Monday, February 18, 2013
History of Supply Chain Management
Supply chain management has its roots deep within the history of pirating and naval shipping. Originally, the supply chain of nations was managed either by a royal ministry, or an organization. The Dutch East Indian Trading company became famous and one of the richest organizations in the world by affective supply chain management.
What supply chain management entails is the managing of capital, stock, and transportation of products from one point to another. These original masters of management controlled the production of their transportation vehicles (ships), and oversaw the effective shipping strategies used to keep the costs of their adventures low, and the profits from each trip maximized. While most companies today probably aren't dealing in jewels and gold, any company that utilizes logistics and/or transportation can learn a valuable lesson from the tactics inspired by the East Indian Trading Company.
While ships are still used today for some international shipping and logistics, airplanes and trains are the preferred format for transportation in modern times. Shipping by airplane can be expensive, as jet fuel must be managed into the cost of transportation; this is why management of transportation is so important. If the costs are not correctly balanced in a shipping situation, the cost of shipping can easily exceed the revenue for that particular product. A business that is losing money somewhere in the shipping process is destined to fail without a reliable logistics manager.
Click here to learn more about logistics and the transportation management process, from Establish Inc.