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The main driving force behind the development of SCM over the past 20 years has been the desire to minimize inventory level. In the 1980s companies discovered new manufacturing techniques that allowed them to reduce costs and better compete in different markets.
Strategies such as just-in-time, manufacturing, team manufacturing, total quality management, and other became very popular and vast amount of resources were invested in implementing these strategies. In the last few years, however, it has been realized that without effective supply chain management, profit and market share cannot be increased significantly.
If we peep into the history of supply chain management, we found that SCM is only half century old concept. The birth of supply chain management as a discipline was given by world renowned management guru, Peter Drucker, who wrote a seminal article on distribution, which appeared in the Fortune Magazine in 1962. Over the years, the function of distribution, logistics, materials management and the integration of all these activities have gain significant importance.
From 1970s to early 1980s:
This period of supply chain management was characterized by large scale changes, re-engineering, downsizing driven by cost reduction techniques and widespread attention to the Japanese manufacturing techniques.
In the early 1990s:
In the early 1990s industries began to focus on “Core Competencies” and adopted a specialization model. Companies abandoned vertical integration, sold off non-core operations, and outsourced those functions to other companies. Thus companies extended their supply chain operations well beyond company walls and entered into supply chain partnerships with externals (vendors) resulted in vendor managed inventory (VMI) control. Thus managing inventory levels was the sole responsibility of vendors. The retailer was supposed to send the sales and inventory data to the vendor via EDI.
Late 2010 (Last 20 years):
In the last twenty years especially after year 2000. Outsourced technology hosting for supply chain solutions was replaced by on-demand model from approximately 2003- 2006 to the software as a service (SaaS) model currently in focus today. Furthermore, the last two decades have seen the introduction of large number of operation and quality management and control issues like JIT (Just-in-time), ZI (Zero Inventory), TQM (Total Quality Management), ECR (Efficient Customer Response), VMI (Vendor Managed Inventory) and CD (Cross docking). All of these techniques now have been integrated within the domain of supply chain management process.
