Organizational structure from the fifties to the late eighties was marked by the functional silos where the decisions were made keeping in mind the narrow view of the business functions and the repercussions of the decisions on the other functions were ignored.
These often created conflicting objectives within the various functions of a company. The late eighties saw the advent of Business Process Reengineering and ERP concepts. The corporate houses started analyzing the importance of aligning their business with the developments in the information technology capabilities to collaborate effectively with its stakeholders, integrate its functions and decision making and to remain competitive in the market.
There are three distinct phases in evolution of SCM:
Pre-1970 era:
- Supply Chain was not considered as a competitive unit. Companies seek more profit by maneuvering their suppliers and customers.
- Scientific methods like EOQ and SPC were applied.
- Companies attempted at Vertical integration – themselves.
1970 – 1980 era :
- Holding inventory becomes key due to Oil shock
- TQM and JIT practice becomes popular in
- Distribution is not yet the focus area
- MRP systems gain popularity in US and
Post 1980 era :
- Inventory profits dry up as inflation reigns in
- Lower setup times, lower batch quantities result in reduction in lead times and drastic improvement in customer responsiveness.
- Suppliers and customers considered as part of the organization network. We against them philosophy fades away.
- MRP systems give way to MRP II systems, ERP and then to advanced supply chain systems involving optimization.
