Inside World Trade

Finding Your Place

December 1, 2013
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I’m fond of a long passage from Adam Smith, penned in the 1770s, that describes what we now refer to as supply chain management. His quote begins with the end product, a woolen coat, but quickly shifts to the manufacturing and sourcing of the components and then to the logistics of delivering those elements to the point where the garment was created.

Our own attention in the last decade has been on improving the efficiency and reducing the cost of sourcing and manufacturing, following pretty closely what Smith highlighted. Now, that focus is shifting somewhat, and we are concentrating on bringing our distribution capabilities up to a level that matches what is best practice on the sourcing side.

In essence, our focus on omnisourcing continues, but with the additional emphasis on omnichannel distribution.

The precedent is well established and reinforced repeatedly since Smith. It is reflected in the 50-year history of the Council of Supply Chain Management Professionals.

At its beginning in 1963, the group was organized around a principle that gave it its overly long name, the National Council of Physical Distribution Management. NCPDM was a “council” because it was meant to promote networking, education and professionalism. The concept of physical distribution management was an effort to employ the best practices of operations management and manufacturing process flow to the distribution of goods and products.

In the 50 years since the formation of NCPDM, we have come back around to looking at how we optimized procurement and manufacturing and are again emphasizing how we need to optimize the demand and fulfillment side of the supply chain.

The bigger news is the absolute explosion of technology that has been a prime enabler of all of these developments. The tremendous improvement in transportation has been another major factor as well. Transportation has not only affected cost and efficiency, it could be said to have required NCPDM to drop “national” from its name in order to remain relevant. Globalization would not be the force it is in today’s markets without efficient, cost-effective transportation.

It has taken time for the tools and technology to catch up to the concepts and, lately, for the concepts to be integrated into a more holistic way of thinking and managing. Logistics has always been about supporting a continuous, efficient flow of goods and commerce. The scale has changed and the technology has certainly changed.

Logistics professionals have also changed. They are much more involved in issues of place, policy, and relationships, but they still take an end-to-end view of a process Henry Ford described as beginning when the raw material is removed from the earth and ending when the final product is delivered to the customer. And today, they include return, reuse, and recycling of those products at the end of their lifecycle.

We may quickly tire of the use and misuse of the term “holistic,” but as we strive to optimize extended supply chains, there’s no better term for the perspective logistics professionals need to adopt.

 

Perry A. Trunick, Editor-in-Chief

 trunickp@worldtradeWT100.com 

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