April 15, 2013
Supply chain management (SCM) is an evolving discipline. The art and science of managing a global supply chain has gone through a transformation in response to changes in the way companies operate as well as a more complex and interdependent business environment. Practitioners need to keep abreast of these developments and adopt the appropriate mix of leadership skills.
More specifically, as the profession continues to grow beyond its physical distribution roots, supply chain managers require both broader expertise and deeper technical excellence. How to reconcile these two seemingly opposing demands is one of the most difficult leadership challenges facing SCM today.
By tracing the profession’s evolutionary track and changing profile, we can identify responses to these challenges and prepare practitioners for the leadership demands that lie ahead.
From Concept to Practice
The SCM concept first arose from the work of Jay Forrester at MIT in the early 1960s. Forrester noted that success for a company relied on controlling and managing the “interactions between flows of information, materials, manpower, and capital equipment.” The first public use of the term Supply Chain Management did not occur until 1982 when Keith Oliver mentioned it in a Financial Times interview. (Exhibit 1, depicts the evolution of SCM from idea to adoption.)
Adoption of the SCM concepts was slow but incremental throughout the 1980s as traditionally silo-ed distribution, logistics, and transportation departments started collaborating. The Continuous Replenishment Program initiated by Walmart and P&G in the late 1980s is a prime example of the nascent initiatives and programs that were beginning to take place.
As is often the case, the academic community lagged the industry. Throughout the 1990s numerous universities created partnerships to formalize and flesh out this new integrated supply chain management concept. Consortia at MIT, Stanford, and elsewhere began clarifying the differences between older, more traditional logistics and the new supply chain practices.
In 1996, the consulting firms PRTM and AMR Research along with more than 50 manufacturers founded the Supply Chain Council. Over the next year, the organization developed and propagated the first set of comprehensive, cross-company metrics and approaches that track the information and material flows described by Jay Forrester 30 years earlier. The SCOR framework of Plan, Source, Make, and Deliver shifted the way companies considered and measured their extended operations.
SCM disciplines continued to become widely adopted throughout the 2000s. Today, SCM is considered common practice in North America and Europe, and, increasingly, in the rest of the world.