Great Moments in World Trade: The Adam Smith of Supply Chain Management

Arch Wilkinson Shaw


In January of 1915, Harvard University Press first published a 119-page business book covered in modest maroon cloth. Its thirty-eight-year-old author, Arch Wilkinson Shaw, was a former office supply company owner and ardent student of “scientific” business management. Three years earlier, the Dean of the Harvard Faculty of Commerce had hired Shaw to help teach business policy, reorganize curriculum, and start the school's Bureau of Business Research. The result, Some Problems in Market Distribution, would prove the world's first supply chain management textbook.

“The most pressing problem of the business man today,” Shaw wrote, “is systematically to study distribution,” by which he meant both physically supplying a product and creating demand for it among consumers via marketing. “Demand creation was advertising and sales,” says Bud La Londe, professor emeritus of logistics at Ohio State University. “Physical supply was figuring out how to get it there.”

In both cases, Shaw meant his book to end what he termed 'the era of rule-of-thumb' in favor of 'the laboratory point of view.' Separately classified and considered in his remarkable book's four chapters, for example, were how best to source raw materials, hire workers, and transport products; how to locate, construct, and operate manufacturing plants; and how to record and analyze not only incomes and expenses in each area but productivity and waste. For any world-class organization, Shaw said, “Systematic study must replace experiences and empirical rules.”

Enacting that replacement took almost half a century, at least in the case of “figuring out how to get it there.” Bud La Londe's 1961 doctorate in Business Administration from Michigan State made him among the country's first ten degree holders in the new discipline of “physical distribution.” Whatever the field's name, Some Problems in Market Distribution, reprinted in 1920, 1951, and 1976, long-remained its central text at home and abroad. “There is an unquestionable superstar in marketing theory, whose work did in fact gave rise to all of the latter theories,” Isao Hashimoto, Professor of Economics, Kyoto University, wrote in the mid-seventies. “The man is Arch W. Shaw, 'the father of marketing' and 'Adam Smith of Marketing Theory.'”

Shaw, whose other influential texts included “Scientific Management in Business” and “Simplification: a Philosophy of Business Management,” still has much to teach modern manufacturers, says C. John Langley Jr., professor of supply chain management, Georgia Institute of Technology, and co-author of The Management of Business Logistics: A Supply-Chain Perspective, now in its seventh edition. “As a separate field from marketing, supply chain management has grown significantly, [but] I don't know if I'd say yet it's fully-grown.” Take integrating the activities of the supply chain organization. “The idea that companies ought to work together and coordinate activities has always been around,” Langley says, “but ask people today what one of the biggest problems with supply chains are today and they say companies don't work very well together. ”

To that end, what academic texts like Some Problems in Market Distribution and its successors teach matters. “A lot of time the terminology and the vocabulary change before the practice does,” Langley observes. “I saw the change from distribution to logistics and logistics to supply chain. Companies said, 'Okay, it's now logistics or supply chain, but what are we doing differently?' For a while there, the answer was not much. But it grows on you and you do change.” He repeats the example of collaboration between partner organizations. “The term 'supply chain management' says that that's more of a priority than 'logistics management' did. It inspires you to be broader in your thinking and to look at issues that are truly supply chain issues. Once you change the title, that's an incentive to change the practice.”

As part of their education at Georgia Tech, Langley's graduate students go back and review the earliest logistics textbooks. The lesson? “The things that we're succeeding with in 2006 are not new to the world,” Langley says. “They've been around a long while. It takes a period of time to identify new ideas. It takes a lot longer to implement them.”

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