Though globalization, competition and customer focus may have drawn increased
attention to the Supply Chain (SC) phenomenon (Gunasekaran et al., 2001) recently, supply chains have been in existence for a very long time. Camel convoys along the `Silk Route'
from China to Europe and the `Old Spice' route, via sea, from India to Europe held sway
over the world economy for centuries. Given the then existing technology and
infrastructure, these chains were relatively efficient, because they remained profitable for the
traders despite the dangers and high taxation enroute. These
supplier-manufacturer-distributor-retailer-customer chains operating at arm's length in an open market, brings goods to
the customer. The system is still `honored' as the governments try to assess taxes on the
basis of arm's length principle in case of transfer pricing.
In some sectors, with time, giant monolith organizations took control of the
entire chain: from mine to market. Shell and US Steel were leading examples of the
phenomenon at one time. Henry Ford was distinctly ahead of his times in his thinking, when he
wrote in 1926, "Our production cycle is about 81 h from the mine to the finished machine
in the freight car" (Morgan, 2004, p. 529). The structure of supply chains evolved
further in the face of increasing competition. While a number of smaller organizations
started entering into long-term relationships with the suppliers and distributors, a number of
the monolith organizations underwent re-engineering or downsizing and, eventually,
started outsourcing. Governed by the long-term contracts, these relationships gave rise to
supply chains of intermediate maturity. With the rapid spread of new communication systems
and the Internet, the exchange of information became faster, almost real time. The
data exchange evolved into the exchange of rich, actionable, information. A large number
of supply chains are now closely inter-linked with a seamless flow of information, goods
and finance strengthening their bonds. Such a supply chain, increasingly behaves like a
single entity (Mann et al., 2008), so much so the global competition can now be seen to be
occurring between supply chains, rather than between firms. At such a stage, a supply chain may
be seen as fully mature or advanced in the current context. In the future, some of the
supply chains are expected to grow or coalesce into bigger, pan-world, organizations with a
global control system (Morgan, 2004). Apart from growth, the intertwining of an
organization with a supply chain creates pressures for isomorphism. As the participating units have
to be interoperable to cooperate successfully, this progressively leads to "synchronization
and standardization of practices of business processes"
(Blanc et al., 2007, p. 720).
The growth of supply chains has brought forth the issue of Supply Chain
Management (SCM). SCM is defined by Simchi-Levi et al. (2003), as a set of approaches utilized
to efficiently integrate suppliers, manufacturers, warehouses, and stores so that
merchandize is produced and distributed in the right quantities, to the right locations, and at the
right time in order to minimize system-wide costs while satisfying service level
requirements. In the present scenario, supply chains in different stages of evolution coexist, and
need to be managed differently. Accordingly, the stage of evolution of a supply chain has
significant implications for the way we measure its performance. |
