2. Evolution of Supply Chain Management
The concepts of supply chain management have evolved over the last half-century. Research has
studied these changes in chronological order.
The 1950s: The Transportation Era
During this decade, transportation was the main focus. Thus, courses offered during this time
only included transportation information and omitted topics like logistics, supply chain, and
physical sourcing. There was also not much discussion about the concept of the total cost.
The 1960s: Physical Distribution
The study of transportation evolved into the study of logistics during this decade. Transportation
remained the most crucial function of logistics, and professional logistics managers came to
exist.
The 1970s: Physical Supply, Deregulation, and Logistics
In the early 1970s, the physical supply of the logistics system was taken over. Then, later in the
decade, physical distribution and physical delivery were combined.
During this decade, the logistics concept was developed, and articles were published in industrial
management and carriers, physical distribution, regulation, logistics, and more.
The 1980s: Transportation Deregulation, Physical Distribution, and Business Logistics
In the 1980s, deregulation continued, and the government reduced the regulation of road freight
rates and entry conditions. The Staggers Rail Act of 1980 allowed the railways to operate with
less supervision by the ICC. The term physical distribution also began to fade out and was
replaced by logistics.
The 1990s: Business Logistics
During the 1980s, business logistics continued to be a vital element — making companies see it
as an integral part of their business strategy. Most companies realised it offered a significant
opportunity for cost savings through the implementation of systems and negotiation with
suppliers. During this decade, electronics and communication technologies were the two main
factors affecting logistics.
The 2000s: Logistics and Supply Chain Management
The early years of the 21st century saw a gradual evolution from logistics to supply chain
management in business and academia. Supply chain management has come to be seen as a
1
, chain consisting of all the activities involved in sourcing and converting raw materials into
finished products.
Functions of Supply Chain Management
The coordination and management of the various processes involved in producing and delivering
goods and services to customers is a function of Supply Chain Management.
Below is the discussion of the functions of Supply Chain Management.
1. Purchasing
Purchasing involves the acquisition of raw materials, goods, and services required to produce
and deliver products to customers.
It includes identifying reliable suppliers, negotiating contracts, and managing supplier
relationships.
2. Operations
Operations include the management of the manufacturing process, including production planning
and scheduling, the organization of manufacturing activities, and monitoring the stock level.
3. Logistics
Managing the flow of goods and services from suppliers to customers is known as logistics. It
includes transportation, warehousing, and distribution activities.
2
The concepts of supply chain management have evolved over the last half-century. Research has
studied these changes in chronological order.
The 1950s: The Transportation Era
During this decade, transportation was the main focus. Thus, courses offered during this time
only included transportation information and omitted topics like logistics, supply chain, and
physical sourcing. There was also not much discussion about the concept of the total cost.
The 1960s: Physical Distribution
The study of transportation evolved into the study of logistics during this decade. Transportation
remained the most crucial function of logistics, and professional logistics managers came to
exist.
The 1970s: Physical Supply, Deregulation, and Logistics
In the early 1970s, the physical supply of the logistics system was taken over. Then, later in the
decade, physical distribution and physical delivery were combined.
During this decade, the logistics concept was developed, and articles were published in industrial
management and carriers, physical distribution, regulation, logistics, and more.
The 1980s: Transportation Deregulation, Physical Distribution, and Business Logistics
In the 1980s, deregulation continued, and the government reduced the regulation of road freight
rates and entry conditions. The Staggers Rail Act of 1980 allowed the railways to operate with
less supervision by the ICC. The term physical distribution also began to fade out and was
replaced by logistics.
The 1990s: Business Logistics
During the 1980s, business logistics continued to be a vital element — making companies see it
as an integral part of their business strategy. Most companies realised it offered a significant
opportunity for cost savings through the implementation of systems and negotiation with
suppliers. During this decade, electronics and communication technologies were the two main
factors affecting logistics.
The 2000s: Logistics and Supply Chain Management
The early years of the 21st century saw a gradual evolution from logistics to supply chain
management in business and academia. Supply chain management has come to be seen as a
1
, chain consisting of all the activities involved in sourcing and converting raw materials into
finished products.
Functions of Supply Chain Management
The coordination and management of the various processes involved in producing and delivering
goods and services to customers is a function of Supply Chain Management.
Below is the discussion of the functions of Supply Chain Management.
1. Purchasing
Purchasing involves the acquisition of raw materials, goods, and services required to produce
and deliver products to customers.
It includes identifying reliable suppliers, negotiating contracts, and managing supplier
relationships.
2. Operations
Operations include the management of the manufacturing process, including production planning
and scheduling, the organization of manufacturing activities, and monitoring the stock level.
3. Logistics
Managing the flow of goods and services from suppliers to customers is known as logistics. It
includes transportation, warehousing, and distribution activities.
2
