SCM evolution and it’s driving factors

The previous article introduced the concept of supply chain management (SCM) and its vital elements such as inventory management and reverse logistics. Understanding SCM involves consideration of a wide range of dimensions. Wolf’s (2011) definition of SCM is the most relevant in this regard. According to Wolf;

“it is the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally” (Wolf, 2011, pp. 222).

However, the SCM evolution has come a long way as a result of different changing operating systems and speedy business process. The evolution has also come from the changing need and demand of the customers and the introduction of a green supply chain.

Concept-based SCM evolution

Logistics being one of the primal aspects was focused only during the 1950s (Fayezi and Zomorrodi, 2016). Logistics came out to be important for physical distribution management in the manufacturing firms mainly. In fact, SCM was termed and coined with the aspects of logistics and its involved functions. However, Drucker in 1998 rejected all aspects and said that one business does not form the supply chain but a cluster of businesses or business functions forms the supply chain. In addition, it was also implicated that SCM not only comprised of logistics but inventory management, operational management, management of demand and supply, and customer management. According to Fayezi and Zomorrodi, (2016), the evolutionary stages of SCM starts with supply chain awareness followed by linkage or logistics, then information process integration, and in the recent year’s seamless relational and progress integration.

However, Mudgal et.al., (2010) implicated that, the future phase of the SCM evolution is the green or sustainable SCM. During the process, many new models were formed and argued upon. Some of the most common SCM models were:

• Integrated Tertiary Educational Supply Chain Management (ITESCM) model (Habib, 2011),
• Organizational Theories in Supply Chain Management (Parkhi et. al., 2015) and,
• sustainable SCM theories like resource-based view (RBV), stakeholder theory and institutional theory (Touboulic and Walker, 2015).

Evolution in the manufacturing industry

As per the previous article, the below flowchart is the most simplified form of the SCM process. According to the process, the manufacturer shares an important place as both raw and final product has to go through the manufacturer (Sanderson et.al., 2015). This position has helped the manufacturers to develop alternative conceptual solutions fit best with components and technologies to manage a seamless process between the suppliers and the distributors. The businesses in the manufacturing segment mainly use the strategic models of supply chain management and the operational models of supply chain management. The models of strategic SCM mainly focus on total quality management, systems thinking, cost analysis modelling and agility (Fayezi and Zomorrodi, 2016).

On the other hand, the business that uses operational models focuses on the functional processes of the businesses like customer relations, inventory processes and managing an efficient flow of products. However, the strategic models and the operational models of supply chain management were the earliest forms of supply chain strategies and models used by the manufacturing companies (Sanderson et.al., 2015). However, in recent years the network models of SCM has been in use since the development of the multi-dimensional functions of businesses. This model keeps a track of different segmented operations within the businesses with different SCM operations and the framework.

For instance, Apple Inc manufactures different types of devices and hence has different suppliers. But in the end, Apple keeps a track of all the raw supplies of different products and then distribution to stores and so on. The supply chain here is connected and networked.

Factors leading to SCM evolution

Evolution of SCM has also happened through the integration of various tasks over a period of time. It has been facilitated with efforts being put to integrate fragmented areas of the process, to increase performance and improve process seamlessness. Implementation of information technology and modern communication has helped SCM processes of various geographies to operate on the same platform. This helps in information sharing, controlled and cohesive flow of finance and goods (Wu & Blackhurst, 2009). Development of complex systems has increased the competitiveness at the global business level to other firms. Increased demand for products and its management needs effective and efficient structures of supply and demand process. Technological advancements have always impacted the reason for the change in business operations and hence the change in SCM structure.

Increased need to focus on customer needs, supplier’s capability, and integration of information from all spheres to has also led to the need for change in the SCM processes (Yu et.al., 2016). Supply chains with the rise in demand and supply also need to maintain the flow of information effectively in terms of speed, cost, and quality. Therefore, to increase the performance and overall management of supply chain the development of new forms of SCM is needed every now and then. Consumer and environmental consciousness have also led to the development of green and sustainable SCM models (Touboulic and Walker, 2015). Supply chains in order to become flexible in operations undergo major transformations in terms of strategic differentiation, cost reduction, collaboration with other processes thereby contributing to the need for SCM evolution.

References

• Fayezi, S. and Zomorrodi, M., (2016). Supply chain management: developments, theories and models. In Handbook of Research on Global Supply Chain Management(pp. 313-340). IGI Global.
• Habib, M., (2011). Supply chain management (SCM): theory and evolution. In Supply Chain Management-Applications and Simulations. IntechOpen.
• Parkhi, S., Joshi, S., Gupta, S. and Sharma, M., (2015). A study of evolution and future of supply chain management. Supply Chain Management, 9(2), pp.95-106.
• Mudgal, R.K., Shankar, R., Talib, P. and Raj, T., (2010). Modelling the barriers of green supply chain practices: an Indian perspective. International Journal of Logistics Systems and Management, 7(1), pp.81-107.
• Sanderson, J., Lonsdale, C., Mannion, R. and Matharu, T., (2015). Towards a framework for enhancing procurement and supply chain management practice in the NHS: lessons for managers and clinicians from a synthesis of the theoretical and empirical literature. Touboulic, A. and Walker, H., 2015. Theories in sustainable supply chain management: a structured literature review. International Journal of Physical Distribution & Logistics Management, 45(1/2), pp.16-42.
• Wolf, J. (2011). Sustainable Supply Chain Management Integration: A Qualitative Analysis of the German Manufacturing Industry. Journal of Business Ethics, 102(2), 221–235. https://doi.org/10.1007/s10551-011-0806-0.
• Wu, T., & Blackhurst, J. (2009). Managing supply chain risk and vulnerability: tools and methods for supply chain decision makers. Springer Science & Business Media.
• Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce Logistics in Supply Chain Management: Practice Perspective. Procedia CIRP, 52, 179–185. https://doi.org/10.1016/J.PROCIR.2016.08.002