1970s the need
for cost reduction got greatly emphasized and soon
there were efforts to reduce inventory.
Material requirement planning (MRP) and
Manufacturing Resource planning (MRP II) systems were
introduced to reduce inventory holding.
Need for effective
Materials management was duly recognized.
The advancement in Information Technology , witnessing application
of complicated softwares for tracking and managing inventories
through LAN and WAN became competitive factors. Concepts such as JIT
and TQM helped the processing on the shop floor. The origin of
supply chain management can be traced to 80s.
The 80s, saw
a dramatic change in the business scenario all over the
world due to globalization and liberalization.
Low cost ,high quality product and customer delight became
the buzz words for the industry. Increased dependence on JIT
and TQM methodologies created the vision for strategic
Development in IT further reduced the national boundary
concepts. The first mention of the term supply chain
management was found in a paper published in 1982 in the US.
Market globalization also presented a great opportunity to
reach out to high potential global markets.
This needed relook of the way inventory and logistics were
The challenges associated with enhancement in quality,
manufacturing efficiency, customer service and new product
design and development also increased.
To deal with these challenges, manufacturers began
buying from a select number of certified, high quality
suppliers with excellent service reputations and involved
these suppliers in their new product design and development
activities as well as in cost, quality and service
Obviously, supplier management and customer
became focused activities for a firm and Supply Chain
Management became popular as a source of competitive
advantage for the firms.
Today, Supply Chain Management has concretized for itself
purchasing and supply management emphasis from
industrial buyers and
transportation and logistics emphasis from the
wholesalers and the retailers
The new well talked about concepts are supply chain spanning from
the supplier's supplier on the one hand to the customer's customer
on the other hand.
In the future, it is expected that supply chain management emphasis
will concentrate on supply chain expansion, increasing supply chain
responsiveness and further reducing supply chain costs.